MANAGEMENT SERVICES AGREEMENT
Exhibit
10.1
MANAGEMENT
SERVICES AGREEMENT
THIS
MANAGEMENT SERVICES AGREEMENT (the “Agreement”) is made and entered into
effective as of December 20, 2005, by and between DRTATTOFF, LLC, a California
limited liability company (“Manager”) and Xxxxxxx Xxxxx, D.O., an individual
(“Physician”).
RECITALS
A. Physician
is licensed to practice osteopathic medicine in the State of California, and
has
special expertise in the removal of tattoos.
B. Manager
is a company specializing in providing management services to healthcare
professionals, and is experienced in providing management services to practices
of the type operated by Physician.
C. Physician
desires to provide tattoo removal services at the “Practice Site,” as such term
is defined below, and Manager and Physician desire that Manager provide
management services to Physician on the terms and conditions contained in this
Agreement.
NOW,
THEREFORE, the parties to this Agreement do hereby agree as
follows:
1. Relationship
of Physician and Manager.
a. Appointment
of Manager.
Physician hereby appoints Manager as the exclusive manager of Physician’s tattoo
removal practice (the “Practice”) at the “Practice Site,” as such term is
defined in Section 2.e. below, and at any other Practice Sites at which
Physician provides or supervises tattoo removal services, and Manager shall
provide to Physician the technical, management, administrative and support
services and equipment described in Section 2 below.
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b. Retention
of Authority and Control. Notwithstanding
the authority granted to Manager in this Agreement, Manager and Physician agree
that Physician shall at all times exercise overall control of the operations
of
the Practice, and shall retain legal responsibility for all professional medical
and ethical matters in connection with the Practice. Manager’s duties for
Physician under this Agreement shall be purely non-medical and administrative
in
nature, and Manager shall in no way exercise any clinical judgment as to the
nature of professional or ancillary services or type of practitioner that any
patient requires or receives. Rather, Physician shall be solely responsible
for
and have complete authority, supervision and control over the provision of
professional healthcare services performed by Physician and the “Licensed Health
Professionals,” as such term is defined below in Section 2.b.iv., as Physician,
in his sole discretion, deems appropriate and in accordance with all applicable
laws and regulations. This Agreement shall in no way be construed to mean or
suggest that Manager is engaged, or permitted to engage, in the practice of
osteopathic medicine. Any delegation of authority by Physician to Manager that
would require or permit Manager to engage in the practice of osteopathic
medicine shall be prohibited and deemed ineffective and Physician shall retain
and have sole authority at all times with respect to all such
matters.
2. Manager’s
Services. Manager
shall provide the following management services (collectively, “Services”) with
respect to the Practice conducted by Physician:
a. Day-to-Day
Management. Physician
hereby engages Manager as his sole and exclusive agent to manage and administer
the day-to-day business functions related to the Practice conducted by Physician
at the Practice Site. Manager’s performance of the Services shall involve such
expenditure of time as Manager determines is necessary or advisable in its
reasonable discretion.
b. Personnel.
i. Manager
shall employ or engage and provide to Physician all administrative personnel,
including a receptionist, secretarial and transcribing personnel, billing
personnel, purchasing personnel, janitorial and maintenance personnel, and
such
other administrative and management personnel that Manager determines to be
necessary or appropriate, after consultation with Physician, for the efficient
and proper operation of Physician’s Practice. All such administrative and
non-licensed personnel engaged by Manager shall be referred to collectively
as
the “Support Personnel.”
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ii. Manager
shall be responsible for the hiring, supervising, training, disciplining, and
termination of the Support Personnel, including all determinations regarding
the
retention, promotion, demotion, awarding of bonuses, salary adjustments and
other matters affecting the terms and conditions of the employment or engagement
of the Support Personnel in accordance with and subject to such personnel
policies as may be adopted from time to time by Manager. Staffing levels, work
hours and shifts and employee benefit programs shall be established and
implemented by Manager in accordance with the policies and funding arrangements
developed by Manager.
iii. Manager
shall be responsible for compensating the Support Personnel, and shall provide
payroll accounting services and maintain employee records, workers’ compensation
insurance, unemployment insurance, and such employee benefit programs for the
Support Personnel as it determines are necessary or advisable in its sole
discretion.
iv. Physician
shall be responsible for employing or engaging, at Physician’s sole cost and
expense, additional physicians or licensed allied health professionals,
including but not limited to Registered Nurses and/or Physician Assistants
(collectively, the “Licensed Health Professionals”), which Physician shall
supervise in accordance with all applicable laws and regulations. If Physician
engages Licensed Health Professionals, Manager shall administer the payment
of
compensation of the Licensed Health Professionals, including providing payroll
and accounting services, preparing checks for the signature of Physician and
maintaining employee records. Manager shall also administer the payment of
all
applicable vacation pay, sick leave, and retirement, health and life insurance
benefits provided by Physician, at Physician’s sole cost and expense, to the
Licensed Health Professionals.
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c. Billing
and Collection.
i. Manager
shall provide all billing and collection services that Manager determines to
be
necessary or appropriate in connection with the charges resulting from the
performance of services by Physician and the Licensed Health Professionals.
Specifically, Manager shall prepare patient invoices; input billing information;
prepare computerized billing statements and submit bills and claims to patients
and third party payors; respond to telephone inquiries from patients and payors
concerning their bills; diligently pursue collection of unpaid bills for up
to
180 days from the initial billing, and, thereafter; refer such unpaid bills
to
collection agencies or attorneys for collection, the cost and expense of which
shall be borne solely by Physician. Manager shall deposit all payments into
the
“Operational Account” described in Section 3 below. Manager shall provide
monthly and year-to-date reports showing all xxxxxxxx, collections, and accounts
receivable and the aging of same.
ii. Physician
hereby appoints Manager for the term of this Agreement as his true and lawful
attorney-in-fact for the following purposes:
1. To
xxxx
in Physician’s name and on his behalf: (a) patients; (b) third party payors and
(c) any other persons or entities who are obligated to pay for services
performed by Physician and the Licensed Health Professionals.
2. To
collect in the name of Physician and on his behalf all charges, fees or other
amounts resulting from or related to the professional and ancillary services
performed by Physician and the Licensed Health Professionals.
3. To
receive all payments arising from the professional and ancillary services
performed by Physician and the Licensed Health Professionals; take possession
of
and endorse in the name of Physician all cash, notes, checks, money orders,
insurance payments and any other instruments received as payments of accounts
receivable of Physician, however arising. Physician shall immediately forward
to
Manager any such payments that may come into the possession of Physician or
the
Licensed Health Professionals. Physician hereby expressly authorizes and grants
Manager the right to open any mail or messengered envelopes or packages sent
by
any Practice patient or third party payor which lists Physician or any Licensed
Health Professional as the addressee. Physician agrees that he shall not attempt
to stop, hinder, interfere with, re-direct or divert any claims, payments or
explanation of benefits, whether submitted or paid in a written form, by
facsimile or electronically, during the term of this Agreement or after its
expiration.
