Exhibit 10.4
SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated as of November [ ], 2007,
by and among HC Innovations, Inc., a Delaware corporation (the "COMPANY"), and
the secured parties signatory hereto and their respective endorsees, transferees
and assigns (collectively, the "SECURED PARTY").
W I T N E S S E T H:
WHEREAS, pursuant to a Subscription Agreement, dated the date hereof,
between Company and the Secured Party (the "PURCHASE AGREEMENT"), the Company
has agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from the Company (i) Twelve-Month 10% Secured Convertible Notes, (the
"NOTES"), which are convertible into shares of Company's Common Stock, par value
$0.001 per share (the "COMMON STOCK"); and (ii) Common Stock purchase warrants
(the "WARRANTS"); and
WHEREAS, pursuant to the Registration Rights Agreement, dated the date
hereof, between the Company and the Secured Party (the "REGISTRATION RIGHTS
AGREEMENT"), the Company has, among other things, agreed to register all of the
shares of the Company's Common Stock that may be issued upon the conversion of
the Note and the exercise of the Warrant;
WHEREAS, pursuant to the Guarantees, dated the date hereof (each a
"GUARANTEE" and, collectively, the "GUARANTEES") and made by each of the
Company's subsidiaries and affiliates, (each, a "GUARANTOR" and collectively,
the "GUARANTORS", as the case may be), in favor of the Secured Party, each
Guarantor has guaranteed all of the Obligations of the Company to the Secured
Party; and
WHEREAS, in order to induce the Secured Party to purchase the Note and
the Warrant, the Company has agreed to execute and deliver to the Secured Party
this Agreement for the benefit of the Secured Party and to grant to it a
security interest in certain property of the Company to secure the payment,
performance and discharge in full of all of the Company's Obligations under the
Notes.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth in this Section 1.
(a) "COLLATERAL" means the collateral in which the
Secured Party is granted a security interest by this Agreement and which shall
include the following, whether presently owned or existing or hereafter acquired
or coming into existence, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and accounts
thereof, including, without limitation, all proceeds from the sale or transfer
of the Collateral and of insurance covering the same and of any tort claims in
connection therewith:
(i) All goods of the Company, including, without
limitations, all machinery, equipment, computers, appliances,
furniture, fixtures, test and quality control devices and
other equipment of every kind and nature and wherever
situated, together with all documents of title and documents
representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful
in connection with the Company's businesses and all
improvements thereto (collectively, the "EQUIPMENT"); and
(ii) All of the Company's contract rights and
general intangibles, including, without limitation, all
partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software
development rights, leases, franchises, customer lists,
quality control procedures, grants and rights, goodwill,
trademarks, service marks, trade styles, trade names, patents,
patent applications, copyrights, deposit accounts, and income
tax refunds (collectively, the "GENERAL INTANGIBLES"); and
(iii) All Receivables of the Company including all
insurance proceeds, and rights to refunds or indemnification
whatsoever owing, together with all instruments, all documents
of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title,
security and guaranties with respect to each Receivable,
including any right of stoppage in transit; and
(iv) All of the Company's documents, instruments
and chattel paper, files, records, books of account, business
papers, computer programs and the products and proceeds of all
of the foregoing Collateral set forth in clauses (i)-(iii)
above.
(b) "COMPANY" shall mean, collectively, the Company and
all of the subsidiaries and affiliates of Company.
(c) "OBLIGATIONS" means all of the Company's obligations
under this Agreement and the Notes, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later decreased, created
or incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.
(d) "UCC" means the Uniform Commercial Code as in effect,
from time to time, in the State of Delaware; provided that, if perfection or the
effect of perfection or non perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Delaware, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
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purposes of the provisions hereof relating to such perfection, effect of
perfection or non perfection or priority.
