INTER-COMPANY SECURITY AGREEMENT
This SECURITY AGREEMENT ("SECURITY AGREEMENT"), dated as of July 14,
1997, is entered into between PROSPECT MEDICAL SYSTEMS, INC., a Delaware
corporation ("DEBTOR"), and PROSPECT MEDICAL HOLDINGS, INC. ("SECURED PARTY"),
with reference to the following facts:
R E C I T A L
Secured Party has made a loan to Debtor, evidenced by a Secured
Promissory Note (the "NOTE"), dated as of even date herewith. The Note is
secured by this Security Agreement to insure prompt payment of the Note.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth, and for other
good and valuable consideration, the parties hereto agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated with respect to, or on account of, an Account.
"ACCOUNTS" means any and all of Debtor's presently existing and
hereafter arising accounts and rights to payment, except those evidenced by
Negotiable Collateral, arising out of the sale or lease of goods or the
rendition of services by Debtor, irrespective of whether earned by performance.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978
(Pub. L. No. 95-598; 11 U.S.C.), as amended or supplemented from time to time,
or any successor statute, and any and all rules and regulations issued or
promulgated in connection therewith.
"CHATTEL PAPER" means all writings of whatever sort which
evidence a monetary obligation and a security interest in or lease of specific
goods, whether now existing or hereafter arising.
"CODE" means the California Uniform Commercial Code except, to
the extent applicable, the Uniform Commercial Code as adopted by the
jurisdiction in which any of the Collateral is located. Any and all terms used
in this Security Agreement which are defined in the Code shall be construed and
defined in accordance with the meaning and definition ascribed to such terms
under the Code, unless otherwise defined herein.
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"COLLATERAL" means the following, collectively: any and all of
the Accounts, Deposit Accounts, Equipment, Inventory, Investment Property,
General Intangibles, Negotiable Collateral, and Debtor's Books, in each case
whether now existing or hereafter acquired or created, and any Proceeds or
products of any of the foregoing, or any portion thereof, and any and all
Accounts, Deposit Accounts, Equipment, Inventory, Investment Property, General
Intangibles, Negotiable Collateral, money, or other tangible or intangible
property, resulting from the sale or other disposition of the Accounts, Deposit
Accounts, Equipment, Inventory, Investment Property, General Intangibles, or
Negotiable Collateral, or any portion thereof or interest therein, and the
substitutions, replacements, additions, accessions, products and Proceeds
thereof.
"DEBTOR'S BOOKS" means any and all presently existing and
hereafter acquired or created books and records of Debtor, including all records
(including maintenance and warranty records), ledgers, computer programs, disc
or tape files, printouts, runs, and other computer prepared information
indicating, summarizing, or evidencing the Accounts, Deposit Accounts,
Equipment, Inventory, Investment Property, General Intangibles and Negotiable
Collateral.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or
like account now or hereafter maintained by or for the benefit of Debtor with a
bank, savings and loan association, credit union or like organization, and all
funds and amounts therein, whether or not restricted or designated for a
particular purpose.
"DOCUMENTS" means any and all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other documents of
Debtor, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available
to Debtor for the purpose of ultimate sale or exchange of goods or for the
purpose of loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing with goods in a manner preliminary to their sale
or exchange, in each case whether now existing or hereafter acquired.
"EQUIPMENT" means any and all of Debtor's presently existing and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
computer and other electronic data processing equipment and other office
equipment and supplies, computer programs and related data processing software,
spare parts, tools, motors, automobiles, trucks, tractors and other motor
vehicles, rolling stock, jigs, and other goods (other than Inventory, farm
products, and consumer goods), of every kind and description, wherever located,
together with any and all parts, improvements, additions, attachments,
replacements, accessories, and substitutions thereto or therefor, and all other
rights of Debtor relating thereto, whether in the possession and control of
Debtor, or in the possession and control of a third party for the account of
Debtor.
"EVENT OF DEFAULT" has the meaning set forth in Section 5.
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"GENERAL INTANGIBLES" means any and all of Debtor's presently
existing and hereafter acquired or arising general intangibles and other
intangible personal property of every kind and description, including:
(a) contracts and contract rights, noncompetition covenants,
licensing and distribution agreements, indemnity agreements, guaranties,
insurance policies, franchise agreements and lease agreements;
(b) deposit accounts, uncertificated certificates of deposit,
uncertificated securities, and interests in any joint ventures, partnerships or
limited liability companies;
(c) choices in action and causes of action (whether legal or
equitable, whether in contract or tort or otherwise, and however arising);
(d) licenses, approvals, permits or any other authorizations
issued by any Government Authority;
(e) Intellectual Property Collateral;
(f) computer software, magnetic media, electronic data
processing files, systems and programs;
(g) rights of stoppage in transit, replevin and reclamation,
rebates or credits of every kind and nature to which Debtor may be entitled;
(h) purchase orders, customer lists, subscriber lists and
goodwill;
(i) monies due or recoverable from pension funds, refunds and
claims for tax or other refunds against any Governmental Authority; and
(j) other contractual, equitable and legal rights of whatever
kind and nature.
