Exhibit 10.08 - Guarantor Security Agreement between PetCARE Television Network,
Inc. and Vicis Capital Master Fund
GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT (this "Security Agreement") is made as
of August 11, 2006 by and between PetCARE Television Network, Inc., a Florida
corporation ("Debtor"), and VICIS CAPITAL MASTER FUND ("Vicis"), a trust formed
under the laws of the Cayman Islands.
RECITALS
A. Debtor is a wholly-owned subsidiary of MEDICAL MEDIA TELEVISION, INC.,
a Florida corporation ("Borrower").
B. Pursuant to a Note Purchase Agreement of even date herewith by and
between Vicis and Borrower (as amended or modified from time to time, the "Note
Purchase Agreement") and a 10% Secured Convertible Promissory Note due August
11, 2007 issued by Borrower to Vicis (as amended or modified from time to time,
the "Note"), Vicis has made a $1,302,000 loan (the "Loan") to Borrower. Debtor,
Borrower and any other guarantor of the Loan are the intended beneficiaries of
the Loan and, as such, the Loan will benefit the Guarantor.
C. It is a condition precedent to Vicis making the Loan that Debtor
execute and deliver to Vicis a security agreement in the form hereof. This is
the Guarantor Security Agreement referred to in the Note Purchase Agreement.
AGREEMENTS
In consideration of the Recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees with Vicis as follows:
ARTICLE I
DEFINITIONS
Capitalized terms not defined herein shall have the meaning given to them
in the Note Purchase Agreement. Terms not otherwise defined herein and defined
in the UCC shall have, unless the context otherwise requires, the meanings set
forth in the UCC as in effect on the date hereof (except that the term
"document" shall only have the meaning set forth in the UCC for purposes of
clause (d) of the definition of Collateral). When used in this Security
Agreement, the following terms shall have the following meanings:
Accounts. "Accounts" shall mean all accounts, including without limitation
all rights to payment for goods sold or services rendered that are not evidenced
by instruments or chattel paper, whether or not earned by performance, and any
associated rights thereto.
Collateral. "Collateral" shall mean all personal properties and assets of
Debtor, wherever located, whether tangible or intangible, and whether now owned
or hereafter acquired or arising, including without limitation:
(a) all Inventory and documents relating to Inventory;
(b) all Accounts and documents relating to Accounts;
(c) all equipment, fixtures and other goods, including without
limitation machinery, furniture, vehicles and trade fixtures;
(d) all general intangibles (including without limitation payment
intangibles, software, customer lists, sales records and other business records,
contract rights, causes of action, and licenses, permits, franchises, patents,
copyrights, trademarks, and goodwill of the business in which the trademark is
used, trade names, or rights to any of the foregoing), promissory notes,
contract rights, chattel paper, documents, letter-of-credit rights and
instruments;
(e) all motor vehicles;
(f) (i) all deposit accounts and (ii) all cash and cash equivalents
deposited with or delivered to Vicis from time to time and pledged as additional
security for the Obligations;
(g) all investment property;
(h) all commercial tort claims; and
(i) all additions and accessions to, all spare and repair parts,
special tools, equipment and replacements for, and all supporting obligations,
proceeds and products of, any and all of the foregoing assets described in
Sections (a) through (h), inclusive, above.
Event of Default. "Event of Default" shall have the meaning specified in
the Note Purchase Agreement.
Inventory. "Inventory" shall mean all inventory, including without
limitation all goods held for sale, lease or demonstration or to be furnished
under contracts of service, goods leased to others, trade-ins and repossessions,
raw materials, work in process and materials used or consumed in Debtor's
business, including, without limitation, goods in transit, wheresoever located,
whether now owned or hereafter acquired by Debtor, and shall include such
property the sale or other disposition of which has given rise to Accounts and
which has been returned to or repossessed or stopped in transit by Debtor.
Obligations. "Obligations" shall mean (a) all debts, liabilities,
obligations, covenants and agreements of Debtor contained in the Guaranty dated
of even date herewith by Debtor in favor of Vicis; and (b) any and all other
debts, liabilities and obligations of Debtor to Vicis.
Person. "Person" shall mean and include an individual, partnership,
corporation, trust, unincorporated association and any unit, department or
agency of government.
Security Agreement. "Security Agreement" shall mean this Guarantor
Security Agreement, together with the schedules attached hereto, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
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Security Interest. "Security Interest" shall mean the security interest of
Vicis in the Collateral granted by Debtor pursuant to this Security Agreement.
UCC. "UCC" shall mean the Uniform Commercial Code as adopted in Florida
and in effect from time to time.
ARTICLE II
THE SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES
2.1 The Security Interest. To secure the full and complete payment and
performance when due (whether at stated maturity, by acceleration, or otherwise)
of each of the Obligations, Debtor hereby grants to Vicis a security interest in
all of Debtor's right, title and interest in and to the Collateral.
