EXHIBIT 10.14
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") dated as of July 23,
1996, is from XXX'X ACQUISITION CORPORATION, a Florida corporation, and its
wholly owned subsidiary, XXX'X PRESCRIPTION SHOPS, INC., a Florida corporation
(the "Debtor"), whose mailing address is 0000 XX 0 Xxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx 00000, to XXXXXX X. XXXXX, XX., a resident of the State of Florida (the
"Secured Party") as Successor in Interest to Exired, S.A. de C.V., a Mexican
corporation, whose address is 0000 XX 00 Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx
00000.
WHEREAS, Pharmasystems Cost Containment Corp., a Florida corporation
("Pharmasystems") has (i) requested a loan from the Secured Party in the
principal amount of $537,500.00 to be used for general corporate purposes,
including funding the corporate operations of the Debtor ("Loan A") and (ii)
requested that Secured Party make a loan to Healthcare Workshop, Ltd., a British
Virgin Islands corporation ("HWL") in the principal amount of $1,000,000.00 for
similar corporate purposes ("Loan B") (Loan A and Loan B are hereinafter
collectively referred to as the "Loans");
WHEREAS, in order to evidence and secure Loan A, Pharmasystems is
executing and delivering to Secured Party on this date a Promissory Note and
Security Agreement, of even date herewith (the "Note A") in the principal amount
of $537,500.00;
WHEREAS, in order to evidence and secure Loan B, HWL is executing and
delivering to Secured Party on this date a Promissory Note and Security
Agreement, of even date herewith (the "Note B") in the principal amount of
$1,000,000.00;
WHEREAS, Debtor, a wholly-owned subsidiary of Pharmasystems, is the sole
owner of all assets of the operating business commonly known as Xxx'x
Pharmacies, a pharmaceutical drug store chain doing business in Dade County,
Florida and owns such assets directly.
WHEREAS, the Secured Party's extension of the Loans to Pharmasystems and
HWL is critical to the continued success of Debtor and will result in immediate,
tangible benefits to Debtor;
WHEREAS, the Secured Party's agreement to extend the Loans is conditioned
on the Debtor's execution and delivery of this Agreement granting a perfected
security interest in all of its assets to Secured Party to secure the
obligations of Pharmasystems and HWL under the Notes, respectively, except with
respect to those encumbrances listed on Exhibit B attached hereto;
WHEREAS, the Debtor is willing to enter into this Agreement in order to
induce the Secured Party to make the Loans;
NOW, THEREFORE, in consideration of Loans made or to be made by the
Secured Party to Pharmasystems and HWL, and for other value received by the
Debtor, and in further consideration of other financial accommodations extended
by the Secured Party to Pharmasystems or HWL or to other persons affiliated with
Debtor, the Debtor hereby grants a continuing security interest in, and assigns
to the Secured Party, the Collateral to secure payment and performance of all of
the Obligations.
Section 1. RECITALS. The foregoing recitals are true and correct and
are incorporated into this Agreement by reference.
Section 2. DEFINITIONS. Definitions in the Code apply to words and phrases
in this Security Agreement and, if Code definitions conflict, definitions in
Article 9 (Chapter 679, Florida Statutes) of the Code shall apply. In addition
to terms defined in the Code or elsewhere in this Security Agreement, the
following terms have the meanings indicated below, which meanings shall be
equally applicable to both the singular and the plural forms of such terms:
"Code" means the Uniform Commercial Code as in effect from time to time in
the State of Florida (Chapters 671 through 680, inclusive, Florida Statutes).
"Collateral" means and includes any and all of the following owned by the
Debtor in or which the Debtor has an interest, whether now owned or existing or
hereafter created or acquired:
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;;
(e) Goods, including Equipment, Inventory and Fixtures;
(f) Instruments;
(g) all cash or non-cash proceeds of any of the foregoing,
including insurance proceeds and all products thereof;
(h) all ledger sheets, files, records, documents and instruments
including, but not limited to, computer programs, tapes and
related electronic date processing software) evidencing an
interest in or relating to the above; and
(i) any and all property of the Debtor now or hereafter
delivered to or left in or coming into the possession,
control or custody of the Secured Party, whether expressly
as collateral security or for any other purpose (including
cash, stock and other dividends, and all rights to
subscribe for securities incident to, declared, or granted
in connection with such property), and property described
in collateral receipts or other documents signed or
furnished by the Debtor, and any and all replacements of
any of the foregoing, whether or not in the possession of
the Secured Party.