(k) "GOVERNMENTAL AUTHORITY" means any federal, state, local or
other governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority or subdivision thereof,
domestic or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"INSTRUMENTS" means any and all negotiable instruments,
certificated securities and every other writing which evidences a right to the
payment of money, in each case whether now existing or hereafter acquired.
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"INTELLECTUAL PROPERTY COLLATERAL" means the following Assets
owned or held by Debtor or in which Debtor otherwise has any interest, now
existing or hereafter acquired or arising:
(a) all patents and patent applications, domestic or foreign,
all licenses relating to any of the foregoing and all income and royalties with
respect to any licenses, all rights to xxx for past, present or future
infringement thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and continuations
in-part thereof;
(b) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to xxx
for past, present or future infringement, and all rights of renewal and
extension of copyright;
(c) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses, whether
registered or unregistered and wherever registered, all rights to xxx for past,
present or future infringement or unconsented use thereof, all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof;
(d) all trade secrets, confidential information, customer lists,
license rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, sales and operating plans, drawings, specifications,
blue prints, descriptions, inventions, name plates and catalogs; and
(e) the entire goodwill of or associated with the businesses now
or hereafter conducted by Debtor connected with and symbolized by any of the
aforementioned properties and assets.
"INVENTORY" means any and all of Debtor's presently existing and
hereafter acquired goods of every kind and description (including goods in
transit) which are held for sale or lease, or to be furnished under a contract
of service or which have been so leased or furnished, or other disposition,
wherever located, including those held for display or demonstration or out on
lease or consignment or are raw materials, work in process, finished materials,
or materials used or consumed, or to be used or consumed, in Debtor's business,
and the resulting product or mass, and all repossessed, returned, rejected,
reclaimed and replevied goods, together with all materials, parts, supplies,
packing and shipping materials used or usable in connection with the
manufacture, packing, shipping, advertising, selling or furnishing of such
goods; and all other items hereafter acquired by Debtor by way of substitution,
replacement, return, repossession or otherwise,
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and all additions and accessions thereto, and any Document representing or
relating to any of the foregoing at any time.
"INVESTMENT PROPERTY" has the meaning given to such term in the
Code.
"NEGOTIABLE COLLATERAL" means any and all of Debtor's presently
existing and hereafter acquired or arising letters of credit, advises of credit,
certificates of deposit, notes, drafts, Instruments, Documents and Chattel
Paper.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PROCEEDS" means whatever is receivable or received from or upon
the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of Debtor,
including "proceeds" as defined in Section 9306 of the Code, any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to or for the
account of Debtor from time to time with respect to any of the Collateral, any
and all payments (in any form whatsoever) made or due and payable to Debtor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral or for or on account of any damage or injury to or
conversion of any Collateral by any Person, any and all other tangible or
intangible property received upon the sale or disposition of Collateral, and all
proceeds of proceeds.
"RIGHTS TO PAYMENT" means all Accounts and any and all rights and
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all General Intangibles, Negotiable Collateral and
Proceeds thereof.
"SECURED OBLIGATIONS" shall have the meaning of "Obligations"
under the Loan Agreement and shall also mean any and all debts, liabilities,
obligations, or undertakings owing by Debtor to Secured Party arising under,
advanced pursuant to, or evidenced by this Security Agreement, whether direct or
indirect, absolute or contingent, matured or unmatured, due or to become due,
voluntary or involuntary, whether now existing or hereafter arising, and
including all interest not paid when due and all Secured Party Expenses which
Debtor is required to pay or reimburse pursuant to this Security Agreement, the
Loan Agreement, the other Loan Documents or by law.
"SECURED PARTY" means Prospect Medical Holdings, Inc., a Delaware
corporation.
