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EXHIBIT 4.12
SECURITY AGREEMENT
BY AND BETWEEN
AMERICAN SHARED HOSPITAL SERVICES,
A CALIFORNIA CORPORATION
AND
GENERAL ELECTRIC COMPANY,
A NEW YORK CORPORATION,
ACTING THROUGH GE MEDICAL SYSTEMS
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of May 17, 1995 by
and between AMERICAN SHARED HOSPITAL SERVICES, a California corporation
("Obligor"), and GENERAL ELECTRIC COMPANY, a New York corporation, acting
through GE Medical Systems ("GE").
R E C I T A L S
A. GE is a primary supplier of equipment and services to Obligor and
its affiliates, CuraCare, Inc., a Delaware corporation ("CuraCare"), and
American Shared - CuraCare, a California general partnership ("AS-C")
(collectively, "Affiliates").
B. GE has agreed to make a loan to Obligor, but only upon the condition
precedent, among others, that Obligor shall have granted the lien and security
interest to GE contemplated by this Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. As used in this Security Agreement, the following
terms shall have the following meanings, unless the context otherwise requires
(any terms defined in that certain Agreement among GE, Obligor, AS-C and
CuraCare dated effective as of November 1, 1994 (the "Agreement") and not
otherwise defined herein shall have their meanings defined therein when used
herein):
"Code" shall mean, with respect to each state in which Obligor
operates a business or owns property, the Uniform Commercial Code as codified by
such state.
"Collateral" shall mean, collectively, all of Obligor's present
and future right, title and interest in and to the Equipment and Proceeds
thereof.
"DVI" shall mean DVI Financial Services, Inc. and DVI Business
Credit Corporation.
"DVI Loan Documents" shall mean those certain loan documents
between the Affiliates and DVI that are more particularly described in Exhibit 1
hereto.
"Equipment" shall mean the Leksell gamma knife unit more
particularly described in Exhibit 2 hereto, as well as all
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additions to, replacements of or accessions to any of the foregoing and
accessories thereto whether installed thereon or affixed thereto.
"Note" shall mean that certain Promissory Note of even date
herewith from Obligor to GE in the original principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000).
"Obligations" shall mean Obligor's obligations pursuant to the
Note and this Security Agreement.
"Permitted Liens" shall mean (a) the second priority Lien of
DVI in the Equipment pursuant to the DVI Loan Documents and (b) any existing
Liens of GE or Liens hereafter granted to GE by Obligor.
"Proceeds" shall have the meaning assigned to it under the Code
and shall include, but not be limited to, (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Obligor from time to time
with respect to any of the Collateral, (b) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral, and
(c) all accessions to, substitutions for and all replacements, products and
proceeds of the Collateral.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due of the Obligations, Obligor hereby
assigns, grants, conveys, mortgages, pledges, hypothecates and transfers to GE
for the benefit of GE, a continuing first priority and perfected security
interest in and lien on all of Obligor's right, title and interest in, to and
under the Collateral.
3. Rights of GE. GE may, at any time or times hereafter, upon written
notice to Obligor and after allowing Obligor ten (10) Business Days to resolve
any security interest, lien, claim or encumbrance asserted by any Person against
the Collateral (other than the Permitted Liens), without waiving or releasing
any of the Obligations or any liability or duty of Obligor under any other
documents, or any Event of Default, pay, acquire and/or accept an assignment of
any such security interest, lien, claim or encumbrance asserted by any such
Person. All sums paid by GE in respect thereof and all costs, fees and expenses,
including, without limitation, reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, which are incurred by GE on account thereof,
shall be payable, upon demand, by Obligor to GE and shall be additional
Obligations hereunder secured by the Collateral.
4. Representations and Warranties. Obligor, with respect to itself and
the Collateral, hereby represents and warrants to GE that:
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(a) This Security Agreement constitutes a valid obligation of
Obligor, legally binding upon Obligor and enforceable in accordance with its
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability. No consent or notification of any other party and no
consent, license, approval or authorization, or registration or declaration
with, any governmental authority, bureau or agency is required in connection
with either the grant by Obligor of the liens and security interests granted
hereby or the execution, delivery, performance, validity or enforceability of
this Security Agreement.