2. GRANT OF SECURITY INTEREST.
(a) As an inducement for the Secured Party to purchase
the Notes and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Company
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the
Secured Party, a continuing security interest in, a continuing lien upon, a
qualified right to possession and disposition of, in each case to the fullest
extent permitted by law, all of the Company's right, title and interest of
whatsoever kind and nature in and to the Collateral (the "SECURITY INTEREST").
(b) The Company agrees that within fifteen (15) business
days of the first Closing (as defined in the Purchase Agreement), it shall
deliver certificates representing its ownership interest in its two wholly-owned
subsidiaries, Enhanced Care Initiatives, Inc and NP Care, LLC, to an escrow
agent to be held by such escrow agent for so long as the Company has any
obligations to repay the Secured Party principal and interest under the Note.
(c) The Security Interest granted hereby shall at all
times be subordinated to the Company's current secured indebtedness consisting
of the following (the "Senior Indebtedness") with approximate balances as of the
date hereof as follows:
Citibank SBA Loan - $ 40,000
Citibank Line - $ 50,000
Peoples Bank Line - $ 150,000
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3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
COMPANY. The Company represents and warrants to, and covenants and agrees with,
the Secured Party as follows:
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by the Company
of this Agreement and the filings contemplated therein have been duly authorized
by all necessary action on the part of the Company and no further action is
required by the Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditor's rights
generally.
(b) The Company represents and warrants that it has no
place of business or offices where its respective books of account and records
are kept (other than temporarily at the offices of its attorneys or accountants)
or places where Collateral is stored or located, except as set forth on SCHEDULE
A attached hereto;
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(c) The Company is the sole owner of the Collateral
(except for non-exclusive licenses granted by the Company in the ordinary course
of business), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security Interest in and
to pledge the Collateral, except as set forth on Schedule B. There is not on
file in any governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing covering or affecting any of the Collateral,
except as set forth on Schedule B. So long as this Agreement shall be in effect,
the Company shall not execute and shall not knowingly permit to be on file in
any such office or agency any such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured Party
pursuant to the terms of this Agreement), except as set forth on Schedule B.
(d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or the
Company's use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company's claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Company's
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of the
Company, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) The Company shall at all times maintain its books of
account and records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth on SCHEDULE A attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Party at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements and other necessary documents have been filed
and recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured Party valid, perfected and continuing first
priority liens in the Collateral.
(f) This Agreement creates in favor of the Secured Party
a valid security interest in the Collateral securing the payment and performance
of the Obligations and, upon making the filings described in the immediately
following sentence, a perfected first priority security interest in such
Collateral. Except for the filing of financing statements on Form-1 under the
UCC, attached hereto, no authorization or approval of or filing with or notice
to any governmental authority or regulatory body is required either (i) for the
grant by the Company of, or the effectiveness of, the Security Interest granted
hereby or for the execution, delivery and performance of this Agreement by the
Company or (ii) for the perfection of or exercise by the Secured Party of its
rights and remedies hereunder.
(g) Upon execution of this Agreement, the Company will
deliver to the Secured Party one or more executed UCC financing statements on
Form-1 with respect to the Security Interest.
(h) Except as set forth on SCHEDULE B, the execution,
delivery and performance of this Agreement does not conflict with or cause a
breach or default, or an event
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that with or without the passage of time or notice, shall constitute a breach or
default, under any agreement to which the Company is a party or by which the
Company is bound. No consent (including, without limitation, from stock holders
or creditors of the Company) is required for the Company to enter into and
perform its obligations hereunder.
(i) The Company shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first priority
liens and security interests in the Collateral in favor of the Secured Party
until this Agreement and the Security Interest hereunder shall terminate
pursuant to Section 11. The Company hereby agrees to defend the same against any
and all persons. The Company shall safeguard and protect all Collateral for the
account of the Secured Party. At the request of the Secured Party, the Company
will sign and deliver to the Secured Party at any time or from time to time one
or more financing statements pursuant to the UCC (or any other applicable
statute) in form reasonably satisfactory to the Secured Party and will pay the
cost of filing the same in all public offices wherever filing is, or is deemed
by the Secured Party to be, necessary or desirable to effect the rights and
obligations provided for herein. Without limiting the generality of the
foregoing, the Company shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interest hereunder, and the Company
shall obtain and furnish to the Secured Party from time to time, upon demand,
such releases and/or subordinations of claims and liens which may be required to
maintain the priority of the Security Interest hereunder.
