AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED
AND RESTATED SECURITY AGREEMENT
This
Agreement is effective as of November 30, 2010, by and between Oak Tree
Educational Partners, Inc., a Delaware Corporation, (“Parent”),
the parent company of Valley Anesthesia, Inc., a Delaware corporation (“Borrower”);
and their respective subsidiaries, current and future, as debtor (collectively,
jointly and severally “Debtor”),
and Valley Anesthesia Educational Programs, Inc., an Iowa corporation, as the
Secured Party (“Secured
Party”).
Whereas, Borrower and Valley Anesthesia
Educational Programs, Inc., an Iowa corporation, (“Valley
Seller”) are parties to that certain Agreement of Purchase of Assets
dated August 20, 2009 (the “Purchase
Agreement”), pursuant to which, among other things, Borrower purchased
and acquired all of the Purchased Assets (as defined in the Purchase Agreement)
subject to the terms and conditions set forth therein; and
Whereas, Pursuant to the Purchase
Agreement, Valley Seller agreed to finance a portion of the “Purchase Price” (as
defined in the Purchase Agreement), and Borrower executed and delivered that
certain Six Year Term Note dated as of August 20, 2009, made payable to Valley
Seller in the initial principal amount of $2,000,000 (as amended, supplemented,
replaced or restated from time to time, the “Subordinated
Note”); and
Whereas, in connection with the
Subordinated Note, Borrower and Valley Seller entered into that certain Security
Agreement dated as of August 20, 2009 (the “Original Security
Agreement”), pursuant to which Borrower granted a security interest in
the Purchased Assets, and all additions and accessions thereto as such is
renewed and replenished and all proceeds of its sale or other disposition until
the Purchase Price is paid in full, to Subordinated Lender to secure the
Subordinated Note; and
Whereas,
Borrower and Parent are parties to that certain Loan Agreement dated November
30, 2010, by and among Parent, Borrower, and their respective subsidiaries,
current and future, as borrowers, Deerpath Funding, LP, a Delaware limited
partnership, and the other lenders from time to time party thereto, (“Deerpath”)
and Deerpath, as administrative agent and collateral agent for itself and the
other lenders (the “Senior Loan
Agreement”); and
Whereas, as a material inducement to
the Senior Loan Agreement, Deerpath has required that Valley Seller and Borrower
enter into that certain Subordination and Intercreditor Agreement dated November
30, 2010, (the “Subordination
Agreement”) to subordinate the rights and remedies of Valley Seller under
the Subordinated Note, this Amended and Restated Security Agreement, and other
documents constituting the “Subordinated Debt
Documents”, as defined in the Subordination Agreement, to the rights and
remedies of Deerpath under the Senior Loan Agreement and other documents;
and
Whereas,
as a condition precedent to Valley Seller entering into the Subordination
Agreement, Valley Seller has required that the obligations of Borrower under the
Subordinated Debt Documents be secured by a security interest in the assets of
Debtor in accordance with the terms of this Security Agreement.
Now,
therefore, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor agrees as follows:
1. AMENDED AND RESTATED SECURITY
AGREEMENT. This Amended and Restated Security Agreement
amends, restates, and supersedes the Original Security Agreement in its
entirety.
2. GRANT OF SECURITY INTEREST. As
security for the Obligations (as defined below), but subject at all times to the
subordination provisions of Section 4 below, Debtor hereby grants to Secured
Party a security interest in all assets of Debtor, tangible and intangible, real
or personal, including but not limited to all of Debtor’s inventory now owned or
hereafter acquired; all of Debtor’s accounts, Deposit Accounts, Investment
Property, Letter of Credit Rights, Supporting Obligations, now existing or
hereafter arising, together with all interest of Debtor in any goods, the sale
or lease of which give rise to any of Debtor's accounts, and all chattel paper,
documents and instruments relating to accounts; all of Debtor’s general
intangibles, now owned or hereafter acquired; all of Debtor’s equipment now
owned or hereafter acquired; all of Debtor’s farm products now owned or
hereafter acquired; all of Debtor’s fixtures; together with the proceeds,
products, increase, issue, accessions, attachments, accessories, parts,
additions, repairs, replacements and substitutes of, to, and for all of the
foregoing. All such property in which a security interest is granted is herein
called the "Collateral."
