SECURITY AGREEMENT
Exhibit 99.2
SECURITY
AGREEMENT, dated as of May __, 2008, by and between Healthcare Providers Direct,
Inc. a Nevada corporation (the “Company”) and the
holders of the Company’s 12% Subordinated Secured Convertible Debentures due 12
months following their issuance, in the original aggregate principal amount of
up to $750,000 (collectively, the “Debentures”) signatory hereto,
their endorsees, transferees and assigns (collectively, the “Secured
Parties”).
W I T N E S S E T
H
WHEREAS,
the Secured Parties have agreed to purchase the Debentures from the Company
pursuant to subscription agreements executed by each Secured Party and the
Company for the Debentures (the “Subscription
Agreements”);
WHEREAS,
to induce the Secured Parties to purchase the Debentures, the Company has agreed
to secure the Obligations (defined below) by granting to the Secured Parties a
security interest in the Collateral (defined below); and
WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the
Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties, pari passu with each other
Secured Party, a security interest in certain property of such Debtor to secure
the prompt payment, performance and discharge in full of all of the Company’s
obligations under the Debentures and the Guarantors’ obligations under the
Guarantee.
NOW
THEREFORE, in consideration of the mutual conditions and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
1.1 Defined
Terms. In addition to the other terms defined in this
Agreement, whenever the following capitalized terms are used they shall be
defined as follows:
“Collateral”
shall have the meaning ascribed to such term in Section 2.1 and described in
Section 2.2.
“Event of
Default” shall have the meaning ascribed to such term under the
Notes.
“Financing
Agreements” shall mean, collectively, this Agreement, the Subscription
Agreements, the Debentures and all other agreements, documents and instruments
now or at any time hereafter executed and/or delivered by the Company in
connection with any or all of the foregoing.
“Liens”
shall mean mortgages, liens, pledges, charges, security interests, encumbrances
or other third party interests of any nature whatsoever.
“NVUCC” shall mean the Uniform
Commercial Code as in effect in the State of Nevada from time to
time.
“Obligations”
shall mean any and all obligations of every kind, nature and description of the
Company arising under the Financing Agreements, or any of them, including, but
not limited to, principal, interest, costs and expenses, however
evidenced.
“Person”
shall mean an individual, a partnership, a corporation, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or department, agency or
political subdivision thereof).
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“Requisite
Holders” shall mean the Holders holding a majority of the aggregate
principal amount then outstanding under the Debentures.
1.2 Other Definitional
Provisions, Construction. All capitalized terms used herein
and defined in the NVUCC shall have the respective meanings provided
therein. Unless otherwise specified, “hereunder,” “herein,” hereto,”
“this Agreement” words of similar import refer to this entire document;
“including” is used by way of illustration and not by way of limitation, unless
the context clearly indicates the contrary; the singular includes the plural,
and conversely.
2. GRANT OF SECURITY
INTEREST
2.1 Grant. Subject
to the terms and conditions of this Agreement, as collateral security for the
punctual payment and performance of the Obligations by the Company, the Company
hereby grants to the Secured Parties a continuing second priority security
interest in, and hereby assigns to the Secured Parties as security for the
payment and performance of the Obligations, all of the personal property and
assets of the Company, tangible or intangible, wherever located, whether
presently owned or hereafter acquired or existing, and wherever located (the
“Collateral”),
including, but not limited to, the assets and properties described in Section
2.2”). The Secured
Parties acknowledge that the security interest granted by this
Agreement is subordinated to security interest granted to the holders of
Company’s 9% Senior Secured Convertible Debentures in the aggregate principal
amount of $2,150,000.
2.2 Specific Itemization of
Collateral. For purposes of this Agreement, the Collateral
shall include, but not be limited to, the following assets, to the extent the
Company has an interest therein:
(a) Accounts and
Health-Care-Insurance Receivables. All Accounts, including,
but not limited to, all rights outstanding as of the date hereof and future
rights to payment for goods sold or leased or for services rendered, which are
not evidenced by instruments or chattel paper, and whether or not earned by
performance; and all Health-Care-Insurance Receivables.
(b) General
Intangibles. All General Intangibles, including, but not
limited to, all contract rights, tax and duty refunds).
