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EXHIBIT 10.15
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is dated as of the ________ day of
March, 1995, by and between EDUCATIONAL MEDICAL, INC., a Delaware corporation,
ANDON COLLEGES, INC. d/b/a Andon College, DBS ACQUISITION CORP. d/b/a Dominion
Business School, MARIC LEARNING SYSTEMS d/b/a Maric College of Medical
Careers, MTSX ACQUISTION CORP. d/b/a Modern Technology School of X-Ray, PALO
VISTA COLLEGE OF NURSING AND ALLIED HEALTH SCIENCES, INC. d/b/a Maric College
of Medical Careers, CALIFORNIA ACADEMY OF MERCHANDISING, ART AND DESIGN d/b/a
California Academy of Fashion Merchandising, Art and Design, ICM ACQUISITION
CORP. d/b/a ICM School of Business, XXXXXXX ACQUISITION CORP. d/b/a Xxxxxxx
College of Business, OIOPT ACQUISITION CORP. d/b/a Ohio Institute of
Photography and Technology, SCOTTSDALE EDUCATIONAL CENTER FOR ALLIED HEALTH
CAREERS, INC. d/b/a Long Medical Institute, and Dest Education Corporation
d/b/a Andon College (individually, a "Borrower" and collectively, the
"Borrowers"), and SIRROM CAPITAL CORPORATION, a Tennessee corporation
("Lender").
WITNESSETH:
WHEREAS, Lender is making a loan (the "Loan") in the amount of $2,200,000
to Borrowers, pursuant to that certain Loan Agreement of even date herewith by
and between Borrowers and Lender (the "Loan Agreement"); and
WHEREAS, in connection with the making of the Loan, Lender desires to
obtain from Borrowers and Borrowers desires to grant to Lender a security
interest in certain collateral more particularly described below.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. Each Borrower hereby grants to Lender
a security interest in the following described property and any and all proceeds
and products thereof and accessions thereto (collectively the "Collateral"):
(a) Equipment. All equipment of Borrower of any kind and
description, whether now owned or hereafter acquired and wherever located,
together with all parts, accessories and attachments and all replacements
thereof and additions thereto;
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(b) Inventory, Accounts, Contract Rights, Chattel Paper and
General Intangibles. All of Borrower's inventory and any agreements for
lease of same and rentals therefrom, and all of Borrower's accounts,
accounts receivable, contract rights, chattel paper and general
intangibles and the proceeds therefrom, whether now in existence or owned
or hereafter arising or acquired, entered into or created, and wherever
located; and whether held for lease or sale, or furnished or to be
furnished under contracts of service;
(c) Trademarks, Etc. All trademarks and service marks now held or
hereafter acquired by Borrower, both those that are registered with the
United States Patent and Trademark Office and any unregistered marks used
by Borrower in the United States, and trade dress, including logos and
designs, in connection with which any such marks are used, together with
all registrations regarding such marks and the rights to renewals
thereof, and the goodwill of the business of Borrower symbolized by
such marks;
(d) Copyrights. All copyrights now held or hereafter acquired by
Borrower and any applications for U.S. copyrights hereafter made by
Borrower; and
(e) Proprietary Information, Computer Data, Etc. All proprietary
information and trade secrets of Borrower with respect to Borrower's
business and all of Borrower's computer programs and the information
contained therein and all intellectual property rights with respect
thereto.
2. Secured Indebtedness. The obligations secured hereby shall
include (a) loans to be made concurrently or in connection with this Agreement
or the Loan Agreement as evidenced by one or more promissory notes payable to
the order of Lender that shall be due and payable as set forth in such
promissory notes, and any renewals or extensions thereof, (b) the full and
prompt payment and performance of any and all other indebtednesses and other
obligations of Borrowers to Lender, direct or contingent (including but not
limited to obligations incurred as indorser, guarantor or surety), however
evidenced or denominated, and however and whenever incurred, including but not
limited to indebtednesses incurred pursuant to any present or future commitment
of Lender to Borrowers and (c) all future advances made by Lender for taxes,
levies, insurance and preservation of the Collateral and all attorney's fees,
court costs and expenses of whatever kind incident to the collection of any of
said indebtedness or other obligations and the enforcement and protection of
the security interest created hereby.
