Exhibit 4.06
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of June 15, 1999 ("Security
Agreement"), is made by REALMED CORPORATION, an Indiana corporation ("Grantor"),
in favor of GEMPLUS CORP., a Delaware corporation ("Secured Party"').
RECITALS
A. Grantor is indebted to Secured Party pursuant to that certain
Subordinated Secured Promissory Note of even date herewith in the original
principal amount of $4,285,797.87 (the "Note").
B. Secured Party is willing to advance the amounts evidenced by the
Note (the "Loans") to Grantor, but only upon the condition, among others, that
Grantor shall have executed and delivered to Secured Party this Security
Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Secured Party to make the Loans and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Grantor hereby
represents, warrants, covenants and agrees as follows:
1. DEFINED TERMS. When used in this Security Agreement the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and plural forms of the terms defined):
"Collateral" shall have the meaning assigned to such term in Section 2
of this Security Agreement.
"Contracts" means with respect to the sale, lease, transfer or other
disposition of the Readers and the Proceeds therefrom, all contracts,
undertakings, franchise agreements or other agreements in or under which Grantor
now holds or hereafter acquires any right, title or interest, including, without
limitation, with respect to an Account, any agreement relating to the terms of
payment or the terms of performance thereof, excepting all transactions for
which Secured Party has been tendered payment for the applicable reader(s) in
the normal course of business.
"Event of Default" means (i) any failure by Grantor forthwith to pay or
perform any of the Secured Obligations (ii) any failure by Grantor to comply
with terms, conditions, covenants or agreements set forth in this Security
Agreement and (iii) any "Event of Default" as defined in the Note not cured
within five (5) business days after notice thereof is tendered in the manner
provided for herein.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Payment" has the meaning set forth in Section 2(b).
"Permitted Lien" means any Liens constituting "Senior Indebtedness" as
that term is defined in the Note.
"Readers" means all Smart Card Readers, Part Number #GCR500 US-HC, in
which Grantor now holds any interest, excepting all readers for which Grantor
has tendered the Payment to Secured Party.
"Secured Obligations" means (a) the obligation of Grantor to repay
Secured Party all of the unpaid principal amount of, and accrued interest on
(including any interest that accrues after the commencement of bankruptcy), the
Note, (b) and any obligation of Grantor to pay any fees, costs and expenses of
the Secured Party under Section 6(b) hereof.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Secured Party's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection of priority and for purposes of
definitions related to such provisions.
In addition, the following terms shall be defined terms having the
meaning set forth for such terms in the UCC (definition sections of the UCC are
noted parenthetically): "Account Debtor" (9105(l)(a)); "Accounts" (9106);
"Chattel Paper" (9105(l)(b)); "Documents" (9105(l)(f); "Instruments"
(9105(l)(i); "Proceeds" (9306(l)). Each of the foregoing defined terms shall
include all of such items now owned, or hereafter acquired, by Grantor, as such
relate only to the Readers or the sale, lease, transfer or other disposition
thereof, or the Proceeds therefrom, excepting all transactions for which Secured
Party has tendered payment for the applicable reader(s) in the normal course of
business.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations and in order to induce
Secured Party to cause the Loans to be made, Grantor hereby assigns, conveys,
mortgages, pledges, hypothecates and transfers to Secured Party, and hereby
grants to Secured Party, a security interest in all of Grantor's right, title
and interest in, to and under the following (all of which being collectively
referred to herein as the "Collateral"):
2
(a) Each Reader for which payment of $135.00 (the "Payment")
to Secured Party has not been tendered; and
(b) To the extent not otherwise included, all proceeds from
the sale or other disposition of each Reader, not to exceed $135.00 per Reader,
to the extent such proceeds have not been tendered to Secured Party.
3. RIGHTS OF SECURED PARTY; COLLECTION OF ACCOUNTS.
(a) Notwithstanding anything contained in this Security
Agreement to the contrary, Grantor expressly agrees that it shall remain liable
under each of its Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder and that it shall
perform all of its duties and obligations thereunder, all in accordance with and
pursuant to the terms and provisions of each such Contract. Secured Party shall
not have any obligation or liability under any Contract by reason of or arising
out of this Security Agreement or the granting to Secured Party of a lien
therein or the receipt by Secured Party of any payment relating to any Contract
pursuant hereto, nor shall Secured Party be required or obligated in any manner
to perform or fulfill any of the obligations of Grantor under or pursuant to any
Contract, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) Secured Party authorizes Grantor to collect its Accounts,
provided that such collection is performed in a prudent and businesslike manner.
