SUBSIDIARY SECURITY AGREEMENT
THIS
SUBSIDIARY SECURITY AGREEMENT
(the
“Agreement”), is
entered into and made effective as of April 1, 2006, by and between PACER
HEALTH MANAGEMENT CORPORATION, a
Louisiana corporation (the “Company”),
and
Cornell Capital Partners, LP (the
“Secured
Party”).
RECITAL:
WHEREAS,
the
Company is a wholly owned subsidiary of Pacer Health Corporation (the
“Parent”);
WHEREAS,
on the
date hereof, the Parent shall issue and sell to the Secured Party, as provided
in the Securities Purchase Agreement dated the date hereof, and the Secured
Party shall purchase up to Two Million Dollars ($2,000,000) of secured
convertible debentures (the “Convertible
Debentures”),
which
shall be convertible into shares of common stock of the Parent, par value
$0.0001 (the “Common
Stock”)
(as
converted, the “Conversion
Shares”),
in
the respective amounts set forth opposite each Buyer(s) name on Schedule I
attached to the Securities Purchase Agreement;
WHEREAS,
the
Company shall benefit from the sale of the Convertible Debentures by the Parent
to the Secured Party; and
WHEREAS,
to
induce
the Secured Party to enter into the transaction contemplated by the Securities
Purchase Agreement, the Secured Convertible Debenture, the Investor Registration
Rights Agreement and the Irrevocable Transfer Agent Instructions (collectively
referred to as the “Transaction
Documents”),
the
Company hereby grants to the Secured Party a security interest in and to the
Pledged Property (as defined below) until the satisfaction of the Obligations,
as defined herein below.
NOW,
THEREFORE, for
and
in consideration of the premises and the mutual covenants herein contained,
and
for other good and valuable consideration, the adequacy and receipt of which
are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE
1.
DEFINITIONS
AND INTERPRETATIONS
Section
1.1. Recitals.
The
above
recitals are true and correct and are incorporated herein, in their entirety,
by
this reference.
Section
1.2. Interpretations.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
any
person other than the Secured Party any right, remedy or claim under or by
reason hereof.
Section
1.3. Obligations
Secured.
The
obligations secured hereby are any and all obligations of the Company or the
Parent now existing or hereinafter incurred to the Secured Party, whether oral
or written and whether arising before, on or after the date hereof including,
without limitation, those obligations of the Parent to the Secured Party under
the Transaction Documents, and any other amounts now or hereafter owed to the
Secured Party by the Parent thereunder or hereunder (collectively, the
“Obligations”).
ARTICLE
2.
PLEDGED
PROPERTY, ADMINISTRATION OF COLLATERAL AND TERMINATION OF SECURITY
INTEREST
Section
2.1. Pledged
Property.
(a) The
Company hereby pledges to the Secured Party, and creates in the Secured Party
for its benefit, a security interest for such time until the Obligations are
paid in full, in and to all of the property of the Company as set forth in
Exhibit “A”
attached
hereto and the products thereof and the proceeds of all such items
(collectively, the “Pledged
Property”):
(b) Simultaneously
with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any
documents reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the execution and delivery
of this Agreement, the Company shall make, execute, acknowledge and deliver
to
the Secured Party such documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may, in the Secured
Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
to continue and preserve, the security interest of the Secured Party in the
Pledged Property, and the Secured Party shall hold such documents and
instruments as secured party, subject to the terms and conditions contained
herein.
Section
2.2. Rights;
Interests; Etc.
(a) So
long
as no Event of Default (as hereinafter defined) shall have occurred and be
continuing:
(i) the
Company shall be entitled to exercise any and all rights pertaining to the
Pledged Property or any part thereof for any purpose not inconsistent with
the
terms hereof; and
(ii) the
Company shall be entitled to receive and retain any and all payments paid or
made in respect of the Pledged Property.