2.2 Representations and Warranties. Debtor hereby represents and warrants
to Vicis that:
(a) The records of Debtor with respect to the Collateral are
presently located only at the address(es) listed on Schedule 1 attached to this
Security Agreement.
(b) The Collateral is presently located only at the location(s)
listed on Schedule 1 attached to this Security Agreement.
(c) The chief executive office and chief place(s) of business of
Debtor are presently located at the address(es) listed on Schedule 1 to this
Security Agreement.
(d) Debtor is a Florida corporation and its exact legal name is set
forth in the definition of "Debtor" in the introductory paragraph of this
Security Agreement. The organization identification number of Debtor is listed
on Schedule 1 to this Security Agreement.
(e) All of Debtor's present patents and trademarks, if any,
including those which have been registered with, or for which an application for
registration has been filed in, the United States Patent and Trademark Office
are listed on Schedule 2 attached to this Security Agreement. All of Debtor's
present copyrights registered with, or for which an application for registration
has been filed in, the United States Copyright Office or any similar office or
agency of any state or any other country are listed on Schedule 2 attached to
this Security Agreement.
(f) Debtor has good title to, or valid leasehold interest in, all of
the Collateral and there are no Liens on any of the Collateral except Permitted
Liens.
2.3 Authorization to File Financing Statements. Debtor hereby irrevocably
authorizes Vicis at any time and from time to time to file in any UCC
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of Debtor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC or such other jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) contain any
other information required by part 5 of Article 9 of the UCC for the sufficiency
of filing office acceptance of any financing statement or amendment, including
whether Debtor is an organization, the type of organization and any state or
federal organization identification number issued to Debtor. Debtor agrees to
furnish any such information to Vicis promptly upon request. Debtor also
ratifies its authorization for Vicis to have filed in any UCC jurisdiction any
like initial financing statements or amendments thereto if filed prior to the
date hereof.
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ARTICLE III
AGREEMENTS OF DEBTOR
From and after the date of this Security Agreement, and until all of the
Obligations are paid in full, Debtor shall:
3.1 Sale of Collateral. Not sell, lease, transfer or otherwise dispose of
Collateral or any interest therein, except as provided for in the Note Purchase
Agreement and for sales of Inventory in the ordinary course of business.
3.2 Maintenance of Security Interest.
(a) At the expense of Debtor, defend the Security Interest against
any and all claims of any Person adverse to Vicis and take such action and
execute such financing statements and other documents as Vicis may from time to
time request to maintain the perfected status of the Security Interest. Debtor
shall not further encumber or grant a security interest in any of the Collateral
except as provided for in the Note Purchase Agreement.
(b) Debtor further agrees to take any other action requested by
Vicis to ensure the attachment, perfection and first priority of, and the
ability of Vicis to enforce its security interest in any and all of the
Collateral including, without limitation, (i) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the UCC, to the extent, if any, that Debtor's signature thereon is required
therefor, (ii) complying with any provision of any statute, regulation or treaty
of the United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Vicis to
enforce, its security interest in such Collateral, (iii) taking all actions
required by any earlier versions of the UCC (to the extent applicable) or by
other law, as applicable in any relevant UCC jurisdiction, or by other law as
applicable in any foreign jurisdiction, and (iv) obtaining waivers from
landlords where any of the tangible Collateral is located in form and substance
satisfactory to Vicis.
3.3 Locations. Give Vicis at least thirty (30) days prior written notice
of Debtor's intention to relocate the tangible Collateral (other than Inventory
in transit) or any of the records relating to the Collateral from the locations
listed on Schedule 1 attached to this Security Agreement, in which event
Schedule 1 shall be deemed amended to include the new location. Any additional
filings or refilings requested by Vicis as a result of any such relocation in
order to maintain the Security Interest in the Collateral shall be at Debtor's
expense.