3. Representations. Warranties and Agreements of Borrower. Each
Borrower represents, warrants and agrees as follows:
(a) Borrower will promptly notify Lender, in writing, of any new
place or places of business if the Collateral is used in business, or of
any change in Borrower's residence if the Collateral is not used in
business, and regardless of use, of any change in the location of the
Collateral or any records pertaining thereto.
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(b) Except as set forth on Schedule 3(b) hereto, Borrower is the
owner of the Collateral free and clear of any liens and security
interests. Borrower will defend the Collateral against the claims and
demands of all persons.
(c) Borrower will pay to Lender all amounts secured hereby as and
when the same shall be due and payable, whether at maturity, by
acceleration or otherwise, and will promptly perform all terms of said
indebtedness and this or any other security or loan agreement between
Borrower and Lender, and will promptly discharge all said liabilities.
(d) Borrower will at all times keep the Collateral insured against
all insurable hazards in amounts equal to the full cash value of the
Collateral. Such insurance shall be in such companies as may be
acceptable to Lender, with provisions satisfactory to Lender for payment
of all losses thereunder to Lender as its interests may appear. If
required by Lender, Borrower shall deposit the policies with Lender. Any
money received by Lender under said policies may be applied to the
payment of any indebtedness secured hereby, whether or not due and
payable, or at Lender's option may be delivered by Lender to Borrower for
the purpose of repairing or restoring the Collateral. Borrower assigns to
Lender all right to receive proceeds of insurance not exceeding the
amounts secured hereby, directs any insurer to pay all proceeds directly
to Lender, and appoints Lender Borrower's attorney in fact to endorse any
draft or check made payable to Borrower in order to collect the benefits
of such insurance. If Borrower fails to keep the Collateral insured as
required by Lender, Lender shall have the right to obtain such insurance
at Borrower's expense and add the cost thereof to the other amounts
secured hereby.
(e) Borrower will pay all costs of filing of financing,
continuation and termination statements with respect to the security
interests created hereby, and Lender is authorized to do all things that
it deems necessary to perfect and continue perfection of the security
interests created hereby and to protect the Collateral.
(f) The address set forth after Borrower's signature on this
Agreement is Borrower's principal place of business and the location of
all tangible Collateral and the place where the records concerning all
intangible Collateral are kept and/or maintained.
4. Default. Borrower shall be in default upon failure to observe
or perform any of Borrower's agreements herein contained, or upon the
occurrence of a default or Event of Default under the Loan Agreement or any
other Loan Document (as defined in the Loan Agreement) that has not been cured
during the applicable grace period.
5. Remedies Upon Default. Upon default hereunder, all sums secured
hereby shall immediately become due and payable at Lender's option without
notice to Borrowers, and Lender may proceed to enforce payment of same and to
exercise any and all rights and remedies provided by the Uniform Commercial
Code (Tennessee) or other applicable law, as well as all other rights and
remedies possessed by Lender, all of which shall be cumulative. Whenever
Borrowers are in default hereunder, and upon demand by Lender, Borrowers shall
assemble the
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Collateral and make it available to Lender at a place reasonably convenient
to Lender and Borrowers. Any notice of sale, lease or other intended
disposition of the Collateral by Lender sent to Borrowers at the address
hereinafter set forth, or at such other address of Borrowers as may be shown
on Lender's records, at least five (5) days prior to such action, shall
constitute reasonable notice to Borrowers.
Lender may waive any default before or after the same has been declared
without impairing its right to declare a subsequent default hereunder, this
right being a continuing one.
6. Severability. If any provision of this Agreement is held invalid,
such invalidity shall not affect the validity or enforceability of the
remaining provisions of this Agreement.
7. Binding Effect. This Agreement shall inure to the benefit of
Lender's successors and assigns and shall bind Borrowers' heirs,
representatives, successors and assigns. If any Borrower is composed of more
than one person, firm and/or entity, their obligations hereunder shall be joint
and several.
8. Financial Reporting. No Borrower has undisclosed or contingent
liabilities that are not reflected in the financial statements on file with
Lender at the execution of this Agreement or disclosed in the Loan Agreement.