Secured Party may, upon the occurrence and during the continuation of
any Event of Default and upon five days written notice to Grantor, limit or
terminate said authority at any time. Upon the occurrence and during the
continuance of any Event of Default, at the reasonable request of Secured Party,
Grantor shall deliver, with respect to all affected Accounts, all original and
other documents evidencing and relating to the performance of labor or service
which created such Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
(c) Secured Party may at any time, upon the occurrence and
during the continuance of any Event of Default, and upon five days written
notice to Grantor, notify affected Account debtors of Grantor, parties to the
Contracts of Grantor, obligors in respect of Instruments of Grantor and obligors
in respect of Chattel Paper of Grantor that the Accounts and the right, title
and interest of Grantor in and under such Contracts, Instruments and Chattel
Paper have been assigned to Secured Party and that payments shall be made
directly to Secured Party. Upon the reasonable request of Secured Party upon the
occurrence and during the continuance of any event of Default, Grantor shall so
notify such Account debtors, parties to such Contracts, obligors in respect of
such Instruments and obligors in respect of such Chattel Paper. Upon the
occurrence and during the continuance of any Event of Default, Secured Party
3
may, upon five days written notice to Grantor, in its name or in the name of
others, communicate with such Account debtors, parties to such Contracts,
obligors in respect of such Instruments and obligors in respect of such Chattel
Paper to verify with such parties, to Secured Party's reasonable satisfaction,
the existence, amount and terms of any such Accounts, Contracts, Instruments or
Chattel Paper.
(d) Notwithstanding anything in this Agreement, Secured Party's
rights shall be subordinated (i) to the rights of Newcourt Financial USA Inc.
("Newcourt") in any Proceeds (whether constituting Chattel Paper, Instruments or
Accounts) to the extent that such Proceeds were purchased by, or assigned to
Newcourt under that certain Master Vending Program Agreement by and between
Grantor and Newcourt dated of even date herewith, and (ii) to the extent and in
the manner set forth in Section 4 of the Note.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to Secured Party that:
(a) Except for the security interest granted to Secured Party
under this Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner of each item of the Collateral in which it purports to grant a
security interest hereunder, having good and marketable title thereto, free and
clear of any and all Liens except for Permitted Liens.
(b) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the Collateral exists, except such as may have been filed by Grantor
in favor of Secured Party pursuant to this Security Agreement except for
Permitted Liens.
(c) This Security Agreement creates a legal and valid
security interest on and in all of the Collateral in which Grantor now has
rights and all filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken. Accordingly, Secured Party
has a fully perfected subordinated security interest in all of the Collateral to
the extent such security interest may be perfected by filing financing
statements in the State of Indiana.
(d) Grantor's chief executive office, principal place of
business and the place where Grantor maintains its records concerning the
Collateral are presently located at the address set forth on the signature page
hereof. The Collateral is presently located at such address and at such
additional addresses set forth on Schedule A attached hereto.
5. COVENANTS. Grantor covenants and agrees with Secured Party that
from and after the date of this Security Agreement and until the Secured
Obligations have been performed and paid in full:
5.1 Disposition of Collateral. Grantor shall not sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so, other than the sale or lease of Readers in the ordinary course of
Grantor's business.
4
5.2 Relocation of Business or Collateral. Grantor shall not
relocate its chief executive office, principal place of business or its records,
or allow the relocation of any Collateral (except as allowed pursuant to Section
5.1 immediately above) from such address(es) provided to Secured Party pursuant
to Section 4(d) above without twenty (20) days prior written notice to Secured
Party.
5.3 Limitation on Liens on Collateral. Grantor shall not,
directly or indirectly, create, permit or suffer to exist, and shall defend the
Collateral against and take such other action as is necessary to remove, any
Lien on the Collateral, except (a) Permitted Liens and (b) the Lien granted to
Secured Party under this Security Agreement.
5.4 Insurance. Maintain insurance policies insuring the
Collateral against loss or damage from such risks and in such amounts and forms
and with such companies as are customarily maintained by businesses similar to
Grantor.
5.5 Taxes, Assessments, Etc. Grantor shall pay promptly when
due all property and other taxes, assessments and government charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, Grantor's Equipment, Fixtures or Inventory, except to the
extent the validity thereof is being contested in good faith and adequate
reserves are being maintained in connection therewith.
5.6 Maintenance of Records. Grantor shall keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral.
5.7 Further Assurances; Pledge of Instruments. At any time and
from time to time, upon the written request of Secured Party, and at the sole
expense of Grantor, Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further action as
Secured Party may reasonably deem necessary or desirable to obtain the full
benefits of this Security Agreement, including, without limitation, facilitating
the filing of UCC-1 Financing Statements in all applicable jurisdictions.
6. RIGHTS AND REMEDIES UPON DEFAULT.
(a) After any Event of Default shall have occurred and while
such Event of Default is continuing, Secured Party may exercise in addition to
all other rights and remedies granted to it under this Security Agreement, all
rights and remedies of a Secured Party under the UCC.