2
(b) Upon
the
occurrence and during the continuance of an Event of Default:
(i) All
rights of the Company to exercise the rights which it would otherwise be
entitled to exercise pursuant to Section 2.2(a)(i) hereof and to
receive payments which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such
rights shall thereupon become vested in the Secured Party who shall thereupon
have the sole right to exercise such rights and to receive and hold as Pledged
Property such payments; provided,
however,
that if
the Secured Party shall become entitled and shall elect to exercise its right
to
realize on the Pledged Property pursuant to Article 5 hereof, then all cash
sums received by the Secured Party, or held by Company for the benefit of the
Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
shall be applied against any outstanding Obligations; and
(ii) All
interest, dividends, income and other payments and distributions which are
received by the Company contrary to the provisions of
Section 2.2(b)(i) hereof shall be received in trust for the benefit of
the Secured Party, shall be segregated from other property of the Company and
shall be forthwith paid over to the Secured Party; or
(iii) The
Secured Party in its sole discretion shall be authorized to sell
any
or all of the Pledged Property at public or private sale in order to recoup
all
of the outstanding principal plus accrued interest owed pursuant to the
Convertible Debenture as described herein
(c) An
“Event
of Default”
shall
be deemed to have occurred under this Agreement upon an Event of Default under
the Convertible Debentures.
ARTICLE
3.
ATTORNEY-IN-FACT;
PERFORMANCE
Section
3.1. Secured
Party Appointed Attorney-In-Fact.
Upon
the
occurrence of an Event of Default, the Company hereby appoints the Secured
Party
as its attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time in the
Secured Party’s discretion to take any action and to execute any instrument
which the Secured Party may reasonably deem necessary to accomplish the purposes
of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect
of
the Pledged Property or any part thereof and to give full discharge for the
same. The Secured Party may demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize on the Pledged Property as and when
the
Secured Party may determine. To facilitate collection, the Secured Party may
notify account debtors and obligors on any Pledged Property to make payments
directly to the Secured Party.
Section
3.2. Secured
Party May Perform.
If
the
Company fails to perform any agreement contained herein, the Secured Party,
at
its option, may itself perform, or cause performance of, such agreement, and
the
expenses of the Secured Party incurred in connection therewith shall be included
in the Obligations secured hereby and payable by the Company under
Section 8.3.
3
ARTICLE
4.
REPRESENTATIONS
AND WARRANTIES
Section
4.1. Authorization;
Enforceability.
Each
of
the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery,
this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.
Section
4.2. Ownership
of Pledged Property.
The
Company warrants and represents that it is the legal and beneficial owner of
the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement.
ARTICLE
5.
DEFAULT;
REMEDIES; SUBSTITUTE COLLATERAL
Section
5.1. Default
and Remedies.
(a) If
an
Event of Default occurs, then in each such case the Secured Party may declare
the Obligations to be due and payable immediately, by a notice in writing to
the
Company, and upon any such declaration, the Obligations shall become immediately
due and payable.
(b) Upon
the
occurrence of an Event of Default, the Secured Party shall: (i) be entitled
to receive all distributions with respect to the Pledged Property, (ii) to
cause the Pledged Property to be transferred into the name of the Secured Party
or its nominee, (iii) to dispose of the Pledged Property, and (iv) to
realize upon any and all rights in the Pledged Property then held by the Secured
Party.
Section
5.2. Method
of Realizing Upon the Pledged Property; Other Remedies.
Upon
the
occurrence of an Event of Default, in addition to any rights and remedies
available at law or in equity, the following provisions shall govern the Secured
Party’s right to realize upon the Pledged Property:
(a) Any
item
of the Pledged Property may be sold for cash or other value in any number of
lots at brokers board, public auction or private sale and may be sold without
demand, advertisement or notice (except that the Secured Party shall give the
Company ten (10) days’ prior written notice of the time and place or
of the time after which a private sale may be made (the “Sale
Notice”)),
which notice period shall in any event is hereby agreed to be commercially
reasonable. At any sale or sales of the Pledged Property, the Company may bid
for and purchase the whole or any part of the Pledged Property and, upon
compliance with the terms of such sale, may hold, exploit and dispose of the
same without further accountability to the Secured Party. The Company will
execute and deliver, or cause to be executed and delivered, such instruments,
documents, assignments, waivers, certificates, and affidavits and supply or
cause to be supplied such further information and take such further action
as
the Secured Party reasonably shall require in connection with any such
sale.
4
(b) Any
cash
being held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of, sale of, collection from, or other
realization upon all or any part of the Pledged Property shall be applied as
follows:
(i) to
the
payment of all amounts due the Secured Party for the expenses reimbursable
to it
hereunder or owed to it pursuant to Section 8.3 hereof;
(ii) to
the
payment of the Obligations then due and unpaid.