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"SECURED PARTY EXPENSES" shall mean: any and all costs or
expenses required to be paid by Debtor under this Security Agreement which are
paid or advanced by Secured Party; all costs and expenses of Secured Party,
including its attorneys' fees and expenses (including attorneys' fees incurred
pursuant to proceedings arising under the Secured Bankruptcy Code), incurred or
expended to correct any default or enforce any provision of this Security
Agreement, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, irrespective of whether a sale is consummated; and all costs and
expenses of suit incurred or expended by Secured Party, including its attorneys'
fees and expenses (including attorneys' fees incurred pursuant to proceedings
arising under the Bankruptcy Code) in enforcing or defending this Security
Agreement, irrespective of whether suit is brought.
"SECURITY AGREEMENT" shall mean this Security Agreement, any
concurrent or subsequent riders, exhibits or schedules to this Security
Agreement, and any extensions, supplements, amendments, or modifications to or
in connection with this Security Agreement, or to any such riders, exhibits or
schedules.
2. CONSTRUCTION. Unless the context of this Security Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the part includes the whole,
"including" is not limiting, and "or" has the inclusive meaning represented by
the phrase "and/or." References in this Security Agreement to "determination"
by Secured Party include reasonable estimates (absent manifest error) by Secured
Party, as applicable (in the case of quantitative determinations) and reasonable
beliefs (absent manifest error) by Secured Party, as applicable (in the case of
qualitative determinations). The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Security Agreement refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement. Article, section, subsection, exhibit, and schedule references are
to this Security Agreement unless otherwise specified.
3. CREATION OF SECURITY INTEREST. Debtor hereby grants to Secured
Party a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure the prompt payment and
performance of all of the Secured Obligations. Debtor acknowledges and affirms
that such security interest in the Collateral has attached to all Collateral
without further act on the part of Secured Party or Debtor.
4. FURTHER ASSURANCES.
4.1 Debtor shall execute and deliver to Secured Party
concurrently with Debtor's execution of this Security Agreement, and from time
to time at the request of Secured Party, all financing statements, continuation
financing statements, fixture filings, security agreements, chattel mortgages,
assignments, and all other documents that Secured Party may request, in form
satisfactory to Secured Party, to perfect and maintain perfected Secured Party's
security interests in the Collateral and in order to consummate fully all of the
transactions contemplated by this Security Agreement and the Loan Agreement.
Debtor hereby irrevocably makes, constitutes, and appoints Secured Party (and
Secured Party's officers, employees, or agents) as Debtor's true and lawful
attorney with power to sign the
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name of Debtor on any of the above-described documents or on any other similar
documents which need to be executed, recorded, or filed, and to do any and all
things necessary in the name and on behalf of Debtor in order to perfect, or
continue the perfection of, Secured Party's security interests in the
Collateral. Debtor agrees that neither Secured Party, nor any of its designees
or attorneys-in-fact, will be liable for any act of commission or omission, or
for any error of judgment or mistake of fact or law with respect to the exercise
of the power of attorney granted under this Section 4.1, other than as a result
of its or their gross negligence or wilful misconduct. THE POWER OF ATTORNEY
GRANTED UNDER THIS SECTION 4.1 IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL ALL OF THE SECURED OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN
FULL, THE LOAN AGREEMENT TERMINATED, AND ALL DEBTOR'S DUTIES HEREUNDER AND
THEREUNDER HAVE BEEN DISCHARGED IN FULL.
4.2 Without limiting the generality of the foregoing Section 4.1
or any of the provisions of the Loan Agreement, Debtor will: (i) at the request
of Secured Party, xxxx conspicuously all of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to Secured Party,
indicating that the Collateral is subject to the security interest granted
hereby; (ii) at the request of Secured Party, appear in and defend any action or
proceeding which may affect Debtor's title to, or the security interest of
Secured Party in, any of the Collateral; and (iii) upon demand of Secured Party,
allow inspection of Collateral by Secured Party or Persons designated by Secured
Party at any time during normal business hours.
4.3 With respect to the Negotiable Collateral (other than drafts
received in the ordinary course of business so long as no Event of Default is
continuing), Debtor shall, immediately upon request by Secured Party, endorse
(where appropriate) and assign the Negotiable Collateral over to Secured Party,
and deliver to Secured Party actual physical possession of the Negotiable
Collateral to Secured Party together with any instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party, in order to
fully perfect the security interest therein of Secured Party.
4.4 Debtor shall cooperate with Secured Party in obtaining a
control agreement in form and substance satisfactory to Secured Party with
respect to all Deposit Accounts and Investment Property.
5. EVENT OF DEFAULT. Failure by Debtor to make any payment required
under the Note when due, whether for principal, interest, or otherwise, shall
constitute an Event of Default under this Security Agreement.