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4. To
deposit all “Gross Revenues,” as such term is defined in Section 3.a. below,
directly into the Operational Account, in accordance with Section 3
below.
iii. Physician
acknowledges and agrees that Manager shall have discretion to compromise, settle
or write off any amount due from a patient or third party payor, or determine
not to appeal a denial by any third party payor of any claim for payment, for
any particular professional service rendered by or on behalf of Physician.
d. Supplies,
Equipment, and Furniture.
i. Manager
shall be responsible for furnishing all management information systems
(collectively, the “Management Information System”), office supplies, equipment,
furnishings, furniture and personal property, including all telephones, postage
and duplication services, stationery, forms and other items (collectively,
the
“Office Equipment”) which Manager, after consultation with Physician, determines
to be necessary or appropriate for the operation of Physician’s Practice.
Manager also shall be responsible for providing, either by purchase or by lease,
such medical equipment (the “Medical Equipment”) as Physician and Manager
determine is necessary or appropriate for the operation of the Practice.
ii. Manager
shall arrange for the maintenance and repair of the Office Equipment and the
Medical Equipment. If Manager determines, after consultation with Physician,
that any item of existing the Office Equipment or Medical Equipment utilized
in
Physician’s practice is worn out or obsolete and that it is unreasonable,
impossible or economically impractical to repair, and if Manager, after
consultation with Physician, further determines that such item is necessary
or
appropriate for the efficient operation of Physician’s practice, then Manager
shall purchase Office Equipment or Medical Equipment which is the same model
or
functional equivalent as the item of equipment to be replaced for use in the
Practice.
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e. Practice
Site.
i. Manager
shall provide to Physician, for his non-exclusive
use in operating the Practice, the premises located at 0000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, together with all appurtenances,
improvements and fixtures (collectively, the “Practice Site”). Changes in
location of the Practice Site may be effected by Manager as of the expiration
of
any lease or other arrangement by which Manager leases or occupies the Practice
Site or at any other time as may be approved in writing by Manager after
consultation with Physician. Further, Manager shall have the exclusive right
to
manage Physician’s Practice at any additional location at which Physician
provides tattoo removal services, and such additional locations shall be
considered a “Practice Site” for purposes of this Agreement, and Physician’s
performance of tattoo removal services at such additional Practice Site(s)
shall
be subject to the terms and conditions contained in this Agreement. Physician
acknowledges that this Agreement and Manager’s provision of any Practice Site to
Physician gives Physician only a conditional right to use the Practice Site,
which right shall automatically expire, without notice or further action by
Manager, upon the expiration or early termination of this Agreement for any
reason, and Physician shall immediately vacate the Practice Site upon such
expiration or early termination. Physician further acknowledges that no
leasehold interest is created or conveyed by this Agreement, and that no
landlord-tenant relationship is created by this Agreement or otherwise exists
between Manager and Physician.
ii. Manager
shall provide or arrange for the provision of all of the lessee maintenance
and
repair obligations for the Practice Site that are required to be performed
pursuant to the terms of the Practice Site lease between Manager and its
landlord, as well as any and all other maintenance and repairs to the Practice
Site which Manager, after consultation with Physician, determines to be
necessary.
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iii. Manager
shall provide or arrange for all utilities and building services related to
the
utilization by Physician and the Licensed Health Professionals of the Practice
Site.
iv. Physician
acknowledges that Manager is the owner of the name, “Dr. Tattoff,” and any
related names or derivations thereof (collectively, the “Name”) and has the
right to use the Name in connection with Manager’s business. Manager hereby
grants to Physician a revocable license to use the Name in connection with
the
practice conducted by Physician at the Practice Site. Physician acknowledges
that this Agreement gives Physician only a conditional right to use the Name,
which right shall automatically expire, without notice or further action by
Manager, upon the expiration or early termination of this Agreement for any
reason, and Physician shall immediately cease using the Name in connection
with
its practice at the Practice Site. Further, Physician agrees to not use the
Name
in connection with any other business or professional practice he may conduct
without the prior written consent of Manager. Physician shall cooperate fully
with Manager in completing, renewing and filing any documents that must be
submitted to the Osteopathic Medical Board of California, and any fictitious
business name statement related to the Name, to evidence Physician’s agreement
to the provisions contained in this Section 7.
f. Advertising
and Marketing.
Upon
request by Physician, Manager shall assist Physician in arranging for third
parties to provide advertising and marketing services (collectively,
“Advertising Services”) in connection with the tattoo removal services provided
by Physician at the Practice Site. In assisting Physician, Manager is acting
solely in its capacity as an administrator to Physician. At no time shall
Manager hold itself out as providing, or actually provide, tattoo removal
services on behalf of Physician. In engaging or employing personnel to provide
Advertising Services, Physician shall ensure that all such Advertising Services
conducted on behalf of Physician shall be performed in accordance with all
applicable laws, regulations, rules and guidelines, including but not limited
to
those promulgated by the Osteopathic Medical Board of California. Physician
shall directly pay the providers of such Advertising Services for the actual
cost and expense of all Advertising Services performed on behalf of
Physician.
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g. Additional
Services.
If
Physician desires that Manager provide services in addition to those listed
in
this Section 2, and Manager desires to provide such additional services, the
parties may negotiate for Manager to provide such additional services on such
terms and for such additional compensation as the parties may agree upon in
writing.
3. Bank
Account.
Manager
shall deposit all payments into a checking account established in Physician’s
name at a bank or other financial institution (“Agent”) mutually agreed upon by
the parties (the “Operational Account”). The Operational Account shall require
two (2) signatures for all drafts, checks and withdrawals: (a) the signature
of
a representative of Manager; and (b) the signature of Physician. Manager shall
deposit into the Operational Account all cash, checks, money orders and other
instruments received by Physician in connection with the operation of the
Practice. Physician shall pay Manager the amount of compensation due on a
semi-monthly basis, as set forth below in Section 4.b.
4. Compensation
for Services.
a. Management
Fee. Manager
and Physician acknowledge and agree that Manager shall incur substantial time,
costs and expense in performing the Services on behalf of Physician, and that
such costs and expenses will vary over the term of this Agreement. Additionally,
the parties acknowledge and agree that the level and intensity of the Services
will increase as the volume of Physician’s Practice increases. Manager and
Physician acknowledge that the Fee, as such term is defined below, has resulted
from arm’s length negotiations between the parties and does not take into
account the volume or value of referrals or business otherwise generated between
the parties, and is consistent with fair market value for the Services,
including the Office Equipment, Medical Equipment and Practice Site provided
by
Manager to Physician. Accordingly, as compensation in full for the performance
of the Services hereunder, Physician shall pay Manager a fee of forty-five
percent (45%) of Physician’s Gross Revenues received during each calendar month
during the term of this Agreement (the “Management Fee”). As used herein, the
term “Gross Revenues” shall be defined to mean all amounts received by Physician
relating to any and all professional services and ancillary services related
to
tattoo removal rendered by Physician and the Licensed Health Professionals
to
patients at the Practice Site, whether such revenues are received in cash from
patients, private or prepaid insurance, other third party payors or any other
source. If Physician or the Licensed Health Professionals directly receive
any
Gross Revenues, Physician shall immediately deliver any and all such Gross
Revenues to Manager for deposit into the Operational Account.