3. OBLIGATIONS. The
aforesaid security interests secure payment and performance of all obligations
of Borrower under the Subordinated Debt Documents (the "Obligations").
4. SUBORDINATION. This
Security Agreement and the Secured Party’s security interest in the Collateral
is expressly made subject and subordinate to the rights of:
(a) the
“Senior
Lender” (as defined in the Subordination Agreement) or any other person,
firm or corporation refinancing or otherwise holding the “Senior
Debt” (as defined in the Subordination Agreement), to the extent and as
provided in the Subordination Agreement; and
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(b) the
holders of (i) any debt assumed or refinanced in connection with any
Acquisition, and/or (ii) any notes executed and delivered by a Debtor in
connection with any Acquisition that are payable to the seller(s) and
representing seller financing of part or all of the purchase price of such
Acquisition.
For
purposes of this Security Agreement, “Acquisition”
means the purchase and acquisition by Debtor (including by any newly formed
subsidiary of Debtor) of all or substantially all of the assets or securities
and the ongoing business operations of an active commercial enterprise, but
excluding the “Culinary Group
Acquisition” (as defined in the Senior Loan Agreement) and excluding the
acquisition of assets pursuant to the Purchase Agreement.
5. FURTHER
DOCUMENTS. Debtor shall, at its sole cost and expense
(including reimbursement of Secured Party’s reasonable attorneys’ fees and
costs), execute, deliver, file or record, or shall cause its subsidiaries and
affiliates to execute, deliver, file or record (in such manner and form as
Secured Party may require) any assignment, financing statement or other paper
that may be necessary or desirable, or that Secured Party may request, in order
to create, preserve or perfect any security interest granted hereby or to enable
Secured Party to exercise and enforce its rights hereunder or under any
Collateral, or otherwise in furtherance of this Security Agreement, including,
but not limited to, the execution of this Security Agreement or a counterpart
thereof by all present and future subsidiaries of Debtor which shall include
(but not be limited to) such parties as are necessary such that the assets
acquired in the Culinary Group Acquisition shall be included in the
Collateral. Secured Party shall execute and deliver such
documents as may be reasonably required by Debtor or Debtor’s lenders or other
secured parties, in furtherance of Section 4 of this Security
Agreement.
6. NOTICE OF FUTURE
ACQUISITIONS. Debtor shall provide Secured Party notice of any
pending Acquisition no less than thirty (30) days prior to closing.
7. DEBTORS. Each of the
undersigned Debtors executes this Security Agreement as its joint and several
obligation and it shall be binding upon and fully enforceable against any or all
of them. Unless the context clearly indicates an individual reference
to “each” Debtor, “Debtor” shall refer to Parent, Borrower, and their respective
subsidiaries, current and future, collectively, jointly and severally, or to any
of them.
8. FINANCING
STATEMENT. Secured Party is further granted the power, coupled
with an interest, to sign on behalf of Debtor as attorney-in-fact and to file
one or more financing statements under the Uniform Commercial Code naming Debtor
as debtor and Secured Party as secured party and describing the Collateral
herein specified.