(c) Instruments, Chattel Paper,
Etc. All Instruments, Chattel Paper, Documents, Investment
Property, Letter-of-Credit Rights, Supporting Obligations, and Payment
Intangibles.
(d) Inventory and
Goods. All Inventory, Goods, and all raw materials, work in
process, and finished goods of whatsoever kind or nature, wherever
located.
(e) Equipment and
Fixtures. All Equipment, Fixtures, machinery, computers and
computer hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located, except any leased property.
(f) Intellectual
Property. All patents, trademarks, and copyrights, all
applications therefor, all trade names, trader secrets, and all goodwill
associated therewith, all license and other rights in any third party products,
and all other tangible or intangible proprietary information and materials that
are currently used or being developed for use in the business of the
Company.
(g) Records. All
of the Company’s books as of the date hereof and future books of account of
every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored.
(h) Cash, Deposit Accounts,
Etc. All of the Company’s cash, including drafts, acceptances,
and all bank deposits, Deposit Accounts, and checking accounts
(i) Commercial Tort
Claims. All Commercial Tort Claims.
(j) Products and
Proceeds. All Products and Proceeds of the foregoing, in any
form, including, without limitation, insurance proceeds and any claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
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3. PERFECTION
The
Company hereby authorizes the Secured Parties to file all financing statements,
continuation statements and amendments contemplated under this Agreement, and
appoints and designates Secured Parties as the Company’s attorney-in-fact,
coupled with an interest, to execute and deliver all deposit account control
agreements, control agreements, stock powers, and other documents and
instruments in the Company’s name and on the Company’s behalf as contemplated by
the foregoing sentence.
4. ADDITIONAL PLEDGE OF
COLLATERAL PROHIBITED. Except
pursuant to transactions in the ordinary course of the Company’s business
(including licensing arrangements but not limited to and the sale of inventory
in the ordinary course), the Company shall not sell, lease, encumber, pledge,
mortgage, assign, grant a security interest or Lien in, or otherwise transfer
the Collateral or any portion thereof without the written consent of 51% of the
Secured Parties, which consent may be withheld for any reason
whatsoever. After the occurrence and during the continuation of an
Event of Default, the Company shall not be entitled to exercise any rights with
respect to the Collateral, and the Secured Parties shall be entitled to exercise
any such rights. If any distributions, payments or proceeds shall be
received by the Company after the occurrence of an Event of Default which has
not been otherwise waived in writing, the Company shall immediately deliver the
same to the Secured Parties, accompanied, if appropriate, by proper instruments
of assignment and/or powers executed by the Company in accordance with the
Secured Parties’s instructions, to be held subject to the terms of this
Agreement.
5. REPRESENTATIONS AND
WARRANTIES. To induce the Secured to enter into this Agreement
and the Debentures, the Company makes the following representations and
warranties to the Secured Parties:
5.1 Authority. The
Company has the authority to enter into this Agreement and to grant the security
interests provided herein, and has obtained all necessary corporate approvals to
execute, deliver and perform its obligations under this Agreement.
5.2 Ownership. Except
for the interest granted to the Holders pursuant to this Agreement and the
security interest granted to the holders of Company’s 9% Senior Secured
Convertible Debentures in the aggregate principal amount of $2,150,000, the
Company owns the Collateral free and clear of any Lien, and no adverse claims
have been filed with respect to any of the Collateral. The Company
shall defend the Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein adverse to the Secured
Parties.
5.3 Priority. To
the extent a security interest in the Collateral can be perfected by the filing
of a financing statement, the filing of financing statements with respect to the
Collateral shall create a valid and perfected second priority security interest
in the Collateral securing the payment of the Obligations. The Secured Parties acknowledge that
the security interest granted by this Agreement is subordinated to security
interest granted to the holders of Company’s 9% Senior Secured Convertible
Debentures in the aggregate principal amount of $2,150,000.