(b) Grantor also agrees to all fees, costs and expenses of
Secured Party, including, without limitation, reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.
5
(c) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by Secured Party in
the following order of priorities:
FIRST, to Secured Party in an amount sufficient to pay in full the
reasonable costs of Secured Party in connection with the sale, disposition or
other realization of the collateral, including all reasonable fees, costs,
expenses, liabilities and advances incurred or made by Secured Party in
connection therewith, including, without limitation, reasonable attorneys' fees;
SECOND, to Secured Party in an amount equal to the then unpaid Secured
Obligations; and
FINALLY, upon payment in full of the Secured Obligations, to Grantor or
its representatives, in accordance with the UCC or as a court of competent
jurisdiction may direct.
7. LIMITATION ON SECURED PARTY'S DUTY IN RESPECT OF COLLATERAL. Secured
Party shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it takes such action as Grantor requests
in writing, but failure of Secured Party to comply with any such request shall
not in itself be deemed a failure to act reasonably.
8. REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Grantor's
property and assets and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance" or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
9. MISCELLANEOUS.
9.1 No Waiver; Cumulative Remedies.
(a) Except as provided in Subsection (e) of this
Section 9.1, Secured Party shall not by any act, delay, omission or otherwise be
deemed to have waived any of its respective rights or remedies hereunder, nor
shall any single or partial exercise of any right or remedy hereunder on any one
occasion preclude the further exercise thereof or the exercise of any other
right or remedy.
(b) 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.
6
(c) 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 Grantor and Secured Party.
9.2 Termination of this Security Agreement. Subject to Section
8 hereof, this Security Agreement shall terminate upon the payment and
performance in full of the Secured Obligations.
9.3 Successor and Assigns. This Security Agreement and all
obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, and shall, together with the rights and remedies of Secured
Party hereunder, inure to the benefit of Secured Party, any future holder of any
of the indebtedness and their respective successors and assigns. No sales of
participation, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner affect the Lien granted
to Secured Party hereunder.
9.4 Governing Law. In all respects, including all matters of
construction, validity and performance, this Security Agreement and the Secured
Obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of California applicable to contracts
made and performed in such State, excluding conflict of laws principles that
would cause the application of laws of any other jurisdiction.
9.5 Notice. All notices under this Security Agreement shall be
in writing and sent by United States mail, postage prepaid, by hand delivery, by
a nationally recognized overnight courier, or by facsimile as follows:
To Grantor: RealMed Corporation
00000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, CEO
Facsimile No.: 317/580-0027
With a copy to: Xxxxxx & Xxxxxxx, PC
4000 Bank One Tower
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: 317/236-9802
To Secured Party: Gemplus Corp.
Xxxxx 000
0 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn:Legal Dept.
Facsimile Number: (000) 000-0000
Either party may change its address and/or facsimile number by giving notices as
provided above. Notice shall be considered given and received on the actual
delivery date or, if sent by mail and delivery cannot be made by the postal
service, the last attempted delivery date, as indicated on the postage
receipt(s).
9.6 Counterparts. This Security Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same Security Agreement. Any
facsimile transmission of a signed counterpart of this Agreement shall be deemed
to be an original counterpart and all signatures appearing thereon shall be
deemed to be originals.
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.
ADDRESS OF GRANTOR REALMED CORPORATION
00000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000 By:
Telephone: (000) 000-0000 Printed Name: Xxxxxx X. Xxxxx
FAX: (000) 000-0000 Title: Chief Executive Officer
ACCEPTED AND ACKNOWLEDGED BY:
GEMPLUS CORP.
By:
Printed Name:
Title:
Address of Secured Party:
Gemplus Corp.
Xxxx:Xxxxx Xxxx.
Xxxxx 000
0 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Schedule A
Location of Collateral
Inventory Warehouse Location:
Xxxxxxx Logistics
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Exhibit A
to Financing Statement
Between Gemplus Corp. as Secured Party
and RealMed Corporation, as Debtor
This Financing Statement covers all right, title and interest of the
Debtor in, to and under all of the following (collectively, the "Collateral"):
- each Reader for which payment of $135.00 (the "Payment") to the Secured
Party has not been tendered; and
- to the extent not otherwise included, all Proceeds from the sale or other
disposition of each Reader, not to exceed $135.00 per Reader, to the extent such
Proceeds have not been tendered to Secured Party; and
"Readers" means all Smart Card Readers, Part Number #GCR500 US-HC, in
which Debtor now holds any interest, excepting all readers for which Debtor has
tendered Payment to Secured Party; and
"Proceeds" shall have the meaning as set forth in Section 9306(l) of
the Uniform Commercial Code ("UCC") as may be in effect from time to time in the
State of California, or the UCC that may apply to this security interest in any
jurisdiction.