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b. Payment
Date.
Due to
its substantial investment and the costs and expenses Manager has incurred
and
will incur in performing its duties hereunder, the Management Fee shall be
payable as follows: On the first (1st)
and
fifteenth (15th)
days of
each month during the term of this Agreement, Manager shall calculate the
portion of the Gross Revenues in the Operational Account to be paid to Company
for the Services it provides hereunder, and Manager shall prepare a check,
drawn
on the Operational Account, in the amount to be paid to Manager (the “Manager
Check”). Company shall also calculate the portion of the Gross Revenues in the
Operational Account that Physician is entitled to retain and shall prepare
a
check, drawn on the Operational Account, in the amount to be paid to Physician
(the “Physician Check”). Manager shall deliver to Physician the Physician Check,
together with its written calculation of the amount due to each party. Manager
shall retain the Manager Check in payment of its Management Fee. If Physician
fails or refuses to pay, or prevents payment of the Management Fee, or any
portion thereof, to Manager when due, Manager shall be entitled to interest
on
the overdue amount at the greater of ten percent (10%) per annum or the highest
amount allowed by law, such interest to commence accruing as of the due date
of
such payment. The foregoing remedies of Manager, together with all other
remedies of Manager set forth herein, shall be cumulative and in addition to
all
other rights and remedies afforded to Manager at law or in equity.
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c. Semi-Annual
Review.
Manager
shall review annually, and have the right to adjust, the Management Fee if
necessary to insure that Manager is being paid its costs plus a reasonable
profit. If Manager proposes a change in the amount of the Management Fee,
Manager shall notify Physician at least sixty (60) days in advance of the date
on which the revised Management Fee is to be effective and shall provide to
Physician a written statement of the basis for the change, and Physician shall
pay the revised Management Fee beginning on the effective date.
d. Collection
Continuation Period.
Notwithstanding the termination or expiration of this Agreement, for a period
of
ninety (90) days following such termination or expiration (the “Collection
Continuation Period”), Manager shall have the right, but not the obligation, to
continue to provide, at the same compensation rate set forth in Section 4.a.
above, the collection services described in Section 2.c. above with respect
to
all Practice services related to tattoo removal provided by Physician and the
Licensed Health Professionals prior to the expiration or termination of this
Agreement. Physician specifically agrees that the foregoing provision is fair
and reasonable and is intended to compensate Manager for the Services it
provided during the term of the Agreement.
5. Security
Interest.
In
order
to secure Physician’s timely payment of the Management Fee, any other sums owed
to Manager by Physician, and the performance of any other obligation of
Physician under this Agreement, Physician hereby grants Manager a security
interest in and to all of the Gross Revenues, accounts receivable, cash and
all
funds in the Operational Account and other deposit accounts, whether now
existing or hereafter acquired, pertaining to and generated by or in connection
with the Practice conducted by Physician. To evidence the security interest
granted to Manager herein, Manager and Physician shall enter into the “Security
Agreement,” attached hereto as Exhibit “A” and incorporated herein by this
reference. Manager shall file a UCC-1 financing statement with the California
Secretary of State documenting the security interest granted to Manager, and
Physician shall cooperate with Manager in filing such UCC-1. Upon the release
of
the security interest granted herein, Manager shall complete and file a UCC-2
releasing such security interest.
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6. Term
and Termination.
a. Term. The
initial term of this Agreement shall be for one (1) year commencing as of the
date first written above; thereafter, this Agreement shall renew automatically
for successive terms of one (1) year each, unless either party notifies the
other party in writing, not less than ninety (90) days’ prior to the end of the
then current term, of its intention to not renew this Agreement.
b. Termination.
i. Either
party may terminate this Agreement for cause upon the material breach of this
Agreement by the other party, if such breach is not cured within ten (10) days
following written notice of such breach.
ii. Either
party may terminate this Agreement immediately upon the filing, with respect
to
the other party, of a voluntary or involuntary petition in bankruptcy if such
petition is not dismissed within thirty (30) days of such filing; or upon the
appointment of a receiver or trustee to take possession of all, or substantially
all, of the assets of a party, if such appointment is not terminated within
thirty (30) days, or upon the garnishment or attachment of the Gross Revenues
generated by Physician at the Practice Site.
iii. Manager
may terminate this Agreement immediately upon the occurrence of any of the
following events:
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(a) Manager’s
good faith determination that Physician’s operation of the Practice does not
meet the accepted professional or ethical standards of the osteopathic medicine
profession or that Physician or the Licensed Health Professionals are
jeopardizing the health or welfare of Physician’s patients;
(b) The
suspension, revocation, restriction, termination or non-renewal of Physician’s
professional license;
(c) The
suspension, revocation, restriction, termination or non-renewal of Physician’s
medical staff membership or practice privileges at any hospital;
(d) The
felony conviction, or conviction of any crime involving moral turpitude, of
Physician;
(e) Physician’s
inability, due to illness or physical or mental disability, to perform or
supervise tattoo removal services at the Practice Site during Physician’s normal
hours of operation for thirty (30) or more days, consecutively or cumulatively,
during any twelve (12) month period of this Agreement;
(f) If,
for
any reason, Manager no longer has the right to use the Practice Site, due to
Manager’s landlord’s termination of the Premises Lease, its expiration, or
otherwise; or
(g) Physician’s
breach of any of the provisions of Section 7 below.
iv. Either
party may terminate this Agreement immediately upon the dissolution of the
other
party, if such party is an entity, for any reason.
c. Effect
of Termination. Upon
termination or expiration of this Agreement, each party’s respective obligations
hereunder shall terminate in full, except for those obligations which either
explicitly, as set forth in this Agreement, or by their nature survive the
termination or expiration of this Agreement. In addition, Physician shall return
all documents, data and other materials or information that constitute
“Confidential Information” as such term is defined in Section 11.a.
below.
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7. Physician
Covenants. Physician
covenants and agrees that, at all times during the term hereof, Physician shall
(a) insure that he is duly licensed to practice osteopathic medicine in the
State of California, without restriction; (b) insure that the Licensed Health
Professionals are duly licensed to perform their respective professions, without
restriction, and that they have the appropriate level of education and
experience to perform the services required of them in connection with the
Practice; (c) conduct the Practice and supervise the Licensed Health
Professionals in compliance with all applicable federal, state and local laws,
rules and regulations; (d) not enter into discussions or negotiations or an
agreement with any other person or entity regarding some or all of the Services
or for the sale or merger of the Practice, unless Physician obtains Manager’s
prior written consent; (e) be open for business during regular business hours,
Monday through Friday, in accordance with the schedule adopted by Physician,
but
Physician shall provide no less than twenty (20) hours of tattoo removal
services, including supervision services, per month; and (f) continuously
practice at the Practice Site during Physician’s normal business hours, provided
that Physician may take such reasonable amounts of time off for vacation,
illness or family emergencies.