Lender shall have the right, at any time, by its own auditors, accountants or
other agents, to examine or audit any of the books and records of Borrowers, or
the Collateral, all of which will be made available upon request. Such
accountants or other representatives of Lender will be permitted to make any
verification of the existence of the Collateral or accuracy of the records that
Lender deems necessary or proper. Any reasonable expenses incurred by Lender
in making such examination, inspection, verification or audit shall be paid by
Borrower promptly on demand and shall be secured by the security interest
granted hereby.
9. Termination Statement. Borrowers agree that, notwithstanding the
payment in full of all indebtedness secured hereby and whether or not there is
any outstanding obligation of Lender to make future advances, Lender shall not
be required to send Borrowers a termination statement with respect to any
financing statement filed to perfect Lender's security interest(s) in any of
the Collateral, unless and until Borrowers shall have made written demand
therefor. Upon receipt of proper written demand, Lender may at its option, in
lieu of sending a termination statement to Borrowers, cause said termination
statement to be filed with the appropriate filing officer(s).
10. Protection of Collateral. Except as provided for in the Loan
Agreement, Borrowers will not permit any liens or security interests other than
those created by this Agreement to attach to any of the Collateral, nor permit
any of the Collateral to be levied upon under any legal process, nor permit
anything to be done that may impair the security intended to be afforded by
this Agreement, nor permit any tangible Collateral to become attached to or
commingled with other goods without the prior written consent of Lender.
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11. Special Agreements With Respect to Certain Tangible Collateral.
Each Borrower additionally agrees and warrants as follows:
(a) Borrower will not permit any of the Collateral to be removed
from the location specified herein, except for temporary periods in the
normal and customary use thereof, without the prior written consent of
Lender, and will permit Lender to inspect the Collateral at any time.
(b) If any of the Collateral is equipment or goods of a type
normally used in more than one state (whether or not actually so used),
Borrower will contemporaneously herewith furnish Lender a list of the
states wherein such equipment or goods are or will be used, and hereafter
will notify Lender in writing (i) of any other states in which such
equipment or goods are so used, and (ii) of any change in the location of
Borrower's chief place of business.
(c) Except in the ordinary course of business, Borrower will not
sell, exchange, lease or otherwise dispose of any of the Collateral or any
interest therein without the prior written consent of Lender.
(d) Borrower will keep the Collateral in good condition and repair
and will pay and discharge all taxes, levies and other impositions levied
thereon as well as the cost of repairs to or maintenance of same, and
will not permit anything to be done that may impair the value of the
Collateral in any material way. If Borrower fails to pay such sums,
Lender may do so for Borrower's account and add the amount thereof to the
other amounts secured hereby.
(e) Until default in any of the terms hereof, or the terms of any
indebtedness secured hereby, Borrower shall be entitled to possession of
the Collateral and to use the same in any lawful manner, provided that
such use does not cause excessive wear and tear to the Collateral, cause
it to decline in value at an excessive rate, or violate the terms of any
policy of insurance thereon.
12. Special Agreements With Respect to Intangible and Certain
Tangible Collateral. Each Borrower additionally warrants and agrees as
follows:
(a) So long as no Borrower is in default hereunder, Borrower
shall have the right to process and sell Borrower's inventory in the
regular course of business. Lender's security interest hereunder shall
attach to all proceeds of all sales or other dispositions of the
Collateral. If at any time any such proceeds shall be represented by any
instruments, chattel paper or documents of title, then such instruments,
chattel paper or documents of title shall be promptly delivered to
Lender and subject to the security interest granted hereby. If at any
time any of Borrower's inventory is represented by any document of title,
such document of title will be delivered promptly to Lender and subject
to the security interest granted hereby.
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(b) By the execution of this Agreement, Lender shall not be
obligated to do or perform any of the acts or things provided in any
contracts covered hereby that are to be done or performed by Borrower,
but if there is a default by Borrowers in the payment of any amount due
in respect of any indebtedness secured hereby, then Lender may, at its
election, perform some or all of the obligations provided in said
contracts to be performed by Borrower, and if Lender incurs any liability
or expenses by reason thereof, the same shall be payable by Borrower upon
demand and shall also be secured by this Agreement.