5.4 Maintenance of
Collateral. Company shall at all times and at its own expense
maintain and keep, or cause to be maintained and kept, the
Collateral. Company shall perform all acts and execute all documents
reasonably requested by the Secured Parties at any time to evidence, perfect,
maintain, record and enforce the Secured Parties’ interest in the Collateral or
otherwise in furtherance of the provisions of this Agreement, and Company hereby
authorizes the Secured Parties to execute and file one or more financing
statements (and similar documents) or copies thereof or of this Agreement with
respect to the Collateral signed only by the Secured Parties.
5.5 Third
Party. No authorization, approval or other action by, and no
notice to or filing with any governmental authority is required either for the
delivery by the Company of the Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Company except for
(i) filings of Forms UCC with the State of Nevada, or (ii) the remedies in
respect of the Collateral pursuant to this Agreement.
5.6 No
Violation. The execution, delivery and performance of this
Agreement will not violate any provision of any applicable law or regulation or
of any writ or decree of any court or governmental instrumentality or of any
indenture, contract, agreement or other undertaking to which the Company is a
party or which purports to be binding upon the Company or upon any of its assets
and will not result in the creation or imposition of any Lien in any of the
assets of the Company except as contemplated by this Agreement.
5.7 Binding
Obligation. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against it in accordance with its terms, subject,
however, to bankruptcy, and other law, decisional or statutory, of general
application affecting the enforcement of creditors’ rights and to the general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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5.8 Representations and
Warranties Accurate. All representations and warranties
contained in the Credit Documents, or any of them, are true, complete and
correct in all material respects.
6. AFFIRMATIVE AND NEGATIVE
COVENANTS
6.1 Verification. The
Secured Parties, upon reasonable prior notice to the Company and that the
Company’s cost and expense, shall have the right at any time or times to verify
the validity, amount or any other matter relating to any of the
Collateral.
6.2 Power of
Attorney. If at any time an Event of Default exists or has
occurred and is then continuing, at the request of the Secured Parties, the
Company hereby irrevocably designates and appoints the Secured Parties as the
Company’s true and lawful attorney-in-fact, and authorizes the Secured Parties,
in the Company’s name, to do all acts and things which are necessary, in the
Secured Parties’ determination, to fulfill the Company’s Obligations under this
Agreement and the Debentures. The Company hereby releases the Secured
Parties from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of the Secured Parties own willful misconduct as determined pursuant
to a final non-appealable order of a court of competent
jurisdiction.
6.3 Further
Assurances. The Company shall, at its expense and from time to
time, promptly execute and deliver all further instruments, documents and
agreements, and take all further action that may be necessary or desirable, or
that the Secured Parties may request, in order to (i) continue, perfect and
protect the security interest, pledge and Lien granted or purported to be
granted hereby or (ii) enable the Secured Parties to exercise and enforce their
respective rights and remedies hereunder with respect to the
Collateral. Without prejudice to the generality of the foregoing,
each such instrument or document shall be in such form as the Secured Parties
shall stipulate and may contain provisions such as are herein contained or
provisions to the like effect or such other provisions of whatsoever kind as the
Secured Parties shall reasonably consider requisite for the improvement (on and
subject to the terms herein), perfection or enforcement of the security
constituted by, or pursuant to, this Agreement.
7. REMEDIES UPON AN EVENT OF
DEFAULT
7.1 Process following Event of
Default. At any time an Event of Default exists or has
occurred and is continuing, the Secured Parties, shall have all rights and
remedies provided in this Agreement and the Debentures, the NVUCC and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by the Company, except as such notice or consent is expressly
provided for hereunder or required by applicable law. All rights,
remedies and powers granted to the Secured Parties hereunder, under any of the
other Financing Agreements, the NVUCC or other applicable law are cumulative,
not exclusive and enforceable, in the Secured Parties’ discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by the Company of this
Agreement or any of the other Financing Agreements to which it is a
party.
7.2 Actions. Without
limiting the foregoing, at any time an Event of Default exists or has occurred
and is continuing, the Secured Parties may, in its discretion and
without limitation, (i) require the Company, at its own expense, to make
available to the Secured Parties any part or all of the Collateral, (ii)
collect, foreclose, receive, appropriate, setoff and realize upon any and all of
the Collateral, or (iii) sell, transfer, assign, deliver or otherwise dispose of
any and all of the Collateral (including, without limitation, entering into
contracts with respect thereto).
