SECURITY AGREEMENT
AGREEMENT, dated 28th day of
November 2007, between Vital Health Technologies, Inc. / Caribbean American
Health Resorts, Inc., a Minnesota Corporation. ("Debtor"), and Xxxxxx Xxxxx,
("Secured Party'').
W
I T N E S S E T H
WHEREAS, concurrently here with
Secured Party, in conjunction with an MSO Purchase Agreement of same date, has
promised and pledged to Debtor the sum of THREE MILLION DOLLARS ($3,00,000.00),
as evidenced by a Promissory Note of even date herewith (the "Note"):
and
WHEREAS, in order to induce
Secured Party to accept such Note as part of the MSO Purchase Agreement, Debtor
has agreed to pledge to Secured Party certain property as security for the
loan;
NOW THEREFORE, in consideration
of the above principal, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
The following terms as used in this Agreement shall have the meanings set forth
below:
"Collateral".
shall mean all rights, titles and interests in the assets, personal, real or
intangible, of the business owned and operated by debtor and all property of the
same class or character acquired by Debtor subsequent: to the date hereof, and
all proceeds thereof, and all substitutions, replacements and accessions
thereto, including but not limited to un-issued shares of stock of the
Debtor.
"Obligations".
shall mean all principal and interest due or to become due under the afore said
Note, and any other indebtedness or liability of Debtor to Secured Party, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising.
2. Creation
of the Security Interest. Debtor hereby grants to Secured Party a security
interest in all of the right, title and interest of Debtor in and to the
Collateral to secure the full and prompt payment and performance of all of the
Obligations.
3.
Debtor's Obligations to Pay. Debtor shall pay and perform all of the Obligations
of Debtor to Secured Party as the same may become due according to their terms.
Debtor shall be liable for, and shall reimburse to Secured Party, all expenses,
including reasonable attorneys' fees, incurred or paid in connection with
establishing, perfecting, maintaining, protecting or enforcing any of Secured
Party's rights and remedies hereafter.
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4.
Protection of the Collateral. Debtor shall defend the title to the Collateral
against all claims and demands whatsoever. Debtor shall keep the Collateral free
and clear of all liens, charges, encumbrances, taxes and assessments, and shall
pay all taxes, assessments and fees relating to the Collateral. Upon request by
Secured Party. Debtor shall furnish further assurances of title, execute any
further instruments and do any other acts necessary to effectuate the purposes
and provisions of this Agreement. The risk of loss of the Collateral at all
times shall be borne by Debtor.
5.
Filing and Recording. Debtor, at its own cost and expense, shall execute and
deliver to Secured Party any financing statements, and shall procure for Secured
Party any other documents, necessary or appropriate to protect the security
interest granted to Secured Party hereunder against the rights and interests of
third parties, and shall cause the same to be duly recorded and filed in all
places necessary to perfect the security interest of Secured Party in the
Collateral. In the event that any recording or refiling thereof (or filing of
any statements of continuation or assignment of any financing statement) is
required to protect and preserve such security interest, Debtor, at its own
cost and expense,
shall cause the same to be rerecorded and/or refiled at the time and in the
manner requested by Secured Party. Debtor hereby authorizes Secured Party to
file or refile any financing statements or continuation statements with respect
to the security interest granted pursuant to this Agreement which at any time
may be required or appropriate, although the same may have been executed only by
Secured Party, and to execute such financing statement on behalf of Debtor.
Debtor hereby irrevocably designates Secured Party, its agents, representatives
and designees, as agent and attorney-in-fact for Debtor for the
aforesaid purposes.
6.
Default. The occurrence of any one or more of the following events (hereinafter
referred to as "Events of Default") shall constitute a default hereunder,
whether such occurrence is voluntary or involuntary or comes about or is
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental authority:
(a) If
Debtor shall fail to pay, perform or observe any covenant, agreement, term or
provision of this Agreement, the Note or any other agreement or arrangement now
or hereafter entered into between the parties hereto or with respect to any
Obligation of Debtor to Secured Party, or
(b) If
any representation, warranty or other statement of fact herein or in any
writing, certificate, report or statement at any time furnished to Secured Party
pursuant to or in connection with this Agreement or the Note shall be false or
misleading in any material respect; or
(c) If
Debtor shall: admit in writing its inability to pay its debts generally as they
become due; file a petition for relief under the bankruptcy laws or a petition
to take advantage of any insolvency act; make an assignment for the benefit of
creditors; commence a proceeding for the appointment of a receiver, trustee,
1iquidator or conservator of itself or the whole or any substantial part of its
property; file a petition or answer seeking
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reorganization
or arrangement or similar relief under Federal Bankruptcy Laws
or any other applicable law or statute of the United States or any State or
foreign country; or if Debtor shall be adjudged a bankrupt or insolvent, or a
court of competent jurisdiction shall enter any order, judgment or decree
appointing a receiver, trustee, liquidator or conservator of Debtor or of the
whole or any substantial part of the property of Debtor or approves a petition
filed against Debtor seeking reorganization or similar relief under the Federal
Bankruptcy Laws or any other applicable law or statute of the United States
or any State or foreign country; or if, under the provisions of any other law
for the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of Debtor or the whole or any substantial part of its
property; or if there is commenced against Debtor any proceeding for any of the
foregoing relief, or if Debtor by any act indicates its consent to, approval of,
or acquiescence in any such proceeding; or
(d) If
any creditor of Debtor for any reason what so ever here after shall accelerate
payment in whole or in part of any outstanding obligation owed to it by Debtor
under any agreement or arrangement, or if any judgment against the Debtor or any
execution against any of its property for any
amount remains unpaid, unstayed or undismissed for a period in excess of thirty
days.