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9. REPRESENTATIONS AND
AGREEMENTS. Debtor represents and warrants to Secured Party,
and agrees:
a. Each
Debtor is authorized to grant a security interest in the Collateral, free and
clear of all liens and encumbrances, except the security interest created hereby
and except the prior liens referenced in Section 4 of this Security
Agreement.
b. Each
Debtor’s principal place of business is the address shown herein, and Debtor
shall promptly give Secured Party written notice of any change
thereof.
c. Each
Debtor is duly organized, existing, and is qualified and in good standing in all
states in which it is doing business, and the execution, delivery and
performance of this Security Agreement by each Debtor are within each such
Debtor's powers, have been duly authorized, and are not in contravention of law
or the terms of each such Debtor's charter, bylaws if any, or any indenture,
agreement or undertaking to which each such Debtor is a party, or by which it is
bound. Each Debtor will not change its name, or identity unless written notice
is given in advance to Secured Party.
d. Debtor
shall maintain insurance upon the Collateral which is tangible property against
all customarily insured risks for the full insurable value thereof, loss to be
payable to Debtor and Secured Party as their respective interests may
appear. Debtor shall bear all risk of loss or destruction of,
or damage to, the Purchased Assets from any cause whatsoever at all times
subsequent to the execution of this Agreement. Copies of all
policies insuring the Purchased Assets will be provided to Secured Party upon
request.
e. Debtor
shall promptly transmit to Secured Party all information that it may have or
receive with respect to Collateral or with respect to any account debtor which
might in any way affect Secured Party's rights or remedies with respect
thereto.
10. EXPENSES. Debtor
upon demand shall pay to Secured Party forthwith the amounts of all expenses,
including reasonable attorneys' fees and legal expenses, incurred by Secured
Party in seeking to collect any sums secured hereunder or to enforce any rights
in the Collateral. Such amounts shall be secured hereby, and if not paid on
demand shall bear interest at the highest rate payable on any of the
Obligations.
11. DEFAULT. Debtor
will be in default upon the occurrence of any of the following
events: (a) the failure of Borrower to make payment, when due and
payable of any of the Obligations, (b) failure of the performance of any
obligation or covenant contained herein, (c) dissolution of, termination of
existence of, insolvency of, business failure of, appointment of a receiver of
any part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding under any bankruptcy or insolvency law by or
against, Debtor.
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12. RIGHTS AND REMEDIES ON
DEFAULT. After the occurrence of any event of default, subject
at all times to the terms of the Subordination Agreement, Secured Party may
exercise at any time and from time to time any rights and remedies available to
it under applicable law. Without limiting the foregoing,
subject at all times to the terms of the Subordination Agreement, Secured Party
shall be entitled to take possession of the Purchased Assets and other
Collateral sufficient to satisfy its security interest as provided hereby, in
accordance with applicable law.
13. GENERAL.
a. Secured
Party may, as its option, pay any tax, assessment, or other Governmental levy,
or insurance premium or any other expense or charge relating to Collateral which
is payable by Debtor (and not timely paid by it), and further may pay any filing
or recording fees. Any amount or amounts so paid, with interest thereon at the
highest rate payable on any of the obligations (from the date of payment until
repaid) shall be secured hereby and shall be payable upon demand.
b. Secured
Party shall not be deemed to have waived any of its rights hereunder or under
any other agreement, instrument or paper signed by Debtor unless such waiver be
in writing and signed by Secured Party. No delay or omission on the part of
Secured Party in exercising any right shall operate as a waiver of such right or
any other right. A waiver on any one occasion shall not be construed as a bar
to, or waiver of, any right or remedy on any future occasion.
c. Any
notice, if mailed, shall be deemed given when mailed postage prepaid, addressed
to Debtor at its address shown below, or at any other address of Debtor
appearing on Secured Party's records.
d. Covenants,
representations, warranties and agreements herein set forth shall be binding
upon Debtor, its legal representatives, successors and assigns. This Security
Agreement may be assigned by Secured Party and all rights and privileges of
Secured Party under this Security Agreement shall then inure to the benefit of
its successors and assigns.
e. If
any provision of this Security Agreement shall be for any reason held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Security Agreement shall be construed as if
such invalid or unenforceable provision had never been contained
herein.