8. Records.
a. Patient
Records. Although
Manager shall maintain Physician’s patient charts and records on behalf of
Physician, Physician shall be solely responsible for making and reviewing all
entries made by Physician and the Licensed Health Professionals on all Physician
patient charts and records, and all such patient records and charts maintained
by Manager in connection with professional medical services provided by
Physician shall be Physician’s property. Each of the parties hereto shall
maintain and safeguard the confidentiality of all patient records, charts and
other information generated in connection with the professional medical services
provided hereunder in accordance with federal and state confidentiality laws
and
regulations, including without limitation, the California Confidentiality of
Medical Information Act, Civil Code Section 56 et seq. and the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) and the regulations
thereunder. Notwithstanding the foregoing, Manager shall have a continuing
right
to inspect and copy (at Manager’s expense) all records pertaining to Physician’s
patients as may be necessary in connection with Manager’s performance of
services pursuant to this Agreement or for other reasonable purposes, subject
to
federal and state confidentiality laws, and provided Manager gives Physician
at
least five (5) days’ prior written notice.
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b. Business
Records. All
business and administrative records maintained by Manager in connection with
the
Services provided to Physician shall be Manager’s property. Notwithstanding the
foregoing, Physician shall have a continuing right to inspect and copy (at
Physician’s expense) all such business records for any reasonable purpose,
provided Physician gives Manager at least five (5) days’ prior written
notice.
9. Insurance;
Indemnification.
a. General
Liability Insurance. Manager
shall procure and maintain at all times during this Agreement, at Manager’s sole
cost and expense, comprehensive general liability and property insurance
covering the Practice Site with general liability limits in commercially
reasonable amounts, as determined by Manager. Within ten (10) days after
Physician’s request, Manager shall furnish certificates, endorsements and copies
of all insurance policies to Physician.
b. Indemnification. Physician
agrees to defend, indemnify and hold harmless Manager, its officers, directors,
members, representatives, employees and agents, from and against any and all
losses, liabilities, damages, claims, judgments, costs or expenses, including
attorneys’ fees, that Manager may suffer, incur or become liable for, as a
result of any action or omission by Physician and/or the Licensed Health
Professionals. Manager agrees to defend, indemnify and hold harmless Physician,
its officers, directors, members, representatives, employees and agents, from
and against any and all losses, liabilities, damages, claims, judgments, costs
or expenses, including attorneys’ fees, that Physician may suffer, incur or
become liable for, as a result of any action or omission by Manager.
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10. Compliance
with Laws. The
obligations of Manager pursuant to this Agreement shall be subject to any
limitations or restrictions which may be imposed by law or regulation, and
Manager may suspend any or all obligations hereunder, or, at its option,
terminate this Agreement, if it determines, upon advice of counsel, that the
performance of any obligation pursuant to this Agreement may contravene
applicable law or regulation.
11. Non-Disclosure
of Manager’s Professional and Business Practices, Trade Secrets, or Privileged
Information; Non-Solicitation and Non-Interference.
a. Confidentiality. Physician
agrees to keep confidential and to not use or disclose the business practices,
trade secrets or privileged information of Manager and to keep such knowledge
confidential in Physician’s dealings with any healthcare practice, clinic or
practice, hospital, health care facility or other person or entity. Further,
Physician agrees that Physician will not at any time disclose to any person
or
use (except for the benefit of Manager) information obtained by Physician during
the period of Physician’s relationship with Manager regarding Manager’s business
plans, business methods, strategic plans, financial statements, financial
information, any and all data base or data input programs, computer programs
and
software (whether or not completed or in use), any and all operating manuals
or
similar materials that constitute Manager’s systems, templates or forms,
techniques, or any other trade secrets, confidential or proprietary information
respecting Manager and its business operations (collectively, “Confidential
Information”). Except to the extent necessary for Physician to carry out his
duties and obligations under this Agreement, Physician acknowledges and agrees
that he is expressly prohibited from creating, making, duplicating, copying,
retaining, taking, maintaining or possessing, by any means or method, such
Confidential Information either during or after the term of this Agreement.
Notwithstanding the foregoing, Manager may from time to time license to
Physician the use of any logo, trademark or tradename Manager develops from
time
to time, including the “Name,” as discussed above in Section 2.e.iv. above.
Physician shall immediately cease using such logo, trademark or tradename for
any purpose whatsoever upon the expiration or earlier termination of this
Agreement, and shall immediately return to Manager all materials containing
any
logo, trademark or tradename.
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b. Non-Interference. Physician
agrees that Physician will not disrupt, damage, impair or interfere with the
business of Manager, whether by way of interfering with or raiding its employees
or independent contractors, disrupting its relationship with agents, suppliers,
business contacts, representatives, vendors or otherwise.
c. Survival
of Obligations. The
obligations of this Section 11 shall be in full force and effect during the
term
of this Agreement and shall survive the termination or expiration of this
Agreement. Notwithstanding Section 13. of this Agreement, in the event of a
breach of this Section 11, Physician acknowledges that any violation of this
Section 11 could result in irreparable injury to Manager, and the remedy at
law
would be inadequate. Accordingly, Manager shall be entitled to injunctive relief
in addition to any other remedies to which Manager may be entitled at law or
in
equity.
12. Independent
Contractor In
performing all Services under this Agreement, Manager is, and shall at all
times
be acting and performing as, an independent contractor to Physician, with
Manager practicing and performing its business in accordance with its own
judgment as to the method of rendering such services, except as limited by
this
Agreement. The relationship between Manager and Physician is not one of
partners, joint venturers, principal and agent or employer and employee, or
any
relationship other than that of independent parties contracting with each other
solely for the purpose of carrying out the provisions of this Agreement. Except
as specifically provided herein, Physician shall neither have nor exercise
any
control or direction over the methods by which Manager and its employees and
independent contractors provide the Services required of it hereunder. Manager
shall neither have nor exercise any control or direction over the professional
judgment of Physician or the manner in which Physician performs his professional
services. The parties hereto understand that Manager, in its capacity as
Manager, does not practice osteopathic medicine and shall not employ, engage
or
supervise Physician in his provision of medical services. Each party hereto
shall be solely responsible for the compensation, benefits, insurance coverage,
employer taxes and any other obligations of its own employees or independent
contractors.
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13. Resolution
of Disputes.
a. For
all
disputes, claims or controversies arising in connection with, relating to,
or
arising out of this Agreement, the parties agree to first attempt to resolve
such dispute, claim or controversy by non-binding mediation. The mediation
shall
be conducted by a mediator agreed upon by the parties. If the parties are unable
to resolve their dispute, claim or controversy within thirty (30) days after
a
party’s request for mediation, then except as otherwise provided in Section 11
of this Agreement, such dispute, claim or controversy shall be settled by
arbitration in accordance with Sections 1280 through 1286.4 of the California
Code of Civil Procedure and the Commercial Arbitration Rules of the American
Arbitration Association (the “AAA Rules”).
b.