7. Rights
and Remedies. Upon the occurrence of an Event of Default, the Obligations shall
immediately become due and payable in full without notice or demand. Secured
Party shall have all rights and remedies provided by the Uniform Commercial Code
in effect in the State of California on the date hereof. In addition to, or in
conjunction with, or substitution for such rights and remedies, Secured Party
may at any time arid from and after the occurrence of an Event of Default
hereunder:
(a) with
or without notice to Debtor, foreclose the security interest created herein by
any available judicial procedure, or take possession of the Collateral, or any
portion thereof with or without judicial process, and enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the same, or rendering the same unusable, or disposing of the
Collateral on such premises, and Debtor agrees not to resist or interfere
therewith;
(b)
require Debtor to prepare, assemble or collect the Collateral, at Debtor's own
expense, and make the same available to Secured Party at such place as Secured
Party may designate, whether at Debtor's premises or elsewhere;
(c) sell,
lease or otherwise dispose of all or any part of the Collateral, whether in its
then condition or after further preparation, in Debtor's name or in its own
name, or in the name of such party as Secured Party may designate, either at
public or private sale (at which Secured Party shall have the right to
purchase), in lots or in bulk, for cash or for credit, with or without
representations or warranties, and upon such other terms as Secured Party, in
its sole discretion, may deem advisable; and ten days' written notice of such
public sale date or dates after which private sale may occur, or such lesser
period of time in the case of an emergency, shall constitute reasonable notice
hereunder:
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(d)
execute and deliver documents of title, certificates of origin, or other
evidence of payment, shipment or storage of any Collateral or proceeds on behalf
of and in the name of Debtor;
(e)
remedy any default by Debtor hereunder, with out waiving such default, and any
monies expended in so doing shall be chargeable with interest to Debtor arid
added to the Obligations secured hereby; and
(f) apply
for an injunction to restrain a breach or threatened breach o f this Agreement
by Debtor.
8.
Cumulative Rights. All rights, remedies and powers granted to Secured Party
herein, or in any instrument or document related hereto, or provided or implied
by law or in equity shall be cumulative and may be exercised singly or
concurrently on any one or more occasions.
9.
Debtor's Representations And Warranties. Debtor hereby represents and warrants
to Secured Party that:
(a)
Neither the execution nor the delivery of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with the provisions
hereof, will violate any law or regulation, or any order or decree of any
domestic or foreign court of governmental authority, or will conflict with, or
result in the breach of, or constitute a default under, any indenture, mortgage,
deed or trust, agreement or other instrument to which Debtor is a party or by
which Debtor may be bound, or result in the creation or imposition of any lien,
claim or encumbrance upon any property of Debtor.
(b)
Debtor has the power to execute, deliver and perform the provisions of this
Agreement and all instruments and documents delivered or to be delivered
pursuant hereto, and has taken or caused to be taken all necessary or
appropriate actions to authorize the execution, delivery and performance of this
Agreement iand all such instruments and documents.
(c)
Debtor is the legal and equitable owner of the Collateral, free and clear of all
security interests, liens. claims and encumbrances of every kind and
nature.
(d) No
default exists, and no event which with notice or the passage of time, or both,
would constitute a default under the Collateral by any party thereto, and there
are no offsets, claims or defenses against the obligations evidenced by the
Collateral, except as may be expressly set forth in Exhibit A annexed
hereto.
10.
Notices. All notices, requests, demands or other communications provided for
herein shall be in writing and shall be deemed to have been properly given if
sent by registered or certified mail, return receipt requested, addressed to the
parties at their respective addresses, or at such other addresses as the parties
may designate in writing.
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11.
Modification And Waiver. No modification or waiver of any provision of this
Agreement, and no consent by Secured Party to any breach thereof by Debtor shall
be effective unless such modification or waiver shall be in writing and signed
by Secured Party, and the same shall then be effective only for the period and
on the conditions and for the specific instances and purposes specified in such
writing. No course of dealing between Debtor and Secured Party in exercising any
rights or remedies hereunder shall operate as a waiver or preclude the exercise
of any rights or remedies hereunder.
12.
Applicable Law. This Agreement shall be construed in accordance with and shall
be governed by the laws of the State of California.
13.
Benefit. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators. successors
and assigns.
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
date first above written.
Debtor
CARIBBEAN
AMERICAN HEALTH RESORTS, INC.
Xxx
Xxxxxx, President
By: /s/ Xxx
Xxxxxx
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Notary
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[SEAL]
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XXXXXX
XXXXXX
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/s/ Xxxxxx Xxxxxx
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COMM
#1487219
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Notary
Public California
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Los
Angeles County
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My
Comm. Expires May 29,
2008
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