(iii) the
balance, if any, to the person or persons entitled thereto, including, without
limitation, the Company.
(c) In
addition to all of the rights and remedies which the Secured Party may have
pursuant to this Agreement, the Secured Party shall have all of the rights
and
remedies provided by law, including, without limitation, those under the Uniform
Commercial Code.
(i) If
the
Company fails to pay such amounts due upon the occurrence of an Event of Default
which is continuing, then the Secured Party may institute a judicial proceeding
for the collection of the sums so due and unpaid, may prosecute such proceeding
to judgment or final decree and may enforce the same against the Company and
collect the monies adjudged or decreed to be payable in the manner provided
by
law out of the property of Company, wherever situated. The Secured Party may
proceed against the Company without proceeding first against any other party,
including, without limitation, the Parent.
(ii) The
Company agrees that it shall be liable for any reasonable fees, expenses and
costs incurred by the Secured Party in connection with enforcement, collection
and preservation of the Transaction Documents, including, without limitation,
reasonable legal fees and expenses, and such amounts shall be deemed included
as
Obligations secured hereby and payable as set forth in Section 8.3
hereof.
Section
5.3. Proofs
of Claim.
In
case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company or of such
other obligor or its creditors, the Secured Party (irrespective of whether
the
Obligations shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Secured Party shall have made
any
demand on the Company for the payment of the Obligations), subject to the rights
of Previous Security Holders, shall be entitled and empowered, by intervention
in such proceeding or otherwise:
5
(i) to
file
and prove a claim for the whole amount of the Obligations and to file such
other
papers or documents as may be necessary or advisable in order to have the claims
of the Secured Party (including any claim for the reasonable legal fees and
expenses and other expenses paid or incurred by the Secured Party permitted
hereunder and of the Secured Party allowed in such judicial proceeding),
and
(ii) to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by the Secured Party to make such payments
to
the Secured Party and, in the event that the Secured Party shall consent to
the
making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.
Section
5.4. Duties
Regarding Pledged Property.
The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.
ARTICLE
6.
AFFIRMATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing (as provided in Section 8.4
hereof):
Section
6.1. Existence,
Properties, Etc.
(a) The
Company shall do, or cause to be done, all things, or proceed with due diligence
with any actions or courses of action, that may be reasonably necessary
(i) to maintain Company’s due organization, valid existence and good
standing under the laws of its state of incorporation, and (ii) to preserve
and keep in full force and effect all qualifications, licenses and registrations
in those jurisdictions in which the failure to do so could have a Material
Adverse Effect (as defined below); and (b) the Company shall not do, or
cause to be done, any act impairing the Company’s corporate power or authority
(i) to carry on the Company’s business as now conducted, and (ii) to
execute or deliver this Agreement or any other document delivered in connection
herewith, including, without limitation, any UCC-1 Financing Statements required
by the Secured Party (which other loan instruments collectively shall be
referred to as the “Loan
Instruments”) to
which it is or will be a party, or perform any of its obligations hereunder
or
thereunder. For purpose of this Agreement, the term “Material
Adverse Effect”
shall
mean any material and adverse affect as determined by Secured Party in its
reasonable discretion, whether individually or in the aggregate, upon
(a) the Company’s assets, business, operations, properties or condition,
financial or otherwise; (b) the Company’s to make payment as and when due
of all or any part of the Obligations; or (c) the Pledged
Property.
6
Section
6.2. Financial
Statements and Reports.
The
Company shall provide the Security Party with such financial data as the Secured
Party may reasonably request, within a reasonable time after any such request,
including, without limitation the following financial data:
(a) The
balance sheet of the Company as of the close of each fiscal year, the statement
of earnings and retained earnings of the Company as of the close of such fiscal
year, and statement of cash flows for the Company for such fiscal year, all
in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied, certified by the chief executive and chief
financial officers of the Company as being true and correct and accompanied
by a
certificate of the chief executive and chief financial officers of the Company,
stating that the Company has kept, observed, performed and fulfilled each
covenant, term and condition of this Agreement and the other Loan Instruments
during such fiscal year and that no Event of Default hereunder has occurred
and
is continuing, or if an Event of Default has occurred and is continuing,
specifying the nature of same, the period of existence of same and the action
the Company proposes to take in connection therewith;
(b) A
balance
sheet of the Company as of the close of each month, and statement of earnings
and retained earnings of the Company as of the close of such month, all in
reasonable detail, and prepared substantially in accordance with generally
accepted accounting principles consistently applied, certified by the chief
executive and chief financial officers of the Company as being true and correct;
and
(c) Copies
of
all accountants' reports and accompanying financial reports submitted to the
Company by independent accountants in connection with each annual examination
of
the Company.