Each of
the parties specifically agrees that the provisions of this Section 13 shall
govern the resolution of any such controversy or claim. The controversies and
claims so governed by this Section 13 therefore include, but are not limited
to,
any claim for a tort, breach of contract, or a violation of any federal or
California statute or regulation, regardless
of
whether such controversy or claim is based on California case law, a California
statute, federal common law or a federal statute.
c. Each
of
the parties specifically waives the right to a jury trial to resolve a
controversy or claim arising out of or relating to this Agreement.
d. In
the
event of any conflict between the California Code of Civil Procedure Sections
1280 through 1286.4 and the AAA Rules, the Code of Civil Procedure shall
control. Judgment on the award rendered may be entered in any court having
jurisdiction thereof.
e. Such
arbitration shall be held in Los Angeles County, California.
17
f. The
arbitrator shall make written findings of fact and conclusions of law. The
arbitrator shall have no authority to make conclusions of law or an award that
could not have been made by a court of law. If either party initiates legal
proceedings against the other party, other than arbitration in accordance with
the rules of the American Arbitration Association as described above, the
prevailing party shall be allowed such costs and reasonable attorneys’ fees as
the court may allow.
g. All
documents, exhibits, transcripts, decisions, awards, and other information
produced or created in connection with the arbitration proceeding shall be
kept
strictly confidential by the parties.
14. General
Provisions.
a. No
Assignment. Unless
otherwise permitted in this Agreement, neither party hereto shall assign any
of
its rights, nor delegate any of its duties under this Agreement, without first
obtaining the express written consent of the other party. Subject to the
foregoing restriction, this Agreement shall be binding on the parties hereto
and
their successors and permitted assigns.
b. Severability. If
any
provision of this Agreement as applied to any party or to any circumstance
shall
be found by a court to be invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the application of any such
provision in any other circumstance, or the validity or enforceability of this
Agreement, unless such invalidity or unenforceability would defeat an essential
business purpose hereof, or except as otherwise provided herein.
c. Notice.
All
notices or demands shall be in writing and shall be given personally, by
electronic facsimile, or by certified mail. Notice shall be deemed conclusively
made at the time of notice if given personally or if by certified mail, three
(3) days after deposit thereof in the United States mail, properly addressed
and
postage pre-paid to the following addresses:
18
| Physician: | Xxxxxxx Xxxxx, D.O. | ||
| 00000 Xxxx Xxxxxxx Xxxxxxxxx #000 | |||
| Xxxxx Xxx Xxx, XX 00000 | |||
| Attention: Dr. Will Xxxxx | |||
| Manager: | DRTATTOFF Management Company, LLC | ||
| 0000 Xxxxxxxx Xxxx #000 | |||
| Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 | |||
| Attention: Xxxxx Xxxxx, Manager |
d. Waiver. A
waiver
by either party of any of the terms and conditions of this Agreement in any
instance shall not be deemed or construed to be a waiver of such term or
condition for the future, or of any subsequent breach thereof, nor shall it
be
deemed a waiver of performance of any other obligation hereunder.
e. Entire
Understanding. This
Agreement and any exhibits attached hereto contain the entire understanding
of
the parties hereto relating to the subject matter contained herein, and
supersede all prior and collateral agreements, understanding, statements and
negotiations of the parties. This Agreement can only be changed, modified,
amended, rescinded or supplemented by a written agreement executed by both
parties.
f. California
Law. This
Agreement shall be construed and enforced in all respects according to the
laws
of the State of California.
g. Attorney’s
Fees. Should
either party institute any action or proceeding, including without limitation
arbitration, relating to this Agreement, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorney’s fees, incurred in connection with such
action or proceeding.
h. Interpretation
of Agreement. The
parties acknowledge and agree that because all parties and their attorneys
participated in negotiating and drafting this Agreement, no rule of construction
shall apply to this Agreement which construes any language, whether ambiguous,
unclear or otherwise, in favor of, or against any party by reason of that
party’s role in drafting this Agreement.
19
i. Additional
Acts. The
parties hereto agree to perform such other acts, and to execute such additional
documents, as may be required from time to time to carry out the provisions
of
this Agreement or the intentions of the parties.
IN
WITNESS WHEREOF, this Agreement is executed effective as of the date and year
first set forth above.
| “MANAGER” | “PHYSICIAN” | ||
| DRTATTOFF, LLC, | |||
| a California limited liability company | |||
| By: /s/ Xxxxx Xxxxx | /s/ Xxxxxxx Xxxxx | ||
| Manager | Xxxxxxx Xxxxx, D.O. | ||
20
EXHIBIT
“A”
THIS
SECURITY AGREEMENT (“Security Agreement”) is made and entered into effective as
of December 20, 2005 by and between DRTATTOFF, LLC, a California limited
liability company (“Secured Party”) and Xxxxxxx Xxxxx, D.O., an individual
(“Debtor”).
RECITALS
A. Debtor
and Secured Party have entered into that certain “Management Services
Agreement,” of even date herewith (the “MSA”), by which Secured Party provides
management services to Debtor in connection with the tattoo removal practice
conducted by Debtor at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (the “Practice Site”) and at other Practice Sites the parties
may agree upon from time to time, as set forth in the MSA.
B. Debtor
has agreed to enter into this Security Agreement in order to grant Secured
Party
a first priority security interest in the Collateral (as hereinafter defined)
to
secure prompt payment and performance of Debtor’s obligations to Secured Party,
including, without limitation, Debtor’s obligation to pay Secured Party the
Management Fee set forth in the MSA.
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:
AGREEMENT
1. Definitions.
As
used
in this Security Agreement, the following terms shall have the following
meanings:
“Account
Debtor”
means
any person or entity who is or who may become obligated with respect to, or
on
account of, an Account.
“Accounts”
means
all
accounts, as that term is defined in section 9102(a)(2) of the California
Commercial Code, now owned or hereafter acquired by Debtor in connection with
or
arising out of the Practice conducted by Debtor at any and all Practice Sites,
including (a) all accounts receivable, other receivables, book debts and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper
or Instruments), whether arising out of Goods sold or services rendered by
Debtor or any “Licensed Health Professional,” as such term is defined in the
MSA, at any Practice Site (including any such obligations that may be
characterized as an account or contract right under the Code); (b) all of
Debtor’s rights in, to, and under all purchase orders or receipts for Goods or
services; (c) all of Debtor’s rights to any Goods represented by any of the
foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation, and stoppage in transit, and rights to returned, reclaimed, or
repossessed Goods); (d) all money due or to become due Debtor under all purchase
orders and contracts for the sale of Goods or the performance of services or
both by Debtor or in connection with any other transaction (whether or not
yet
earned by performance by Debtor), including the right to receive the proceeds
of
those purchase orders and contracts; and (e) all collateral security and
guaranties of any kind given by any other Debtor with respect to any of the
foregoing.