(b) Obligor is the sole legal and beneficial owner of the
Collateral free and clear of any and all mortgages, liens, security interests,
encumbrances, claims or rights of others except for the security interest
granted to GE herein and the Permitted Liens.
(c) No security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such
agreements, financing statements, security or lien instruments or continuation
statements as relate exclusively to Permitted Liens or as may have been filed by
Obligor in favor of GE prior to the date hereof or pursuant to this Security
Agreement.
(d) Upon GE taking all actions required under each applicable
Code to perfect the security interest granted hereunder, this Security Agreement
creates a valid and perfected first priority security interest in and Lien on
all right, title and interest of Obligor in the Collateral, securing payment of
the Obligations prior to all other liens, encumbrances, security interests and
rights of others created under the UCC in the Collateral and is or will be, as
applicable, enforceable as such as against creditors of and purchasers from
Obligor to the extent provided in the Code. Obligor hereby warrants that, except
for such actions required under the applicable Code to be taken by GE in order
to perfect its security interest granted pursuant to this Security Agreement,
all filings and other actions necessary or desirable to protect and perfect such
lien and security interest in the Collateral have been duly made or taken.
5. Covenants. Unless GE otherwise consents in writing, Obligor, with
respect to itself and the Collateral, hereby covenants and agrees with GE,
subject to the rights of the holders of the Permitted Liens, that from and after
the date of this Security Agreement and until the Obligations are fully
satisfied:
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(a) At any time and from time to time, upon the written request
of GE, and at the sole expense of Obligor, Obligor will promptly and duly
execute and deliver any and all such further instruments and documents and take
such further action that may be necessary or desirable or that GE may reasonably
request in order to perfect and protect the security interest granted or
purported to be granted hereby or to enable GE to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Upon the written
request of GE, Obligor will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as GE may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby.
(b) Obligor hereby authorizes GE to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of Obligor where permitted by law.
(c) Obligor will perform and comply in all material respects
with all obligations under contracts and all other agreements to which it is a
party or by which it is bound relating to the Collateral, the nonperformance of
which would have a Material Adverse Effect on Obligor.
(d) Other than Permitted Liens, Obligor will not create, permit
or suffer to exist, and Obligor will defend the Collateral against and take such
other action as is necessary to remove, any lien, security interest,
encumbrance, claim or right, in or to the Collateral; and Obligor will defend
the right, title and interest of GE in and to any of Obligor's rights to the
Collateral, including, without limitation, in and to the Proceeds and products
thereof against the claims and demands of all Persons whomsoever.
(e) Obligor shall not sell, transfer, assign (by operation of
law or otherwise), lease or otherwise dispose of or transfer any Collateral or
any interest therein, or attempt, offer or contract to do so.
(f) Obligor shall not enter into any transaction that is
reasonably likely to have a Material Adverse Effect on the Collateral.
(g) Obligor will advise GE promptly, in reasonable detail, of
(i) any lien, security interest, encumbrance or claim made or asserted against
any of the Collateral, other than the Permitted Liens, (ii) any material change
in the Collateral, and (iii) the occurrence of any other event which would be
reasonably likely to have a Material Adverse Effect on the aggregate value of
the Collateral or on the security interest created hereunder.
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(h) GE shall at all times have full and free access during
normal business hours to all the books, correspondence and records of Obligor,
and GE or its representatives may examine the same, take extracts therefrom and
make photocopies thereof, and Obligor agrees to render to GE, at Obligor's sole
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. GE and its representatives shall at all times
also have the right to enter into and upon any premises where the Collateral is
located for the purpose of inspecting the same, or protecting its interests
therein.
(i) Obligor shall not change its corporate name without giving
GE at least thirty (30) days prior written notice of its intent to do so.