(c) At any time after any Borrower is in default hereunder or
under the Loan Agreement, Lender shall have the right to notify the
account debtors obligated on any or all of Borrower's accounts receivable
to make payment thereof directly to Lender, and to take control of all
proceeds of any such accounts receivable. Until such time as Lender
elects to exercise such right by mailing to Borrower written notice
thereof, Borrower is authorized, as agent of the Lender, to collect and
enforce said accounts receivable.
13. Power of Attorney. Each Borrower hereby constitutes the
Lender or its designee, as Borrower's attorney-in-fact with power, upon the
occurrence and during the continuance of an Event of Default, to endorse
Borrower name upon any notes, acceptances, checks, drafts, money orders, or
other evidences of payment or Collateral that may come into either its or the
Lender's possession; to sign the name of Borrower on any invoice or xxxx of
lading relating to any of the accounts receivable, drafts against customers,
assignments and verifications of accounts receivable and notices to customers;
to send verifications of accounts receivable; to notify the Post Office
authorities to change the address for delivery of mail addressed to Borrower to
such address as the Lender may designate; to execute any of the documents
referred to in Section 3(e) hereof in order to perfect and/or maintain the
security interests and liens granted herein by Borrower to the Lender; to do
all other acts and things necessary to carry out this Security Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of commission or omission
(other than acts of gross negligence or willful misconduct), nor for any error
of judgment or mistake of fact or law; this power being coupled with an
interest is irrevocable until all of the obligations secured hereby are paid in
full and any and all promissory notes executed in connection therewith are
terminated and satisfied.
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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement; or
have caused this Agreement to be executed as of the date first above written
BORROWERS:
EDUCATINAL MEDICAL, INC., a Delaware
corporation, ANDON COLLEGES, INC. d/b/a
Andon College, DBS ACQUISITION CORP. d/b/a
Dominion Business School, MARIC LEARNING
SYSTEMS d/b/a Maric College of Medical
Careers, MTSX ACQUISITION CORP. d/b/a
Modern Technology School of X-Ray, PALO
VISTA COLLEGE OF NURSING AND ALLIED HEALTH
SCIENCES, INC. d/b/a Maric College of
Medical Careers, CALIFORNIA ACADEMY OF
MERCHANDISING, ART AND DESIGN d/b/a
California Academy of Fashion
Merchandising, Art and Design, ICM
ACQUISITION CORP. d/b/a California Academy
of Fashion Merchandising, Art and Design,
ICM ACQUISITION CORP. d/b/a ICM School of
Business, XXXXXXX ACQUISITION CORP. d/b/a
Xxxxxxx College of Business, OIOPT
ACQUISITION CORP. d/b/a Ohio Institute of
Photography and Technology, SCOTTSDALE
EDUCATIONAL CENTER FOR ALLIED HEALTH
CAREERS, INC. d/b/a Long Medical Institute,
DEST EDUCATIN CORPORATION d/b/a Andon
College
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Title: President
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LENDER:
SIRROM CAPTIAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Title: CFO
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ADDRESSES OF BORROWERS FOR NOTICE
PURPOSES:
EDUCATIONAL MEDICAL, INC.
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
ADDRESSES OF BORROWERS:
EDUCATIONAL MEDICAL, INC.
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
ANDON COLLEGE AT STOCKTON
0000 Xxxxx Xx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ANDON COLLEGE AT MODESTO
0000 X Xxxxxx
Xxxxxxx, XX 00000
DOMINION BUSINESS SCHOOL
0000-0 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
DOMINION BUSINESS SCHOOL
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
DOMINION BUSINESS SCHOOL
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
MARIC COLLEGE AT VISTA
0000-X Xxxx Xxxxx Xxx
Xxxxx, XX 00000
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MARIC COLLEGE AT SAN DIEGO
0000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
MARIC COLLEGE AT SAN MARCOS
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
MODERN TECHNOLOGY SCHOOL OF X-RAY
0000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxxxxx, XX 00000
CALIFORNIA ACADEMY OF
MERCHANDISING, ART & DESIGN
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
ICM SCHOOL XX XXXXXXXX
00-00 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
XXXXXXX COLLEGE OF BUSINESS
000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
OHIO INSTITUTE OF PHOTOGRAPHY AND
TECHNOLOGY
0000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
LONG MEDICAL INSTITUTE
0000 Xxxxx Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
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SCHEDULE 3(b)
(Liens)
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