1
“California
Commercial Code” means
the
Uniform Commercial Code as may, from time to time, be enacted and in effect
in
the State of California. Terms defined in the California Commercial Code not
otherwise defined in this Security Agreement or the MSA are used in this
Security Agreement as defined in that Code on the date of this Security
Agreement.
“Collateral”
means
all
of Debtor’s personal property, furniture and fixtures, whether now owned or
hereafter acquired, located at any Practice Site or elsewhere and resulting
from
Debtor’s operation of the Practice conducted at any Practice Site, including,
but not limited to, all of Debtor’s interest in Accounts, Chattel Paper,
Contracts, Debtor’s Books, Equipment, Fixtures, General Intangibles, Goods,
Instruments and letters of credit, Inventory, Investment Property, Deposit
Accounts, money, cash or cash equivalents, and to the extent not otherwise
included, all proceeds and products of the foregoing and all accessions to,
substitutions and replacements for, and rents and profits of each of the
foregoing.
“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 summarizing, or evidencing the Accounts.
“Deposit
Account” means
any
deposit account, as that term is defined in section 9102(a)(29) of the
California Commercial Code, now owned or hereafter acquired by Debtor.
“Equipment”
means
all
equipment, as that term is defined in section 9102(a)(33) of the California
Commercial Code, now owned or hereafter acquired by Debtor, wherever located,
including all of data processing and computer equipment with software and
peripheral equipment, office machinery, furniture, tools, attachments,
accessories, medical and laser equipment, and other equipment of every kind
and
nature, trade fixtures and other fixtures, together with all additions and
accessions, replacements, parts, substitutes for any of the foregoing, and
all
manuals, drawings, instructions, warranties, and rights with respect to the
foregoing, and all products and proceeds of the foregoing and condemnation
awards and insurance proceeds with respect thereto.
“Fixtures”
means
all
fixtures, as that term is defined in section 9102(a)(41) of the California
Commercial Code, now owned or hereafter acquired by Debtor, wherever located.
“General
Intangibles”
means
all general intangibles, as that term is defined in section 9102(a)(42) of
the
California Commercial Code, now owned or hereafter acquired by Debtor in
connection with the Practice conducted at any and all Practice Sites, including
all right, title, and interest that Debtor may now or hereafter have in or
under
any Contracts, Licenses, Copyrights, Trademarks, and Patents and all
applications therefore and reissues, extensions, or renewals; interests in
partnerships, joint ventures, and other business associations; permits;
inventions (whether or not patented or patentable); knowledge, know-how, skill,
expertise, or experience; software; databases; data; processes; models,
drawings, materials, and records; goodwill (including the goodwill associated
with any Trademark or Trademark License); all rights and claims in or under
insurance policies (including insurance for fire, damage, loss, and casualty,
whether covering personal property, real property, tangible rights, or
intangible rights, all liability, life, key man, and business interruption
insurance, and all unearned premiums); uncertificated and certificated
securities; chooses in action; deposit, checking, and other bank accounts;
rights to receive tax refunds and other payments; rights to receive dividends,
distributions, cash, instruments, and other property in respect of or in
exchange for pledged shares or other equity interests; rights of
indemnification; all ledgers, correspondence, credit files, invoices, and other
papers and records; magnetic tapes, CD-ROMs, zip drives, and other data storage
media; and other papers and documents in the possession or under the control
of
Debtor or any computer bureau or service company from time to time acting for
Debtor.
2
“Goods”
means
any
goods, as that term is defined in section 9102(a)(44) of the California
Commercial Code, now owned or hereafter acquired by Debtor.
“Licenses”
means
Copyright Licenses, Patent Licenses, and Trademark Licenses.
“Obligations”
means
any
and all debts, liabilities, obligations, or undertakings owing by Debtor to
Secured Party, including, without limitation, all debts, liabilities,
obligations or undertakings arising under, advanced pursuant to, or evidenced
by
the MSA and 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.
“Practice”
means
the
tattoo removal services and any other services provided by Debtor and the
“Licensed Health Professionals,” as such term is defined in the MSA, at any and
all Practice Sites.
“Practice
Site” or “Practice Sites”
means
the premises located at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, together with all appurtenances, improvements and fixtures.
The term “Practice Site” or “Practice Sites” also includes any additional or
replacement locations at which Debtor conducts a Practice and which are managed,
or entitled to be managed, by Secured Party pursuant to the MSA.
2. Grant
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 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.
3. Perfection
and Further Assurances.
a. Debtor
authorizes Secured Party to authenticate and file all records (including initial
financing statements, certificates of title, and control instructions to third
parties, amendments, continuation statements, etc.) that are reasonably required
by Secured Party to perfect and continue its security interest in the
Collateral. Debtor authorizes Secured Party to indicate that the financing
statement covers all assets or all personal property owned by Debtor and used
in
connection with the Practice operated by Debtor at any Practice Site. Debtor
will execute (sign, acknowledge when necessary, and deliver) any other records
or documents necessary to perfect and continue the security interest under
applicable federal or state statute, regulation, or treaty, including any
financing statement necessary to perfect a security interest in
fixtures.
3
b. Debtor
agrees to authenticate and to cause all necessary third parties to authenticate
any and all records necessary for Secured Party’s control over Deposit Accounts,
electronic Chattel Paper, and letter-of-credit rights. Debtor agrees that the
third party will have the right to comply with the instructions originated
by
Secured Party directing disposition of such Collateral without further consent
by Debtor and will indemnify and defend the third party from all claims by
Debtor arising from or related to the third party’s compliance with Secured
Party’s disposition instructions. Debtor will cause any bank with which a
Deposit Account is maintained to subordinate its rights of recoupment and setoff
to Secured Party’s security interest.
c. Debtor
represents and warrants that (1) his exact name is as set forth in the preamble
to this Security Agreement; and (2) Debtor is located (as that term is used
in
California Commercial Code section 9307) in California.
d. Debtor
authorizes Secured Party to take possession of any and all items of the
Collateral at any time. Debtor promises to deliver possession of the Collateral
promptly upon receipt of an authenticated request from Secured Party for
delivery of possession.
e. Whether
or not Debtor is then in default, Secured Party will have the right, but not
the
obligation, to (1) notify Account Debtor and other persons obligated on the
Collateral to make payment or otherwise render performance to or for the benefit
of Secured Party, (2) enforce the obligations of Account Debtor and other
persons obligated on the Collateral, (3) apply the balance of any Deposit
Account which it controls to the Obligations, and (4) take any proceeds to
which
it is entitled for application to the Obligations.
4. Notice
of Postperfection Changes.
Debtor
will immediately notify Secured Party of:
a. Any
change in the name of Debtor or Debtor’s use of an assumed business or trade
name;
b. Any
change in Debtor’s location;
c. Any
merger between Debtor and any third party or transfer by or to Debtor of
substantially all of the assets and liabilities of another person;
d. Any
substantial damage to or loss or destruction of any essential or material part
of the Collateral, whether or not covered by insurance.