6. GE's Appointment as Attorney-in-Fact.
(a) Obligor hereby irrevocably constitutes and appoints GE and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Obligor and in the name of Obligor or in GE's own name, from time
to time in GE's discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, Obligor hereby gives GE the power and right, on
behalf of Obligor, without prior notice to or the consent of Obligor, to do the
following after the occurrence and during the continuance of an Event of
Default, subject, however, to the rights of the holders of the Permitted Liens:
(i) in the name of Obligor or in GE's own name or
otherwise, to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of monies due with
respect to the Collateral;
(ii) to enforce the rights of GE with respect to the
Collateral;
(iii) to defend any suit, action or proceeding brought
with respect to the Collateral;
(iv) to settle, compromise or adjust any suit, action
or proceedings described above and, in connection therewith, to give such
discharges or releases as GE may deem appropriate;
(v) in connection with the dispositions provided in
Section 8 below, to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with the Collateral as fully and completely as though GE were
the absolute owner thereof for all purposes; and
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(vi) to do, at GE's option and Obligor's sole expense,
at any time, or from time to time, all acts and things which XX xxxxx necessary
to protect, preserve or realize upon the Collateral and GE's security interest
therein, in order to effect the intent of this Security Agreement, all as fully
and effectively as Obligor might do.
Obligor hereby ratifies all that said attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) If Obligor fails to perform any agreement contained herein,
GE may itself perform, or cause performance of, such agreement.
(c) The powers conferred on GE hereunder are solely to protect
its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. GE shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Obligor for any act or failure to act, except for its own gross negligence or
willful misconduct.
7. Term; Performance by GE of Obligor's Obligations.
(a) This Security Agreement shall remain in full force and
effect until the payment and satisfaction in full of the Obligations.
(b) If Obligor fails to perform or comply with any of its
agreements contained herein and GE, as provided by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of GE incurred in connection with
such performance or compliance, together with interest thereon at four percent
(4%) per annum shall be payable by Obligor to GE on demand and shall constitute
additional Obligations secured hereby.
8. Remedies, Rights Upon Default. Upon and after an Event of
Default:
(a) GE may, subject to the rights of the holders of the
Permitted Liens, exercise, in addition to all other rights and remedies granted
to it in this Security Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party or lien creditor under the Code (whether or not the Code applies
to the affected Collateral) or under any other applicable law of any
jurisdiction. Without limiting the generality of the foregoing, Obligor
expressly agrees that in any such event GE shall have the right, subject,
however, to the rights of the holders of the Permitted Liens to (i) enter upon
the premises of Obligor, or any
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other place where the Collateral is located and kept, through self-help and
without judicial process, without first obtaining a final judgment or giving
Obligor notice and opportunity for a hearing on the validity of GE's claim and
without any obligation to pay rent to Obligor, and to remove the Collateral
and/or (ii) to require Obligor to assemble, and Obligor hereby agrees to
assemble, the Collateral and make it available to GE at a place to be designated
by GE, in its sole discretion. GE, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of the time and place of public or private sale) to or upon Obligor or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, subject to the rights of the holders of the Permitted
Liens, forthwith receive, appropriate and realize upon the Collateral, or any
part thereof and/or may forthwith sell, assign, give an option or options to
purchase, or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, at public or private sale or sales board or at any of
GE's offices or elsewhere at such prices as it may deem best, for cash or on
credit without assumption of any credit risk. Any such sales may be adjourned
from time to time with or without notice. GE shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. GE shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
said Collateral so sold, free of any right or equity of redemption of Obligor
released and, in lieu of actual payment of the purchase price therefor, to set
off the amount of such purchase price against the Obligations. The net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care, safekeeping or otherwise of any or all of the
Collateral or in any way relating to the rights of GE hereunder, including
reasonable attorneys' fees and legal expenses, shall be applied by GE to the
payment in whole or in part of the Obligations, in such order as GE may elect.
Obligor shall remain liable for any deficiency remaining unpaid after such
application, and only after (i) so paying over such net proceeds and after the
payment by GE of any other amount required by any provision of law, including
the Code, and (ii) paying to DVI any surplus amounts held by GE which DVI has
advised GE are payable to DVI, need GE account for the surplus, if any, to
Obligor. To the extent permitted by applicable law, Obligor waives all claims,
damages and demands against GE arising out of the repossession, retention or
sale of the Collateral. Obligor agrees that GE need not give more than ten (10)
days' notice of the time and place of any public sale or of the time after which
a private sale may take place and that such notice is reasonable notification of
such matters. Obligor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which GE is entitled, Obligor also being liable for the
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reasonable fees and expenses of any attorneys employed by GE to collect such
deficiency.