2
"Obligations" shall include:
(a) Note A and Note B, and any and all renewals, modifications,
amendments and replacements thereof, together with any and all other
indebtedness, obligations and liabilities of Pharmasystems or HWL to
the Secured Party now or hereafter existing, incurred or created.
(b) all other liabilities (primary, secondary, direct, contingent, sole,
joint or several), due or to become due or which may be hereafter
contracted to acquired, of Pharmasystems or HWL to the Secured
Party, whether such liabilities arise in the ordinary course of
business or not (including, without limitation, liabilities for
overdrafts and as guarantor, endorser and surety);
(c) all costs incurred by the Secured Party to obtain, preserve and
enforce this Security Agreement and the security interest created
hereunder, collect the Obligations and to maintain and preserve the
Collateral, including, without limitation, taxes, assessments,
insurance premiums, repairs, reasonable attorneys' fees and legal
expenses, rent storage costs and expense of sale; and
(d) interest on the above amounts, as agreed between the Debtor and
Secured Party, at the per annum rate of ten percent (10%).
"Receivables" shall mean all Accounts, Chattel Paper, Instruments,
Documents, General Intangibles (including, without limitation, tax refunds and
insurance proceeds) and any and all other obligations and indebtedness owed to
the Debtor from whatever source arising and whether now existing or hereafter
arising. "Receivables" shall also include any and all guarantees of Receivables
and security therefor and any and all proceeds thereof. Notwithstanding the
foregoing, the provisions of this paragraph shall not be applicable to
Receivables relating to federal and/or state funded programs such as the Florida
Medicaid Program, or otherwise, when such assignments are prohibited by law.
Section 3. LIST OF COLLATERAL. Contemporaneous with the execution hereof
the Debtor has furnished to the Secured Party a listing of the Collateral
presently owned by it; PROVIDED, HOWEVER, the Secured Party shall have a
security interest in any and all Collateral whether or not such Collateral is
described generally or specifically on such list. The Debtor warrants and agrees
that it is the owner of the Collateral free and clear of all liens and security
interest except the security interest granted by this Security Agreement or as
set forth on Exhibit B hereto (herein called "Permitted Encumbrances").
Section 4. NO OTHER SECURITY INTEREST. So long as any Obligation to the
Secured Party is outstanding, the Debtor will not without the prior written
consent of the Secured Party grant to any third party a security interest in any
of the Collateral or permit any lien or encumbrance to attach to any part of the
Collateral (except for taxes yet due and payable) or suffer or permit any levy
to be made on any part of the Collateral, or permit any financing statement
except that of Secured Party to be on file with respect thereto except with
respect to Permitted Encumbrances. The Debtor will not sell, transfer, lease or
otherwise dispose of any of the Collateral or any interest therein, or offer to
3
do so or permit anything to be done to impair the value of the Collateral or the
security interest, PROVIDED, however, the Debtor may sell Inventory, and incur
debt related to the purchase of Inventory (secured or unsecured), in the
ordinary course of its business.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING THE
COLLATERAL. The Debtor represents, warrants and covenants, that:
5.1 The Collateral shall be kept at the address specified above or
specified on Schedule I attached hereto. If any of the Collateral is located on
property which is not owned by the Debtor, the Debtor will, on demand of the
Secured Party, obtain landlord's waivers of liens in forms satisfactory to the
Secured Party as to each such location. The Debtor will not permit any of the
Collateral to be moved without the prior written consent of the Secured Party,
other than Collateral which may be sold as permitted under Section 4 hereof.