5. Inspection
and Verification Rights.
Debtor
will keep accurate records and documents relating to the Collateral at its
principal business office. Secured Party will have the unconditional right
at
all reasonable times and upon reasonable prior notice to Debtor to:
4
a. Inspect
the Collateral, including the records and documents related
thereto;
b. Make
copies of the records and documents;
c. After
notice to Debtor (unless it is in default), verify orally and in writing
directly with third parties, including Account Debtor, the accuracy of any
information provided by Debtor with respect to the Collateral;
d. Determine
through employees, agents, or independent contractors the value of the
Collateral at the expense of Debtor no more than once per calendar year and
at
any time reasonably prudent when Debtor is in default;
e. Enter
upon any premises owned, leased, or otherwise controlled by Debtor for the
foregoing purposes.
f. Debtor
promises and agrees to provide to Secured Party access to the Collateral and
to
provide any office space (including computer hardware, operating systems, and
software and access to safes and other areas of safekeeping) that is reasonably
necessary for the exercise of the foregoing rights. Debtor grants to Secured
Party an easement over all premises owned, leased, or otherwise controlled
by
Debtor for the purpose of inspecting and valuing the Collateral and, following
any default, repossessing, storing, preparing for disposition, and disposing
of
the Collateral. Debtor authorizes and instructs all third parties who have
information relating to the Collateral (such as customers, Account Debtor,
obligors, government agencies, employees, and outside accountants) to provide
any and all information, records, and documents relating to the Collateral
to
Secured Party upon its written request provided that Secured Party has given
Debtor prior notice in writing of its intention to ask for such
information.
6. Covenants.
Debtor
promises and agrees to:
a. Pay
and
perform the Obligations when and as due;
b. Cooperate
completely and promptly with Secured Party in perfecting and foreclosing Secured
Party’s security interest, in locating, inspecting, evaluating, collecting,
assembling, repossessing, and disposing of the Collateral, and in notifying
third parties about Secured Party’s security interest and collection
rights;
c. Operate
its business in the ordinary course and not change the size, nature, or emphasis
of that business in any materially adverse way;
5
d. To
maintain fire and extended coverage insurance on the Collateral in the amounts
and under policies acceptable to Secured Party, naming Secured Party under
a
lender’s loss-payable clause, and to provide Secured Party with the original
policies and certificates at Secured Party’s request;
e. Pay
all
taxes, assessments, and similar charges (“taxes”) levied against the Collateral
as and when the same become due and payable;
f. Pay
all
amounts when due which, if not so paid, may become the subject of a lien against
the Collateral which might have or gain priority over Secured Party’s security
interest (a “lien claim”);
g. Perform
all maintenance, repairs, and replacements that are necessary to keep the
Fixtures and Equipment in good and safe operating condition and promptly pay
all
costs of such work;
h. Take
all
reasonable steps to protect the tangible items of the Collateral against theft,
loss, or damage;
i. Provide
to Secured Party upon authenticated request evidence of insurance coverage
and
the payment of taxes and lien claims; and
j. Indemnify
and defend Secured Party against all claims, loss, liability, cost, or expense
asserted against or incurred by Secured Party by reason of Debtor’s failure to
provide a perfected, first-priority security interest in any item or items
of
the Collateral or the breach or default of Debtor under this Security
Agreement.
k. Debtor
hereby authorizes Secured Party to pay the premiums for insurance, taxes, and
the principal, interest, fees, and costs constituting lien claims if Debtor
does
not do so in a timely manner (unless Debtor is then contesting such obligation
in good faith and by appropriate means) and Secured Party reasonably believes
such payment is necessary for the protection of the Collateral and/or Secured
Party’s security interest in the Collateral (a “security protection advance”).
Debtor promises and agrees to reimburse Secured Party on demand for any security
protection advance made by Secured Party and to pay interest thereon at the
rate
of 10% per annum from the date of the advance until the date of
reimbursement.
l. To
pay
all expenses, including attorney fees, incurred by Secured Party in the
perfection, preservation, realization, enforcement, and exercise of Secured
Party’s rights under this Security Agreement.
m.
To
indemnify Secured Party against loss of any kind, including reasonable attorney
fees, caused to Secured Party by reason of its interest in the
Collateral.
n. To
conduct Debtor’s business efficiently and without voluntary
interruption.
6
o. To
preserve all rights, privileges, and franchises held by Debtor’s
business.
p. To
give
Secured Party notice of any litigation that may have a material adverse effect
on Debtor’s business.
q.
Not
to
change the name or place of Debtor’s business, or to use a fictitious business
name, without first notifying Secured Party in writing.
r.
Not
to
sell, lease, transfer, or otherwise dispose of the Collateral except, before
the
occurrence of a default, for cash proceeds of Accounts collected in the ordinary
course of business.
s.
Not
to
use the Collateral for any unlawful purpose or in any way that would void any
effective insurance.
t.
To
notify
Secured Party promptly in writing of any default, potential default, or any
development that might have a material adverse effect on the
Collateral.
7. Representations
and Warranties.
Debtor
represents and warrants to Secured Party that:
a. Debtor
is
duly licensed to practice osteopathic medicine in the State of California,
without restriction;
b. Debtor
is
authorized to execute and deliver this Security Agreement. The Security
Agreement is a valid and binding obligation of Debtor. The Security Agreement
creates a perfected, first-priority security interest enforceable against the
Collateral in which Debtor now has rights, and will create a perfected,
first-priority security interest enforceable against the Collateral in which
Debtor later acquires rights, when Debtor acquires those rights.
c.
Neither
the execution and delivery of this Security Agreement, nor the taking of any
action in compliance with it, will (1) violate or breach any law, regulation,
rule, order, or judicial action binding on Debtor, any agreement to which Debtor
is a party, Debtor’s articles of incorporation or bylaws; or (2) result in the
creation of a lien against the Collateral except that created by this Security
Agreement.
d.
No
default or potential default exists.
e. Debtor
has not (1) made any assignment for the benefit of creditors, (2) applied for
or
consented to the appointment of a receiver or trustee for its affairs, or (3)
been the subject of any voluntary or involuntary bankruptcy, insolvency,
reorganization or liquidation proceeding.
7
f. Other
than financing statements in favor of Secured Party, no effective financing
statement naming Debtor as debtor, assignor, grantor, mortgagor, pledgor or
the
like and covering any part of the Collateral is on file in any filing or
recording office in any jurisdiction.
8. Power
of Attorney.
Debtor
hereby irrevocably appoints Secured Party as Debtor’s attorney in fact with full
power of substitution to do any and all acts which Debtor is obligated by this
Security Agreement to do and for the purpose of, subsequent to any default
of
Debtor hereunder, taking any action and executing any instruments which Secured
Party may deem necessary or advisable to accomplish the purposes of this
Security Agreement. Without limiting the generality of the foregoing, Secured
Party shall have the following powers:
a.
To
perform any of Debtor’s obligations under the Security Agreement in Debtor’s
name or otherwise.
b.