3.4 Insurance. Keep the Collateral consisting of tangible personal
property insured against loss or damage to the Collateral under a policy or
policies covering such risks as are ordinarily insured against by similar
businesses, but in any event including fire, lightning, windstorm, hail,
explosion, riot, riot attending a strike, civil commotion, damage from aircraft,
smoke and uniform standard extended coverage and vandalism and malicious
mischief endorsements, limited only as may be provided in the standard form of
such endorsements at the time in use in the applicable state. Such insurance
shall be for amounts not less than the actual replacement cost of the
Collateral. No policy of insurance shall be so written that the proceeds thereof
will produce less than the minimum coverage required by the preceding sentence,
by reason of co-insurance provisions or otherwise, without the prior consent
thereto in writing by Vicis. Debtor will obtain lender's loss payable
endorsements on applicable insurance policies in favor of Vicis and will provide
certificates of such insurance to Vicis. Debtor shall cause each insurer to
agree, by endorsement on the policy or policies or certificates of insurance
issued by it or by independent instrument furnished to Vicis, that such insurer
will give thirty (30) days written notice to Vicis before such policy will be
altered or canceled. No settlement of any insurance claim shall be made without
Vicis's prior consent. In the event of any insured loss, Debtor shall promptly
notify Vicis thereof in writing, and Debtor hereby authorizes and directs any
insurer concerned to make payment of such loss directly to Vicis as its interest
may appear. Vicis is authorized, in the name and on behalf of Debtor, to make
proof of loss and to adjust, compromise and collect, in such manner and amounts
as it shall determine, all claims under all policies; and Debtor agrees to sign,
on demand of Vicis, all receipts, vouchers, releases and other instruments which
may be necessary or desirable in aid of this authorization. The proceeds of any
insurance from loss, theft, or damage to the Collateral shall be held in a
segregated account established by Vicis and disbursed and applied at the
discretion of Vicis, either in reduction of the Obligations or applied toward
the repair, restoration or replacement of the Collateral.
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3.5 Name; Legal Status. (a) Without providing at least 30 days prior
written notice to Vicis, Debtor will not change its name, its place of business
or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if Debtor does not have
an organizational identification number and later obtains one, Debtor shall
forthwith notify Vicis of such organizational identification number, and (c)
Debtor will not change its type of organization or jurisdiction of organization.
ARTICLE IV
RIGHTS AND REMEDIES
4.1 Right to Cure. In case of failure by Debtor to procure or maintain
insurance, or to pay any fees, assessments, charges or taxes arising with
respect to the Collateral, Vicis shall have the right, but shall not be
obligated, to effect such insurance or pay such fees, assessments, charges or
taxes, as the case may be, and, in that event, the cost thereof shall be payable
by Debtor to Vicis immediately upon demand, together with interest at an annual
rate equal 10% from the date of disbursement by Vicis to the date of payment by
Debtor.
4.2 Rights of Parties. Upon the occurrence and during the continuance of
an Event of Default, in addition to all the rights and remedies provided in the
Transaction Documents or in Article 9 of the UCC and any other applicable law,
Vicis may (but is under no obligation so to do):
(a) require Debtor to assemble the Collateral at a place designated
by Vicis, which is reasonably convenient to the parties; and
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(b) take physical possession of Inventory and other tangible
Collateral and of Debtor's records pertaining to all Collateral that are
necessary to properly administer and control the Collateral or the handling and
collection of Collateral, and sell, lease or otherwise dispose of the Collateral
in whole or in part, at public or private sale, on or off the premises of
Debtor; and
(c) collect any and all money due or to become due and enforce in
Debtor's name all rights with respect to the Collateral; and
(d) settle, adjust or compromise any dispute with respect to any
Account; and
(e) receive and open mail addressed to Debtor; and
(f) on behalf of Debtor, endorse checks, notes, drafts, money
orders, instruments or other evidences of payment.
4.3 Power of Attorney. Upon the occurrence and during the continuance of
an Event of Default, Debtor does hereby constitute and appoint Vicis as Debtor's
true and lawful attorney with full power of substitution for Debtor in Debtor's
name, place and stead for the purposes of performing any obligation of Debtor
under this Security Agreement and taking any action and executing any instrument
which Vicis may deem necessary or advisable to perform any obligation of Debtor
under this Security Agreement, which appointment is irrevocable and coupled with
an interest, and shall not terminate until the Obligations are paid in full.
4.4 Right to Collect Accounts. Upon the occurrence and during the
continuance of an Event of Default and without limiting Debtor's obligations
under the Transaction Documents: (a) Debtor authorizes Vicis to notify any and
all debtors on the Accounts to make payment directly to Vicis (or to such place
as Vicis may direct); (b) Debtor agrees, on written notice from Vicis, to
deliver to Vicis promptly upon receipt thereof, in the form in which received
(together with all necessary endorsements), all payments received by Debtor on
account of any Account; and (c) Vicis may, at its option, apply all such
payments against the Obligations or remit all or part of such payments to
Debtor.
4.5 Reasonable Notice. Written notice, when required by law, sent in
accordance with the provisions of Section 12.6 of the Note Purchase Agreement
and given at least ten (10) calendar days (counting the day of sending) before
the date of a proposed disposition of the Collateral shall be reasonable notice.
4.6 Limitation on Duties Regarding Collateral. The sole duty of Vicis with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal
with it in the same manner as Vicis deals with similar property for its own
account. Neither Vicis nor any of its directors, officers, employees or agents,
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of Debtor or otherwise.