(j) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by the Company in
the ordinary course of business and to an institutional lender as set forth in
Section 2 hereof), sell or otherwise dispose of any of the Collateral without
the prior written consent of the Secured Party.
(k) The Company shall keep and preserve its Equipment and
other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in
any area excluded from insurance coverage.
(l) The Company shall, within fifteen (15) days of
obtaining knowledge thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Collateral, and of the occurrence of
any event which would have a material adverse effect on the value of the
Collateral or on the Secured Party's security interest therein.
(m) The Company shall promptly execute and deliver to the
Secured Party such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Party may from time to
time request and may in its sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral.
(n) The Company shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time, and to make
copies of records pertaining to the Collateral as may be requested by the
Secured Party from time to time.
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(o) The Company will take all steps reasonably necessary
to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.
(p) The Company shall promptly notify the Secured Party
in sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of any other
information received by the Company that may materially affect the value of the
Collateral, the Security Interest or the rights and remedies of the Secured
Party hereunder.
(q) The Company currently maintains a key man life
insurance policy on Xxxxx Chess, its Chief Executive Officer, with $5 million of
coverage ("$5 Million Key Man Policy"). In connection with the transactions
contemplated herein, the Company agrees that within ninety (90) days from the
first Closing, it shall obtain an additional key man life insurance policy on
Xxxxx Chess such that the aggregate amount of insurance covering Xxxxx Chess is
no less than $7 million ("Additional Key Man Policy"). Further, within fifteen
(15) business days from the first Closing, the Company shall provide for
appropriate collateral assignments of the $5 Million Key Man Policy, naming the
undersigned as assignee, and any collateral assignment shall be only to the
extent of the undersigned's investment in the Note and Warrant. Additionally,
within fifteen (15) business days from the securing the Additional Key Man
Policy, the Company shall provide for appropriate collateral assignments of the
Additional Key Man Policy, naming the undersigned as assignee, and any
collateral assignment shall be only to the extent of the undersigned's
investment in the Note and Warrant.
(r) All information heretofore, herein or hereafter
supplied to the Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as of the date
furnished.
4. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The occurrence of an Event of Default (as defined in
the Notes) under the Notes;
(b) Any representation or warranty of the Company in this
Agreement shall prove to have been incorrect in any material respect when made;
(c) The material failure by the Company to observe or
perform any of its obligations hereunder for fifteen (15) days after receipt by
the Company of notice of such failure from the Secured Party; and
(d) Any breach of, or default under, the Warrants.
5. DUTY TO HOLD IN TRUST. Upon the occurrence of any Event of
Default and at any time thereafter, the Company shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether payable
pursuant to the Notes or otherwise, or of any
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check, draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for the Secured Party and
shall forthwith endorse and transfer any such sums or instruments, or both, to
the Secured Party for application to the satisfaction of the Obligations.
6. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any Event
of Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Notes, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Party shall have the following rights and powers:
(a) The Secured Party shall have the right to take
possession of the Collateral and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Collateral, or any part
thereof, is or may be placed and remove the same, and the Company shall assemble
the Collateral and make it available to the Secured Party at places which the
Secured Party shall reasonably select, whether at the Company's premises or
elsewhere, and make available to the Secured Party, without rent, all of the
Company's respective premises and facilities for the purpose of the Secured
Party taking possession of, removing or putting the Collateral in saleable or
disposable form.
(b) The Secured Party shall have the right to operate the
business of the Company using the Collateral and shall have the right to assign,
sell, lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as the Secured Party may deem
commercially reasonable, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon or notice to the
Company or right of redemption of the Company, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Secured Party may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
Company, which are hereby waived and released.
7. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease
or other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, the Company will
be liable for the deficiency, together with interest thereon, at the rate of 12%
per annum (the "DEFAULT RATE"), and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
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against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due to the gross negligence or willful misconduct
of the Secured Party. All proceeds in excess of the amounts owed to the Secured
Parties shall be immediately forwarded to the Company.
8. COSTS AND EXPENSES. The Company agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements,
continuation statements, partial releases and/or termination statements related
thereto or any expenses of any searches reasonably required by the Secured
Party. The Company shall also pay all other claims and charges which in the
reasonable opinion of the Secured Party might prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein. The Company will also,
upon demand, pay to the Secured Party the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Secured Party may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Party under the
Notes. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes and shall bear interest at the Default Rate.
9. RESPONSIBILITY FOR COLLATERAL. The Company assumes all
liabilities and responsibility in connection with all Collateral, and the
obligations of the Company hereunder or under the Notes and the Warrants shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason.
10. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party
and all Obligations of the Company hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of
this Agreement, the Notes, the Warrants or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change
in the time, manner or place of payment or performance of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Notes, the Warrants or any other agreement
entered into in connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Collateral, or any release or amendment or waiver of
or consent to departure from any other collateral for, or any guaranty, or any
other security, for all or any of the Obligations; (d) any action by the Secured
Party to obtain, adjust, settle and cancel in its sole discretion any insurance
claims or matters made or arising in connection with the Collateral; or (e) any
other circumstance which might otherwise constitute any legal or equitable
defense available to the Company, or a discharge of all or any part of the
Security Interest granted hereby. Until the Obligations shall have been paid and
performed in full, the rights of the Secured Party shall continue even if the
Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Company expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party
other than the Secured Party, then, in any such event, the Company's obligations
hereunder shall survive cancellation of this Agreement, and shall not be
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discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Company waives all right to
require the Secured Party to proceed against any other person or to apply any
Collateral which the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy. The Company waives any defense arising by reason
of the application of the statute of limitations to any obligation secured
hereby.
11. TERM OF AGREEMENT. This Agreement and the Security Interest
shall terminate on the date on which all payments under the Notes have been made
in full and all other Obligations have been paid or discharged. Upon such
termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.
12. POWER OF ATTORNEY; FURTHER ASSURANCES.
(a) The Company authorizes the Secured Party, and does
hereby make, constitute and appoint it, and its respective officers, agents,
successors or assigns with full power of substitution, as the Company's true and
lawful attorney-in-fact, with power, in its own name or in the name of the
Company, to, after the occurrence and during the continuance of an Event of
Default, (i) endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into possession
of the Secured Party; (ii) to sign and endorse any UCC financing statement or
any invoice, freight or express xxxx, xxxx of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to the Collateral; (iii)
to pay or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Collateral; (iv) to
demand, collect, receipt for, compromise, settle and xxx for monies due in
respect of the Collateral; and (v) generally, to do, at the option of the
Secured Party, and at the Company's expense, at any time, or from time to time,
all acts and things which the Secured Party deems necessary to protect, preserve
and realize upon the Collateral and the Security Interest granted therein in
order to effect the intent of this Agreement, the Notes and the Warrants, all as
fully and effectually as the Company might or could do; and the Company hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding.
(b) On a continuing basis, the Company will make,
execute, acknowledge, deliver, file and record, as the case may be, in the
proper filing and recording places in any jurisdiction, including, without
limitation, the jurisdictions indicated on SCHEDULE A, attached hereto, all such
instruments, and take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Secured Party, to perfect the
Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Secured Party
the grant or perfection of a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured
Party as the Company's attorney-in-fact, with full authority in the place and
stead of the Company and in the
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name of the Company, from time to time in the Secured Party's discretion, to
take any action and to execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of the Company where permitted by law.
13. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when (i) if
delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt of
proof of sending thereof, (iii) if sent by nationally recognized overnight
delivery service (receipt requested), the next business day or (iv) if mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, four days after posting in the U.S. mails, in each case if delivered to
the following addresses:
If to the Company: HC Innovations, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Chess, MD, CEO
Telephone: (000) 000-0000
With a copy to: Xxxxxxx Savage, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
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If to the Secured Party:
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Attention:
14. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party's rights and
remedies hereunder.
15. MISCELLANEOUS.
(a) No course of dealing between the Company and the
Secured Party, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder or under the
Notes shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) All of the rights and remedies of the Secured Party
with respect to the Collateral, whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with respect
thereto. Except as specifically set forth in this Agreement, no provision of
this Agreement may be modified or amended except by a written agreement
specifically referring to this Agreement and signed by the parties hereto.
(d) No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(e) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(f) Each party shall take such further action and execute
and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
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(g) This Agreement shall be construed in accordance with
the laws of the State of Delaware, except to the extent the validity, perfection
or enforcement of a security interest hereunder in respect of any particular
Collateral which are governed by a jurisdiction other than the State of Delaware
in which case such law shall govern. Each of the parties hereto irrevocably
submit to the exclusive jurisdiction of any New York State or United States
Federal court sitting in Manhattan county over any action or proceeding arising
out of or relating to this Agreement, and the parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non conveniens.
(h) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS
RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE,
MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(j) This Agreement inures to the benefit of Holder and
binds Company, its successors and assigns, and the words "Holder" and "Company"
whenever occurring herein shall be deemed and construed to include such
respective heirs, successors and assigns.
12
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13
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
HC INNOVATIONS, INC.
By:
------------------------------------
Name:
Title:
SECURED PARTY:
--------------
By:
---------------
Name:
14
SCHEDULE A
HC INNOVATIONS, INC.
ENHANCED CARE INITIATIVES, INC.
00 XXXXXXXX XXXXX, XXXXX 000
XXXXXXX, XX 00000
TEXAS ENHANCED CARE INITIATIVES, INC.
00000 XXXXXXXX, XXXXX 000
XXXXXXX, XXXXX 00000
ENHANCED CARE INITIATIVES OF TENNESSEE, INC.
XXX XXXXXXXXXXXXX XXXXX XXXXX, XXXXX 000
XXXXXXXXX, XX 00000
ENHANCED CARE INITIATIVES OF MASSACHUSETTS, INC.
00 XXXXXXXX XXX, XXXXX 0000
XXXXXX, XXXXXXXXXXXXX 00000
ENHANCED CARE INITIATIVES OF NEW YORK, INC.
00-00 00XX XXXXXX, XXXXX 000
XXXXXXX, XX 00000
NP CARE, LLC
00 XXXXXXXX XXXXX, XXXXX 000
XXXXXXX, XX 00000
NP CARE OF TENNESSEE, LLC
0 XXXXXXXXXXXXX XXXXX XXXXX, XXXXX 000
XXXXXXXXX, XX 00000
NP CARE OF NEW JERSEY, LLC
0000 XXXXX 00 XXXX, XXXXX 000
XXXXX XXXXXXXX, XX 00000
NP CARE, LLC
00000 XX 00XX XXXXXX
XXXXXXX, XXXXXXX 00000
NP CARE OF OHIO, LLC
0000 XXXXXX XXXXXXX
XXXXXXXX, XXXX 00000
NP CARE OF ILLINOIS, LLC
000 X. XXXXXXXX XXXXXX, XXXXX 000
XXXXXXXX, XX 00000
NP CARE OF MASSACHUSETTS, LLC
00 XXXXXXXX XXX, XXXXX 0000
XXXXXX, XX 00000
15
SCHEDULE B
Secured Debt:
Citibank SBA Loan - $ 40,000 (approximate balance)
Citibank LOC - $ 50,000
Peoples Bank LOC - $150,000
--------
Total $240,000
16