6. RIGHTS AND REMEDIES.
6.1 During the continuance of an Event of Default, Secured
Party, without notice or demand, may do any one or more of the following, all of
which are authorized by Debtor:
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(a) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Secured Party considers
advisable, and in such cases, Secured Party will credit the Secured Obligations
with only the net amounts received by Secured Party in payment of such disputed
Accounts after deducting all Secured Party Expenses incurred or expended in
connection therewith;
(b) Cause Debtor to hold all returned Inventory in trust
for Secured Party, segregate all returned Inventory from all other property of
Debtor or in Debtor's possession and conspicuously label said returned Inventory
as the property of Secured Party;
(c) Without notice to or demand upon Debtor or any
guarantor, make such payments and do such acts as Secured Party considers
necessary or reasonable to protect its security interests in the Collateral.
Debtor agrees to assemble the Collateral if Secured Party so requires, and to
make the Collateral available to Secured Party as Secured Party may designate.
Debtor authorizes Secured Party to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien
that in Secured Party's determination appears to conflict with its security
interests and to pay all expenses incurred in connection therewith. With
respect to any of Debtor's owned or leased premises, Debtor hereby grants
Secured Party a license to enter into possession of such premises and to occupy
the same, without charge, for up to 120 days in order to exercise any of Secured
Party's rights or remedies provided herein, at law, in equity, or otherwise;
(d) Without notice to Debtor (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9505 of the Code), set off and
apply to the Secured Obligations any and all (i) balances and Deposit Accounts
of Debtor held by Secured Party, or (ii) indebtedness at any time owing to or
for the credit or the account of Debtor held by Secured Party;
(e) Hold, as cash collateral, any and all balances and
Deposit Accounts of Debtor held by Secured Party, to secure the full and final
repayment of all of the Secured Obligations;
(f) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Secured Party is hereby granted a license or other
right to use, without charge, Debtor's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and Debtor's rights under all licenses and all franchise agreements
shall inure to Secured Party's benefit;
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(g) Sell the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Debtor's premises) as Secured Party
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;
(h) Secured Party shall give notice of the disposition of
the Collateral as follows:
(i) Secured Party shall give Debtor and each holder of
a security interest in the Collateral who has filed with Secured Party a written
request for notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made;
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Debtor as provided in SECTION 9 of this Security
Agreement, at least 5 days before the date fixed for the sale, or at least 5
days before the date on or after which the private sale or other disposition is
to be made; no notice needs to be given prior to the disposition of any portion
of the Collateral that is perishable or threatens to decline speedily in value
or that is of a type customarily sold on a recognized market. Notice to Persons
other than Debtor claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Secured Party;
(iii) If the sale is to be a public sale, Secured Party
also shall give notice of the time and place by publishing a notice one time at
least 5 days before the date of the sale in a newspaper of general circulation
in the county in which the sale is to be held;
(i) Secured Party may credit bid and purchase at any public
sale; and
(j) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Debtor. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Secured Party to Debtor.
6.2 Upon the exercise by Secured Party of any power, right,
privilege, or remedy pursuant to this Security Agreement which requires any
consent, approval, registration, qualification, or authorization of any
Governmental Authority, Debtor agrees to execute and deliver, or will cause the
execution and delivery of, all applications, certificates, instruments,
assignments, and other documents and papers that Secured Party or any purchaser
of the Collateral may be required to obtain for such governmental consent,
approval, registration, qualification, or authorization.
6.3 The rights and remedies of Secured Party under this Security
Agreement, the Loan Agreement, the other Loan Documents, and all other
agreements
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contemplated hereby and thereby shall be cumulative. Secured Party shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Secured Party of any one right or
remedy shall be deemed an election of remedies, and no waiver by Secured Party
of any default on Debtor's part shall be deemed a continuing waiver of any
further defaults. No delay by Secured Party shall constitute a waiver, election
or acquiescence with respect to any right or remedy.
7. SECURED PARTY NOT LIABLE. So long as Secured Party complies with
the obligations, if any, imposed by Section 9207 of the Code, Secured Party
shall not otherwise be liable or responsible in any way or manner for: (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion or from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other person whomsoever.
8. INDEFEASIBLE PAYMENT. The Secured Obligations shall not be
considered indefeasibly paid for purposes of this Security Agreement unless and
until all payments to Secured Party are no longer subject to any right on the
part of any Person, including Debtor, Debtor as a debtor in possession, or any
trustee (whether appointed under the Bankruptcy Code or otherwise) of Debtor or
Debtor's Assets to invalidate or set aside such payments or to seek to recoup
the amount of such payments or any portion thereof, or to declare same to be
fraudulent or preferential. In the event that, for any reason, any portion of
such payments to Secured Party is set aside or restored, whether voluntarily or
involuntarily, after the making thereof, then the obligation intended to be
satisfied thereby shall be revived and continued in full force and effect as if
said payment or payments had not been made.
9. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party at its address or facsimile number set
forth on the signature pages hereof or such other address or facsimile number as
such party may hereafter specify by notice to the other party in accordance with
this Section 9. Each such notice, request or other communication shall be
deemed given on the second business day after mailing; PROVIDED that actual
notice, however and from whomever given or received, shall always be effective
on receipt; PROVIDED FURTHER that notices sent by Secured Party in connection
with Sections 9504 or 9505 of the California Uniform Commercial Code shall be
deemed given when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by facsimile.
10. GENERAL PROVISIONS.
10.1 SUCCESSORS AND ASSIGNS. This Security Agreement shall bind
and inure to the benefit of the respective successors and assigns of Debtor and
Secured Party; PROVIDED, HOWEVER, that Debtor may not assign this Security
Agreement nor delegate any of its duties hereunder without Secured Party's prior
written consent and any prohibited assignment or delegation shall be absolutely
void. No consent by Secured Party to an assignment by Debtor shall release
Debtor from the Secured Obligations. Secured Party
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may assign this Security Agreement and delegate its duties hereunder, if any,
from time to time to Imperial Bank or its assigns without prior notice to, or
the consent of Debtor and Debtor agrees to recognize such lender as Secured
Party's assignee under this Security Agreement.
10.2 EXHIBITS AND SCHEDULES. All of the exhibits and schedules
attached hereto shall be deemed incorporated by reference.
10.3 NO PRESUMPTION AGAINST ANY PARTY. Neither this Security
Agreement nor any uncertainty or ambiguity herein shall be construed or resolved
against Secured Party or Debtor, whether under any rule of construction or
otherwise. On the contrary, this Security Agreement has been reviewed by each
of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words used so as to accomplish fairly
the purposes and intentions of all parties hereto.
10.4 AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the party asserted to be bound thereby, and then such amendment or
waiver shall be effective only in the specific instance and specific purpose for
which given.
10.5 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Security
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Security Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Security Agreement shall become effective when executed by each of
the parties hereto and delivered to Secured Party.
10.6 SEVERABILITY. The provisions of this Agreement are
severable. The invalidity, in whole or in part, of any provision of this
Agreement shall not affect the validity or enforceability of any other of its
provisions. If one or more provisions hereof shall be declared invalid or
unenforceable, the remaining provisions shall remain in full force and effect
and shall be construed in the broadest possible manner to effectuate the
purposes hereof.
11. GOVERNING LAW. This Security Agreement shall be deemed to have
been made in the State of California and the validity, construction,
interpretation, and enforcement hereof, and the rights of the parties hereto,
shall be determined under, governed by, and construed in accordance with the
internal laws of the State of California, without regard to principles of
conflicts of law.
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12. SUBORDINATION OF SECURITY INTEREST. Secured Party hereby
expressly agrees that the security interests granted to it under this Security
Agreement ("SUBORDINATE LIENS") in the Collateral shall be second, junior and
inferior to any and all liens, rights, powers, titles and interests of Imperial
Bank or its assigns in the Collateral ("SENIOR LIENS") granted by Debtor
pursuant to that certain Security Agreement, dated as of July 3, 1997, between
Debtor and Imperial Bank, and Secured Party agrees that all Senior Liens shall
be unconditionally first, prior and superior to any and Subordinate Liens in the
Collateral. Secured Party further agrees that any and all Subordinate Liens
shall be and remain expressly subject and subordinate to any renewal, extension,
refinancing, consolidation, modification or supplement of the liens, rights,
titles and interests of the Senior Liens, as well as any and all increases
thereof.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first set forth above.
PROSPECT MEDICAL SYSTEMS, INC.,
a Delaware corporation
By /s/ Xxxxx X. Xxxxxx, M.D.
----------------------------------
Title: CEO
------------------------------
Address for Notices:
Prospect Medical Systems, Inc.
00000 Xxxxx Xxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, M.D.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
PROSPECT MEDICAL HOLDINGS, INC.,
a Delaware corporation
By /s/ Xxxxx X. Xxxxxx, M.D.
----------------------------------
Title: CEO
------------------------------
Address for Notices:
Prospect Medical Holdings, Inc.
00000 Xxxxx Xxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, M.D.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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