Section
6.3. Accounts
and Reports.
The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied and provide,
at
its sole expense, to the Secured Party the following:
(a) as
soon
as available, a copy of any notice or other communication alleging any
nonpayment or other material breach or default, or any foreclosure or other
action respecting any material portion of its assets and properties, received
respecting any of the indebtedness of the Company in excess of $50,000 (other
than the Obligations), or any demand or other request for payment under any
guaranty, assumption, purchase agreement or similar agreement or arrangement
respecting the indebtedness or obligations of others in excess of $50,000,
including any received from any person acting on behalf of the Secured Party
or
beneficiary thereof; and
(b) within
fifteen (15) days after the making of each submission or filing, a copy of
any report, financial statement, notice or other document, whether periodic
or
otherwise, submitted to the shareholders of the Company, or submitted to or
filed by the Company with any governmental authority involving or affecting
(i)
the Company that could have a Material Adverse Effect; (ii) the
Obligations; (iii) any part of the Pledged Property; or (iv) any of
the transactions contemplated in this Agreement or the Loan
Instruments.
7
Section
6.4. Maintenance
of Books and Records; Inspection.
The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit the
Secured Party, its officers and employees and any professionals designated
by
the Secured Party in writing, at any time to visit and inspect any of its
properties (including but not limited to the collateral security described
in
the Transaction Documents and/or the Loan Instruments), corporate books and
financial records, and to discuss its accounts, affairs and finances with any
employee, officer or director thereof.
Section
6.5. Maintenance
and Insurance.
(a) The
Company shall maintain or cause to be maintained, at its own expense, all of
its
assets and properties in good working order and condition, subject to ordinary
wear and tear, making all necessary repairs thereto and renewals and
replacements thereof.
(b) The
Company shall maintain or cause to be maintained, at its own expense, insurance
in form, substance and amounts (including deductibles), which the Company deems
reasonably necessary to the Company’s business, (i) adequate to insure all
assets and properties of the Company, which assets and properties are of a
character usually insured by persons engaged in the same or similar business
against loss or damage resulting from fire or other risks included in an
extended coverage policy; (ii) against public liability and other tort
claims that may be incurred by the Company; (iii) as may be required by the
Transaction Documents and/or the Loan Instruments or applicable law and
(iv) as may be reasonably requested by Secured Party, all with adequate,
financially sound and reputable insurers.
Section
6.6. Contracts
and Other Collateral.
The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement.
Section
6.7. Defense
of Collateral, Etc.
The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss could have a Material
Adverse Effect, the Company shall defend the Secured Party’s right, title and
interest in and to each and every part of the Pledged Property, each against
all
manner of claims and demands on a timely basis to the full extent permitted
by
applicable law.
8
Section
6.8. Payment
of Debts, Taxes, Etc.
The
Company shall pay, or cause to be paid, all of its indebtedness and other
liabilities and perform, or cause to be performed, all of its obligations in
accordance with the respective terms thereof, and pay and discharge, or cause
to
be paid or discharged, all taxes, assessments and other governmental charges
and
levies imposed upon it, upon any of its assets and properties on or before
the
last day on which the same may be paid without penalty, as well as pay all
other
lawful claims (whether for services, labor, materials, supplies or
otherwise) as and when due.
Section
6.9. Taxes
and Assessments; Tax Indemnity.
The
Company shall (a) file all tax returns and appropriate schedules thereto
that are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or
upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or
levies that, if unpaid, might become a lien or charge upon any of its
properties; provided,
however,
that
the Company in good faith may contest any such tax, assessment, governmental
charge or levy described in the foregoing clauses (b) and (c) so long as
appropriate reserves are maintained with respect thereto.
Section
6.10. Compliance
with Law and Other Agreements.