5.2 If any of the Equipment is attached to real property, the legal
description for said real property is attached hereto as Exhibit A and the
Debtor will, on demand of the Secured Party, furnish the Secured Party with a
disclaimer or disclaimers, signed by all persons having an interest in said real
estate at the time of such attachment, of any interest in the Equipment.
The Debtor is the record owner of the real property where the Equipment is
kept or, if the Debtor is not the record owner, the name or names of the record
owner or owners is shown on Exhibit A hereto.
5.3 The Debtor will at all times keep the Collateral insured against
loss, damage, theft, and such other risks as the Secured Party may require in
such amounts (in any event, not less than the full insurable value thereof),
with such insurance companies, under such policies, in such form and for such
periods as shall be satisfactory to the Secured Party, and each such policy
shall provide that loss thereunder and proceeds payable thereunder shall be
payable to the Secured Party under a standard mortgagee endorsement, if
available, or, if not available, as an additional loss payee (and the Secured
Party may apply any proceeds of such insurance which may be received by the
Secured Party toward payment of the Obligations whether due or not due, in such
order of application as the Secured Party may determine). Each such policy shall
provide for ten (10) days written minimum cancellation notice to the Secured
Party. Each such policy shall, if the Secured Party so requests, be deposited
with the Secured Party and the Secured Party may act as attorney for the Debtor
in obtaining, adjusting, settling, and canceling such insurance and endorsing
any drafts. Such policies shall provide that no act or default of the Debtor
shall affect the right of the Secured Party to recover.
5.4 The Debtor will at all times keep the Collateral in good order
and repair and will not waste or destroy the Collateral or any part thereof.
5.5 The Debtor warrants that no financing statement covering any
Collateral or any proceeds thereof is on file in any public office, other than
financing statements naming the Secured Party and financing statements filed
4
with respect to Permitted Encumbrances. The Debtor will promptly forward, if
requested by the Secured Party, xxxx its records evidencing its Accounts and
Chattel Paper in a manner satisfactory to the Secured Party so as to show the
same having been assigned to the Secured Party. The Debtor authorizes the
Secured Party to file financing statements with respect to the Collateral signed
only by the Secured Party. The Debtor will join with the Secured Party in
executing financing statements, notices, affidavits or similar instruments in
forms satisfactory to the Secured Party and such other documents as the Secured
Party may from time to time request, and will pay the cost of filing the same in
any public office deemed advisable by the Secured Party. The Debtor will do such
other acts and things, all as the Secured Party may request, to maintain a valid
perfected security interest in the Collateral (free of all other liens and
claims whatsoever other than Permitted Encumbrances) to secure the payment of
the Obligations secured hereby. The Secured Party is hereby appointed the
Debtor's attorney-in-fact to do all acts and things which the Secured Part may
deem necessary to perfect and to continue to the perfection of the security
interest created hereby and to protect the Collateral, only in the Event of
Default as defined in Section 7 hereof.
5.6 The Debtor will not use the Collateral or permit the same to be
used in violation of any statute or ordinance. The Secured Party may examine and
inspect the Collateral at any time, wherever located. The Debtor will pay
promptly when due all taxes and assessments upon the Collateral or for its use
or operation or upon this Security Agreement or other writing evidencing the
Obligations, or any of them.
5.7 The Debtor keeps the bulk of its Inventory at the address
specified at the beginning of this Security Agreement and/or at the address or
addresses specified on Schedule I hereto. The chief executive office where
Debtor keeps its records concerning its Receivables is at the address specified
at the beginning of this Security Agreement unless a different address is
specified on Schedule I hereto. The Debtor shall give the Secured Party written
notice of each additional location at which Inventory will be kept and of any
change in the chief executive office of the Debtor at which records of the
Debtor pertaining to Receivables are kept at least thirty (30) days prior to the
location of Inventory at such address or the change of the chief executive
office.