4.7 Lock Box; Collateral Account. This Section 4.7 shall be effective only
upon the occurrence and during the continuance of an Event of Default. If Vicis
so requests in writing, Debtor will direct each of its debtors on the Accounts
to make payments due under the relevant Account or chattel paper directly to a
special lock box to be under the control of Vicis. Debtor hereby authorizes and
directs Vicis to deposit into a special collateral account to be established and
maintained by Vicis all checks, drafts and cash payments received in said lock
box. All deposits in said collateral account shall constitute proceeds of
Collateral and shall not constitute payment of any Obligation until so applied.
At its option, Vicis may, at any time, apply finally collected funds on deposit
in said collateral account to the payment of the Obligations, in the order of
application selected in the sole discretion of Vicis, or permit Debtor to
withdraw all or any part of the balance on deposit in said collateral account.
If a collateral account is so established, Debtor agrees that it will promptly
deliver to Vicis, for deposit into said collateral account, all payments on
Accounts and chattel paper received by it. All such payments shall be delivered
to Vicis in the form received (except for Debtor's endorsement where necessary).
Until so deposited, all payments on Accounts and chattel paper received by
Debtor shall be held in trust by Debtor for and as the property of Vicis and
shall not be commingled with any funds or property of Debtor.
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4.8 Application of Proceeds. Vicis shall apply the proceeds resulting from
any sale or disposition of the Collateral in the following order:
(a) to the costs of any sale or other disposition;
(b) to the expenses incurred by Vicis in connection with any sale or
other disposition, including attorneys' fees;
(c) to the payment of the Obligations then due and owing in any
order selected by Vicis; and
(d) to Debtor.
4.9 Other Remedies. No remedy herein conferred upon Vicis is intended to
be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Security Agreement and the Transaction Documents now or hereafter existing at
law or in equity or by statute or otherwise. No failure or delay on the part of
Vicis in exercising any right or remedy hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right hereunder preclude
other or further exercise thereof or the exercise of any other right or remedy.
ARTICLE V
MISCELLANEOUS
5.1 Expenses and Attorneys' Fees. Debtor shall pay all fees and expenses
incurred by Vicis, including the fees of counsel including in-house counsel, in
connection with the preparation, administration and amendment of this Security
Agreement and the protection, administration and enforcement of the rights of
Vicis under this Security Agreement or with respect to the Collateral, including
without limitation the protection and enforcement of such rights in any
bankruptcy.
5.2 Setoff. Debtor agrees that Vicis shall have all rights of setoff and
bankers' lien provided by applicable law.
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5.3 Assignability; Successors. Debtor's rights and liabilities under this
Security Agreement are not assignable or delegable, in whole or in part, without
the prior written consent of Vicis. The provisions of this Security Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
the parties.
5.4 Survival. All agreements, representations and warranties made in this
Security Agreement or in any document delivered pursuant to this Security
Agreement shall survive the execution and delivery of this Security Agreement,
and the delivery of any such document.
5.5 Governing Law. This Security Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York
applicable to contracts made and wholly performed within such state.
5.6 Counterparts; Headings. This Security Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement. The
article and section headings in this Security Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
5.7 Notices. All communications or notices required or permitted by this
Security Agreement shall be given to Debtor (to be delivered care of Borrower)
in accordance with Section 12.6 of the Note Purchase Agreement.
5.8 Amendment. No amendment of this Security Agreement shall be effective
unless in writing and signed by Debtor and Vicis.
5.9 Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Security Agreement in such
jurisdiction or affecting the validity or enforceability of any provision in any
other jurisdiction.
5.10 WAIVER OF RIGHT TO JURY TRIAL. VICIS AND DEBTOR ACKNOWLEDGE AND AGREE
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SECURITY AGREEMENT WOULD BE
BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT
ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
5.11 Submission to Jurisdiction; Service of Process. As a material
inducement to Vicis to make the Loan:
(a) DEBTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER
RELATING TO OR ARISING OUT OF THIS SECURITY AGREEMENT MAY BE BROUGHT ONLY IN
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE FEDERAL COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND DEBTOR CONSENTS TO THE JURISDICTION OF
SUCH COURTS. DEBTOR WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH COURT AND ANY RIGHT IT MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM
THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; AND
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(b) Debtor consents to the service of process in any such action or
proceeding by certified mail sent to Debtor (to be delivered care of Borrower)
at the address specified in Section 12.6 of the Note Purchase Agreement.
(signature page follows)
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IN WITNESS WHEREOF, this Guarantor Security Agreement has been
executed as of the day and year first above written.
PetCARE Television Network, Inc.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
VICIS CAPITAL MASTER FUND
By: Vicis Capital LLC
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Operating Officer
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SCHEDULE 1 TO SECURITY AGREEMENT
Locations of Collateral
Organizational ID: 00-0000000
Address of Debtor's records of Collateral and chief executive office:
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxx, XX 00000
Collateral Locations:
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxx, XX 00000
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SCHEDULE 2 TO SECURITY AGREEMENT
Intellectual Property
Patents - None
Trademarks - None
Copyrights - None