7.3 Application of
Proceeds. The Secured Parties may apply the cash proceeds of
Collateral actually received by the Secured Parties from any collection, sale,
foreclosure or other disposition of the Collateral to the payment of the
Obligations, in whole or in part and in such order as the Secured Parties may
elect.
8. CONTINUING
OBLIGATIONS This Agreement shall remain in full force and
effect and continue to be effect should any petition be filed by or against the
Company for liquidation or reorganization, should the Company 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 the Company’s assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Secured Parties, 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 Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
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9. NOTICE Except
as otherwise specifically set forth herein, all notices, instructions, requests,
demands or other communications hereunder shall be deemed to have been duly and
effectively given only if delivered in writing by hand, three (3) business days
after sent by certified mail, return receipt requested, or one (1) business day
after sent by recognized overnight courier, addressed as follows:
If to the Secured
Parties:
If to the
Company:
Healthcare
Providers Direct, Inc.
0000
Xxxxx Xxx, Xxxxx 000
Xxxxxxxxxxxxx,
Xxx Xxxxxx 00000
Attn: Xxxxxx
Xxxxxx, CEO
With a
copy to (which shall not constitute notice):
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attn: Xxxxxxx
X. Xxxxxxxx, Esq.
Any party
may, by written notice to the other parties, substitute such other address as it
deems advisable. No notice, instruction, request, demand or other
communication hereunder shall be deemed to have been received before actual
receipt by recipient.
10. GENERAL
10.1 Effectiveness and
Termination. This Agreement creates a continuing security
interest and Lien on the Collateral and will remain in full force and effect
until the full final payment by the Company in satisfaction of all the
Obligations. Upon termination, the Secured Parties’ rights, title and
interest in and to the Collateral shall be automatically terminated and released
to the Company, this Agreement shall terminate except as to the Secured Parties’
rights in Section 9, and the Company shall be permitted to file UCC termination
statements as to the balance of the Collateral.
10.2 Entire Agreement;
Amendments; Counterparts. This Agreement, the Debentures and
all other Financing Agreements set forth the entire agreement of the parties
with respect to subject matter of this Agreement and supersede all previous
understandings, written or oral, in respect thereof. In the event of
a conflict between the terms of this Agreement and those of any other agreement
(other than the Debentures), the terms herein shall govern. The terms
of this Agreement may be amended, waived or modified only by an instrument in
writing duly executed by all the parties hereto. This Agreement may
be executed in counterparts, each of which shall be deemed an original
agreement, but all of which together shall constitute one and the same
instrument. Execution and delivery of this Agreement by facsimile
transmission (including the delivery of documents in Adobe PDF format) shall
constitute execution and delivery of this Agreement for all purposes, with the
same force and effect as execution and delivery of an original manually signed
copy hereof.
10.3 Assignment. The
Company may not assign, transfer or otherwise dispose of any of its rights or
obligations hereunder, by operation of law or otherwise, without the written
consent of a 51% of the Secured Parties, which shall not be unreasonably
withheld.
10.4 Binding. This
Agreement is binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, assigns, administrators and
successors. No Persons other than the Company and the Secured Parties
are intended to be benefited in this Agreement or to have rights hereunder as
third-party beneficiaries or otherwise.
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10.5 Headings. Section
headings in this Agreement are included for convenience of reference only and
shall not relate to the interpretation or construction of this
Agreement.
10.6 Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding in either of such
courts may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of either such court in any such suit, action or proceeding and to
the laying of venue in either such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in either such court and irrevocably waives any claim that
any such suit, action or proceeding brought in either such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
10.7 Validity. If
any provision of this Agreement is held to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did not
contain the particular provision held to be invalid, illegal or unenforceable
and the rights and obligations of the parties hereto shall be construed and
enforced only to such extent as may be permitted by applicable law.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
day and year first above written.
| HEALTHCARE PROVIDERS DIRECT, INC. | |||
|
Date
|
By:
|
/s/ | |
| Name: Xxxxxx Xxxxxx | |||
| Title: Chief Executive Officer | |||
AGREED
TO:
By:
Name:
Title:
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