The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state
and local laws, regulations and ordinances governing such business operations
and the use and ownership of such property, and (b) all agreements,
licenses, franchises, indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound. Without limiting
the
foregoing, the Company shall pay all of its indebtedness promptly in accordance
with the terms thereof.
Section
6.11. Notice
of Default.
The
Company shall give written notice to the Secured Party of the occurrence of
any
default or Event of Default under this Agreement, the Transaction Documents
or
any other Loan Instrument or any other agreement of Company for the payment
of
money, promptly upon the occurrence thereof.
Section
6.12. Notice
of Litigation.
The
Company shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$50,000, instituted by any persons against the Company, or affecting any of
the
assets of the Company, and (b) any dispute, not resolved within fifteen
(15) days of the commencement thereof, between the Company on the one hand
and
any governmental or regulatory body on the other hand, which might reasonably
be
expected to have a Material Adverse Effect on the business operations or
financial condition of the Company.
9
ARTICLE
7.
NEGATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing:
Section
7.1. Liens
and Encumbrances.
The
Company shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property or of the Company’s capital stock, or offer or agree to do so, or own
or acquire or agree to acquire any asset or property of any character subject
to
any of the foregoing encumbrances (including any conditional sale contract
or
other title retention agreement), or assign, pledge or in any way transfer
or
encumber its right to receive any income or other distribution or proceeds
from
any part of the Pledged Property or the Company’s capital stock; or enter into
any sale-leaseback financing respecting any part of the Pledged Property as
lessee, or cause or assist the inception or continuation of any of the
foregoing.
Section
7.2. Articles,
By-Laws, Mergers, Consolidations, Acquisitions and Sales.
Without
the prior express written consent of the Secured Party, which consent shall
not
be unreasonably withheld, the Company shall not: (a) Amend its Articles of
Incorporation or By-Laws; (b) be a party to any merger, consolidation or
corporate reorganization, (c) purchase or otherwise acquire all or
substantially all of the assets or stock of, or any partnership or joint venture
interest in, any other person, firm or entity, (d) sell, transfer, convey,
grant a security interest in or lease all or any substantial part of its assets,
nor (e) create any subsidiaries nor convey any of its assets to any
subsidiary in excess of $200,000 in the aggregate.
Section
7.3. Management,
Ownership.
The
Company shall not materially change its ownership, executive staff or management
without the prior written consent of the Secured Party. The ownership, executive
staff and management of the Company are material factors in the Secured Party's
willingness to institute and maintain a lending relationship with the
Company.
Section
7.4. Dividends,
Etc.
Except
for dividends payable to the Parent, the Company shall not declare or pay any
dividend of any kind, in cash or in property, on any class of its capital stock,
nor purchase, redeem, retire or otherwise acquire for value any shares of such
stock, nor make any distribution of any kind in respect thereof, nor make any
return of capital to shareholders, nor make any payments in respect of any
pension, profit sharing, retirement, stock option, stock bonus, incentive
compensation or similar plan (except as required or permitted hereunder),
without the prior written consent of the Secured Party, which consent shall
not
be unreasonably withheld.
10
Section
7.5. Conduct
of Business.
The
Company will continue to engage, in an efficient and economical manner, in
a
business of the same general type as conducted by it on the date of this
Agreement.
Section
7.6. Places
of Business.
The
location of the Company’s chief place of business is 0000 Xxxx Xxxxxx Xxxxxxx,
Xxxxxxx, XX 00000. The Company shall not change the location of its chief place
of business, chief executive office or any place of business disclosed to the
Secured Party or move any of the Pledged Property from its current location
without thirty (30) days prior written notice to the Secured Party in each
instance.
ARTICLE
8.
MISCELLANEOUS
Section
8.1. Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered as duly given on:
(a) the date of delivery, if delivered in person, by nationally recognized
overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:
|
If
to the Secured Party:
|
Cornell
Capital Partners, LP
|
|
000
Xxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxx
Xxxx, Xxx Xxxxxx 00000
|
|
|
Attention: Xxxx
Xxxxxx
|
|
|
Portfolio
Manager
|
|
|
Telephone:
(000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
With
copy to:
|
Xxxxx
Xxxxxxxx, Esq.