(b) Except as otherwise provided in the Agreement and this
Security Agreement, Obligor hereby waives presentment, demand, protest or any
notice (to the extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
9. Limitation on GE's Duty in Respect of Collateral. Beyond the safe
custody thereof, GE shall not have any duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
it or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.
10. Attorneys' Fees and Expenses. If, during the existence and
continuance of an Event of Default, GE employs legal counsel or any other third
person for advice, consultation or other representation or incurs legal and/or
other costs and expenses in connection with: (a) the administration of this
Security Agreement or the Note and the transactions contemplated hereby and
thereby; (b) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (c) the
exercise or enforcement of any of the rights of GE hereunder, (d) the failure by
Obligor to perform or observe any of the provisions hereof, or (e) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
GE, Obligor or any other Person) in any way relating to the Collateral, this
Security Agreement or the Note or Obligor's affairs; (f) any attempt to collect
any of the amounts under the Note or to enforce any rights of GE against Obligor
or any other Person which may be obligated to GE by virtue of this Security
Agreement or the Note; and/or (g) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of the Collateral; then, in any
such event, the reasonable attorneys' fees arising from such services and all
reasonably incurred expenses, costs, charges and other fees of such counsel or
third party or of GE or relating to any of the events or actions described in
this Section 10 shall be payable, on demand, by Obligor to GE and shall be
additional Obligations secured by the Collateral.
11. Waivers by Obligor. Except as otherwise provided for in the
Agreement and in this Security Agreement, Obligor hereby waives to the extent
allowed by law (a) presentment, demand and protest and notice of presentment,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, documents, instruments and
guaranties at any time held by GE on which Obligor may in any way be liable and
hereby ratifies and confirms whatever GE may do in this regard; (b) notice prior
to taking possession or control of the Collateral or any bond or security which
might be required by any court prior to allowing GE to exercise any of GE's
remedies;
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and (c) the benefit of all valuation, appraisement and exemption laws.
12. Indemnity.
(a) Obligor shall indemnify GE and its affiliates from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against GE in any litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Security Agreement or the Note, except to the extent that any of the foregoing
arises out of the gross negligence or wilful misconduct of GE.
(b) Obligor shall upon demand pay to GE the amount of any and all
reasonable expenses which GE may incur in connection with (i) the administration
of this Security Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of GE
hereunder, or (iv) the failure by Obligor to perform or observe any of the
provisions hereof.
13. Termination Statements. Obligor acknowledges and agrees that it is
Obligor's intent that all financing statements filed hereunder shall remain in
full force and effect until this Security Agreement and the Note shall have been
terminated in accordance with the provisions hereunder and thereunder.
Accordingly, Obligor waives any rights which it may have under the Code to
demand the filing of termination statements with respect to the Collateral, and
agrees that GE shall not be required to send such termination statements to
Obligor, or to file them with any filing office, unless and until this Security
Agreement and the Note shall have been terminated in accordance with their
respective terms as a result of the performance of all covenants of Obligor,
including the payment in full of all Obligations in immediately available funds.
14. Notices. All notices and other communications under this Security
Agreement shall be given to GE and Obligor in accordance with Section 8.11 of
the Agreement.
15. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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16. No Waiver; Cumulative Remedies. GE shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by GE, and
then only to the extent therein set forth. A waiver by GE of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which GE would otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of GE, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by GE.
17. Successors and Assigns; Governing Law. This Security Agreement and
all obligations of Obligor hereunder shall be binding upon the successors and
assigns of Obligor, and shall, together with the rights and remedies of GE
hereunder, inure to the benefit of GE and its successors and assigns. This
Security Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of California, without giving effect to
any choice of law or conflict of law provision or rule (whether the State of
California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
18. No Third-Party Beneficiary. None of the provisions herein contained
are intended by the parties, nor shall they be deemed, to confer any benefit on
any person not a party to this Security Agreement.
IN WITNESS WHEREOF, the parties have caused this Security Agreement to
the executed by their duly authorized officers on the date first specified
above.
OBLIGOR: GE:
AMERICAN SHARED HOSPITAL GENERAL ELECTRIC COMPANY,
SERVICES, a California a New York corporation acting
corporation through GE MEDICAL SYSTEMS
By:_________________________ By:__________________________
Xxxxxx X. Xxxxx, M.D. Xxxxxxx X. Xxxxxx
President Manager, Financial Services
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