Section 6. SPECIAL COVENANTS REGARDING RECEIVABLES. Until the Secured
Party requests that account debtors on Receivables of the Debtor be notified of
the Secured Party's security interest, the Debtor shall continue to collect
them, subject to the direction and control of the Secured Party at all times. In
the Event of Default, any proceeds of Receivables collected by the Debtor shall
not be commingled with other funds of the Debtor and shall, upon the request of
the Secured Party, be immediately delivered to the Secured Party in the form
received except for necessary endorsements to permit collection. In the Event of
Default, the Debtor shall, at the request of the Secured Party, notify its
account debtors of the security interest of the Secured Party in any Receivables
and that payment thereof is to be made directly to the Secured Party, and the
Secured Party may itself at any time, without notice to or demand upon the
Debtor, so notify account debtors. The making of such a request or the giving of
any such notification shall not affect the duties of the Debtor described above
with respect to the proceeds of collection of Receivables received by the
Debtor. In the Event of Default, the Debtor will at any time upon the Secured
Party's request deliver to the Secured Party the original documents in the
Debtor's possession for any Chattel Paper, Documents or Instrument, held or
owned by the Debtor.
5
Section 7. DEFAULTS AND REMEDIES. If any one of the following "Events
of Default" shall occur and shall not have been remedied:
(a) Any "Event of Default" under Note A or Note B; or
(b) Any default by the Debtor with respect to the payment of any
of the Obligations; or
(c) Any representation or warranty made by the Debtor herein or in
any written certificate or report furnished by the Debtor
hereunder shall prove to have been incorrect in any material
respect; or
(d) The Debtor shall default in the performance of any agreement,
covenant or obligation contained herein;
then the Secured Party, may in addition to any other rights and remedies which
it may have, immediately and without demand exercise any and all of the rights
and remedies granted to a secured party upon default under the Code; and upon
request or demand of the Secured Party, the Debtor shall at its expense assemble
all or any part of the Collateral and make it available to the Secured Party at
a convenient place designated by the Secured Party. The Secured Party and its
agents are authorized to enter into or onto any premises where the Collateral
may be located for the purpose of taking possession of such Collateral. Any
notice of sale, disposition or other intended action by the Secured Party, sent
to the Debtor at the address specified at the beginning of this Security
Agreement or at such other address of the Debtor as may from time to time be
shown on the Secured Party's records, at least ten (10) days prior to such
action, shall constitute reasonable notice to the Debtor. Any proceeds of any
disposition of any of the Collateral may be applied to the Secured Party toward
payment of such of the Obligations and in such order of application as the
Secured Party may from time to time elect.
Section 8. MISCELLANEOUS.
8.1 No waiver by the Secured Party of any default shall operate as a
waiver of any other default or of the same default on a future occasion. No
delay or omission on the part of the Secured Party in exercising any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Secured Party of any right or remedy shall preclude any other or future
exercise thereof or the exercise of any other rights or remedy. Time is of the
essence of this Security Agreement. The provisions of this Security Agreement
are cumulative and in addition to the provisions of any liability of the Debtor
under any note, any guaranty or any other writing, and the Secured Party shall
have all benefits, rights and remedies of a secured party under this Security
Agreement and any other document.
8.2 All rights of the Secured Party hereunder shall inure to the
benefit of its successors and its assigns, and all Obligations of the Debtor
shall bind the successors and assigns of the Debtor.
8.3 This Security Agreement has been delivered in the State of
Florida and shall be construed in accordance with the internal laws of Florida.
6
8.4 The Debtor shall pay on demand all expenses and expenditures of
the Secured Party, including reasonable attorneys' fees and legal expenses,
incurred or paid by the Secured Party in protecting, enforcing or exercising its
security interest, rights or remedies created by, connected with or provided in
this Security Agreement or performance pursuant to this Security Agreement.
8.5 At its option, the Secured Party may discharge taxes, liens or
security interests or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral, and may pay for the
maintenance and preservation of the Collateral. The Debtor agrees to reimburse
the Secured Party on demand for any payments made, or any expense incurred, by
the Secured Party, pursuant to the foregoing authorization. Except as otherwise
expressly provided in this Security Agreement, until default the Debtor may have
possession of the Collateral and use it in any lawful manner not inconsistent
with this Security Agreement and no inconsistent with any policy of insurance
thereon.