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f. If
Debtor is a guarantor, endorser, co-maker, or an accommodation party with
respect to the Obligations, Debtor hereby waives the benefit of any and all
defenses and claims of damage which are dependent upon Debtor's character as a
party other than the maker. Each party to any of the Obligations hereby consents
to and waives notice of (1) any and all extensions (whether or not for longer
than the original period) granted as to the time of payment of any or all of the
Obligations, and (2) any renewal of any or all of the Obligations.
g. Unless
otherwise defined or the context otherwise requires, all terms used herein which
are defined in any applicable Uniform Commercial Code shall have the meanings
therein stated. The rights and remedies herein conferred upon Secured Party
shall be in addition to, and not in substitution or in derogation of, rights and
remedies conferred by any applicable Uniform Commercial Code and other
applicable law.
h. All
words and phrases used herein shall be construed as in the singular or plural
number, and as masculine, feminine or neuter gender, as the context may
require.
i. Captions
are inserted for convenience only and shall not be taken as altering the
text.
14. CERTIFICATION.
a. Secured
Party and Debtor each certify that they are not acting, directly or indirectly,
for or on behalf of any person, group, entity or nation named by any Executive
Order of the United States Treasury Department as a terrorist, “Specially
Designated National and Blocked Person” or any other banned or blocked person,
entity, nation or transaction pursuant to any law, order, rule or regulation
that is enforced or administered by the Office of Foreign Assets Control; and
are not engaged in this transaction, directly or indirectly on behalf of, or
instigating or facilitating this transaction, directly or indirectly on behalf
of, any such person, group, entity or nation.
b. Debtor
and Secured Party hereby agrees to defend, indemnify and hold one another
harmless from and against any and all claims, damages, losses, risks,
liabilities and expenses (including attorney’s fees and costs) arising from or
related to any breach of the foregoing certification.
DEBTOR
ACKNOWLEDGES RECEIPT OF A FULLY COMPLETED COPY OF THIS SECURITY
AGREEMENT.
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DATED:
November 30, 2010
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VALLEY
ANESTHESIA EDUCATIONAL
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PROGRAMS, INC. (SECURED
PARTY)
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By:
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/s/ Xxxxxxx X. Paradise
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Title:
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Vice President
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0000 Xxxxxx Xxxx Xxxx.
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Number
and Street
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Clive
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City
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Polk IA
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County
State
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OAK TREE EDUCATIONAL PARTNERS,
INC. (DEBTOR)
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By:
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/s/ Xxxxxx X. Xxxxxx
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Title:
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Chief Executive Officer
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000 Xxxxx Xxxxxx, 0xx Xxxxx
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Number
and Street
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New York
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City
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New
York
NY
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County
State
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TRAINING DIRECT, LLC
(DEBTOR)
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By:
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/s/ Xxxxxx Xxxxxx
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Title:
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President
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0000 Xxxx Xxxxxx, 0xx Xxxxx
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Number
and Street
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Bridgeport
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City
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Fairfield CT
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County
State
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EDUCATIONAL INVESTORS, INC.
(DEBTOR)
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By:
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/s/ Xxxxxx X. Xxxxxx
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Title:
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Chief Executive Officer
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000 Xxxxx Xxxxxx, 0xx Xxxxx
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Number
and Street
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New York
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City
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New
York
NY
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County
State
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VALLEY ANESTHESIA, INC.
(DEBTOR)
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By:
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/s/ Xxxxxx X. Xxxxxx
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Title:
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Chief Executive Officer
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000 Xxxxx Xxxxxx, 0xx Xxxxx
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Number
and Street
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New York
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||
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City
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New
York
NY
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County
State
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The
undersigned, though not an original party to this Security Agreement, is
executing a counterpart to this Security Agreement, as of the date indicated
below, and for value received, agrees to become a Debtor hereunder and to be
bound as a party hereto.
EDUCATIONAL TRAINING INSTITUTE, INC.
(DEBTOR)
(a New
York corporation)
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By:
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/s/
Xxxxxx Xxxxxx
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Name:
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Xxxxxx
Xxxxxx,
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Title:
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President
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Date:
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November
30, 2010
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000
Xxxx 00xx Xxxxxx
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Number
and Street
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New
York
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City
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New
York NY
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County
State
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