To
give
notice of Debtor’s right to payment, to enforce that right, and to make
extension agreements with respect to it.
c.
To
release persons liable on rights to payment, to compromise disputes with those
persons, and to surrender security, all as Secured Party determines in its
sole
discretion when acting in good faith based on information known to it when
it
acts.
d.
To
prepare and file financing statements, continuation statements, statements
of
assignment, termination statements, and the like, as necessary to perfect,
protect, preserve, or release Secured Party’s interest in the
Collateral.
e.
To
endorse Debtor’s name on instruments, documents, or other forms of payment or
security that come into Secured Party’s possession.
f.
To
take
cash in payment of obligations.
g.
To
verify
information concerning rights to payment by inquiry in its own name or in a
fictitious name.
h. To
prepare, execute, and deliver insurance forms; to adjust insurance claims;
to
receive payment under insurance claims; and to apply such payment to reduce
Debtor’ Obligations.
This
power of attorney is coupled with an interest and may not be revoked or
cancelled by Debtor without Secured Party’s written consent.
9. Events
of Default.
Debtor
will be in default under this Security Agreement if:
a. Debtor
fails to pay any Obligations, or any portion thereof, to Secured Party when
due,
at stated maturity, on accelerated maturity, or otherwise.
8
b. Debtor
fails to make any remittances required by this Security Agreement.
c. Debtor
commits any breach of this Security Agreement, or any present or future rider
or
supplement to this Security Agreement, or any other agreement between Debtor
and
Secured Party evidencing the Obligations or securing them, including without
limitation the MSA and any amendments or supplements thereto.
d. Any
warranty, representation, or statement, made by or on behalf of Debtor in or
with respect to the Security Agreement, is false.
e. The
Collateral is lost, stolen, or damaged.
f. There
is
a seizure or attachment of, or a levy on, the Collateral.
g. Debtor
ceases operations, is dissolved, terminates its existence, does or fails to
do
anything that allows Obligations to become due before their stated maturity,
or
becomes insolvent or unable to meet its debts as they mature.
h.
Secured
Party for any reason deems itself insecure.
i.
Debtor
(1) applies for or consents to the appointment of a receiver, trustee,
liquidator, or custodian of himself or of a substantial part of his property;
(2) is unable, or admits in writing its inability, to pay its debts generally
as
they mature; (3) makes a general assignment for the benefit of his creditors
or
any of them; (4) is dissolved or liquidated in full or in part; (5) commences
a
voluntary case or other proceeding seeking liquidation, reorganization, or
other
relief with respect to itself or its debts under any bankruptcy, insolvency,
or
other similar law now or hereafter in effect, or consents to any relief or
to
the appointment of or taking possession of its property by any official in
an
involuntary case or other proceeding commenced against it; or (6) takes any
action for the purpose of effecting any of the foregoing.
j.
Proceedings
for the appointment of a receiver, trustee, liquidator, or custodian of Debtor
or of all or a substantial part of its property, or an involuntary case or
other
proceedings seeking liquidation, reorganization, or other relief with respect
to
such Debtor or its debts under any bankruptcy, insolvency, or other similar
law
now or hereafter in effect are commenced and an order for relief is entered
or
such a proceeding is not dismissed or discharged within 60 days of commencement.
10.
Rights
and Remedies.
When
an
event of default occurs:
a. Secured
Party may exercise all rights and remedies available to Secured Party under
this
Security Agreement and the California Commercial Code, including acceleration
of
the Obligations (that is, make such Obligations immediately due and payable).
All such rights and remedies are cumulative.
9
b. Without
thereby limiting the generality of the foregoing or of Secured Party’s rights
under any other section of this Security Agreement, Secured Party, upon Debtor’s
default, will be entitled to immediate possession of all items of the Collateral
and to collect and apply all payments from, and to enforce performance by,
third
parties as to the Collateral.
c. Debtor
will assemble the tangible items of the Collateral and make such items available
to Secured Party at the location or locations designated by Secured Party.
Debtor must also allow Secured Party, its representatives, and its agents to
enter the premises where all or any part of the Collateral, the records, or
both
may be, and remove any or all of it.
d. Debtor
agrees that it will be commercially reasonable if (1) Secured Party gives Debtor
and other persons entitled to notice written notice at least 10 days in advance
of any public or private disposition of all or any nonperishable part of the
Collateral.
e. Secured
Party and Debtor each waives the right to trial by jury in any action or
proceeding relating to any claim, offset, defense, or counterclaim, whether
in
contract or tort, at law or in equity, arising out of or relating to this
Security Agreement.
f. The
prevailing party in the trial or appeal of any civil action, arbitration, or
other adversary proceeding relating to this Security Agreement or any related
offset, defense, or counterclaim, whether in contract or tort, at law or in
equity, will be entitled to the award of a reasonable attorney fee in addition
to costs and disbursements.
11. Attorneys’
Fees, Costs and Expenses.
Debtor
shall pay all costs and expenses of Secured Party enforcing its rights under
this Security Agreement, including reasonable attorneys fees.
12. No
Waiver.
No
waiver
by Secured Party of any default shall be deemed to be a waiver of any other
subsequent default, nor shall any such waiver by Secured Party be deemed to
be a
continuing waiver.
13. Survival.
Debtor’s
representations and warranties made in this Security Agreement will survive
its
execution, delivery, and termination.
14. Successors
and Assigns.
This
Security Agreement will bind and benefit the successors and assigns of the
parties, but Debtor may not assign his rights under the Security Agreement
without Secured Party’s prior written consent.
15. Governing
Law.
This
Security Agreement will be governed by, and construed in accordance with, the
laws of the State of California.
16. Entire
Agreement.
This
Security Agreement is the entire agreement and supersedes any prior agreement
or
understandings between Secured Party and Debtor relating to the Collateral.
17. Notices.
All
notices hereunder by a party to another party shall be in writing, delivered
personally, by means of electronic communications, by certified or registered
mail, return receipt requested, or by overnight courier, and shall be deemed
to
have been duly given when delivered personally or by electronic communication,
or when deposited in the United States mail, postage prepaid, or deposited
with
the overnight courier addressed as follows:
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| Debtor: | Xxxxxxx Xxxxx, D.O. | ||
| 00000 Xxxx Xxxxxxx Xxxxxxxxx #000 | |||
| Xxxxx Xxx Xxx, XX 00000 | |||
| Attention: Dr. Will Xxxxx | |||
| Secured Party: | DRTATTOFF Management Company, LLC | ||
| 000 X. Xxxxxx Xxxxx | |||
| Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 | |||
| Attention: Xxxxx Xxxxx, Manager | |||
or
to
such other persons or places as any party may from time to time designate by
written notice to the others.
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
executed effective as of the date first written above.
| SECURED PARTY: | DEBTOR: | ||
| DRTATTOFF, LLC | |||
| a California limited liability company | |||
| By: | /s/ Xxxxx Xxxxx | /s/ Xxxxxxx Xxxxx | |
| Manager | Xxxxxxx Xxxxx, D.O. | ||
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