8.6 If any of the provisions of this Security Agreement shall
contravene or be held invalid under the laws of any jurisdiction, the Security
Agreement shall be construed as if not containing such provision and the
remainder of this Security Agreement shall be construed and enforced
accordingly.
8.7 The Secured Party's rights under the Loan Agreement and all
documents executed pursuant thereto or in connection therewith are cumulative.
Without limiting the generality of the foregoing, the Secured Party may enforce
its rights hereunder in all or part of the Collateral or in any other security
in the order selected by Secured Party.
8.8 THE DEBTOR HEREBY, AND THE SECURED PARTY BY ITS ACCEPTANCE OF
THIS SECURITY AGREEMENT, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT
AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED
PARTY ACCEPTING THIS SECURITY AGREEMENT.
7
IN WITNESS WHEREOF, this Security Agreement has been dated for
convenience as of the date hereinabove first written, but in fact executed on
July 23, 1996.
DEBTOR: XXX'X ACQUISITION CORPORATION, a Florida
corporation
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Print Xxxx X. Xxxxxxxxx
Name:
-----------------------------
Title: President
-----------------------------
: XXX'X PRESCRIPTION SHOPS, INC.
a Florida corporation
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Print Xxxx X. Xxxxxxxxx
Name:
-----------------------------
Title: President
-----------------------------
8
EXHIBIT A
TO
SECURED AGREEMENT
LEGAL DESCRIPTION OF
REAL PROPERTY TO WHICH FIXTURES ARE ATTACHED
SCHEDULE OF ASSETS
1. Assets owned by Xxx'x Acquisition Corp. consist of 100% of the issued
stock of Xxx'x Prescription Shops.
2. Assets owned by Xxx'x Prescription Shops, Inc. as of June 30, 1996
Cash in Bank
Accounts Receivable Pledged To: Former
Inventory Shareholders and
Property & Equipment United National
Security Deposits Bank
Other Miscellaneous
Assets
SCHEDULE I
TO
SECURITY AGREEMENT
ADDITIONAL LOCATIONS AT WHICH
COLLATERAL OF THE DEBTOR IS LOCATED
1. XXX'X PHARMACY/SOUTH MIAMI (Leased)
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx
(000) 000-0000
2. XXX'X PHARMACY/GABLES (Leased)
000 Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxx
(000) 000-0000
3. XXX'X PHARMACY/BRICKELL (Leased)
0000 XX Xxxxx Xxxxxx
Xxxxx, Xxxxxxx
(000) 000-0000
EXHIBIT B
TO
SECURED AGREEMENT
PERMITTED ENCUMBRANCES
FILED WITH SECRETARY OF STATE
1. UCC-1 filed 9/29/1995 Filing Number 950000195056
Expires 9/29/2000 Xxxxx Xxxxxx
Secured Parties: Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx
Debtors: Xxx'x Prescription Shops, Inc.
Xxx'x Prescription Corporation
2. UCC-1 filed 3/29/1996 Filing Number 960000064151
Expires 3/29/2001
Secured Party: Fox Meyer Drug Company
Debtor: Xxx'x Prescription Shops, Inc.
3. UCC-1 filed 1/22/1996 Filing Number 960000015259
Expires 1/22/2001
Secured Party: United National Bank
Debtor: Xxx'x Prescription Shops, Inc.
4. UCC-1 filed 10/9/1991 Filing Number 910000217104
Expires 10/9/1996
Secured Party: Xxx'x Prescription Shops, Inc.
Debtor: Xxx'x Prescription Shops No. 5, Inc.
FILED WITH PUBLIC RECORDS OF DADE COUNTY, FLORIDA
5. UCC-1 Financing Statement
Filed 10/8/91
CFN: 91R 355172
Official Records Book
15220 Page 2902
Secured Party: Xxx'x Prescription Shops, Inc.
Debtor: Xxx'x Prescription Shops No. 5, Inc.