|
|
000
Xxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxx
Xxxx, XX 00000
|
|
|
Telephone:
(000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
11
|
And
if to the Company:
|
Pacer
Health Management Corporation
|
|
0000
Xxxx Xxxxxx Xxxxxxx
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Attention: Rainier
Xxxxxxxx
|
|
|
Telephone:
|
|
|
Facsimile:
|
|
|
With
a copy to:
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxxxx Xxxxxx, LLP
|
|
000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
|
|
|
Xxxxx,
Xxxxxxx 00000
|
|
|
Attention: Xxxxxxx
X. Xxxxxx, Esquire
|
|
|
Telephone:
(000)
000-0000
|
|
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Facsimile:
(000)
000-0000
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Any
party
may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day
after the giving of such notice, such newly designated address shall be such
party’s address for the purpose of all notices or other communications required
or permitted to be given pursuant to this Agreement.
Section
8.2. Severability.
If
any
provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if
any
such invalid or unenforceable provision were not contained herein.
Section
8.3. Expenses.
In
the
event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Party may incur in connection with:
(i) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (ii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or
(iii) the failure by the Company to perform or observe any of the
provisions hereof.
Section
8.4. Waivers,
Amendments, Etc.
The
Secured Party’s delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants
shall
not waiver, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver
by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party,
nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party.
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Section
8.5. Continuing
Security Interest.
This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (i) remain in full force and effect until payment in full of the
Obligations; and (ii) be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its
successors and assigns. Upon the payment or satisfaction in full of the
Obligations, the Company shall be entitled to the return, at its expense, of
such of the Pledged Property as shall not have been sold in accordance with
Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.
Section
8.6. Independent
Representation.
Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that
it
has been sufficiently apprised of its rights and responsibilities with regard
to
the substance of this Agreement.
Section
8.7. Applicable
Law: Jurisdiction.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey
for
the adjudication of any civil action asserted pursuant to this
Paragraph.
Section
8.8. Waiver
of Jury Trial.
AS
A
FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.
Section
8.9. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties and supersedes
any
prior agreement or understanding among them with respect to the subject matter
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above
written.
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COMPANY:
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PACER
HEALTH MANAGEMENT CORPORATION
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By:
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Name:
Rainier
Xxxxxxxx
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Title:
CEO
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SECURED
PARTY:
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Cornell
Capital Partners, LP
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By:
Yorkville
Advisors, LLC
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Its:
General
Partner
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By:
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Name:
Xxxx
Xxxxxx
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Title:
Portfolio
Manager
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EXHIBIT
A
DEFINITION
OF PLEDGED PROPERTY
For
the
purpose of securing prompt and complete payment and performance by the Company
of all of the Obligations, the Company unconditionally and irrevocably hereby
grants to the Secured Party a continuing security interest in and to, and lien
upon, the following Pledged Property of the Company:
(a) all
goods
of the Company, including, without limitation, machinery, equipment, furniture,
furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles
of every kind and description, now or hereafter owned by the Company or in
which
the Company may have or may hereafter acquire any interest, and all
replacements, additions, accessions, substitutions and proceeds thereof, arising
from the sale or disposition thereof, and where applicable, the proceeds of
insurance and of any tort claims involving any of the foregoing;
(b) all
inventory of the Company, including, but not limited to, all goods, wares,
merchandise, parts, supplies, finished products, other tangible personal
property, including such inventory as is temporarily out of Company’s custody or
possession and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any
of
the foregoing;
(c) all
contract rights and general intangibles of the Company, including, without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created;
(d) all
documents, warehouse receipts, instruments and chattel paper of the Company
whether now owned or hereafter created;
(e) all
accounts and other receivables, instruments or other forms of obligations and
rights to payment of the Company (herein collectively referred to as
“Accounts”),
together with the proceeds thereof, all goods represented by such Accounts
and
all such goods that may be returned by the Company’s customers, and all proceeds
of any insurance thereon, and all guarantees, securities and liens which the
Company may hold for the payment of any such Accounts including, without
limitation, all rights of stoppage in transit, replevin and reclamation and
as
an unpaid vendor and/or lienor, all of which the Company represents and warrants
will be bona fide and existing obligations of its respective customers, arising
out of the sale of goods by the Company in the ordinary course of
business;
(f) to
the
extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection
with the operations of any of its facilities;
(g) all
products and proceeds (including, without limitation, insurance proceeds) from
the above-described Pledged Property.
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