ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement") is entered
into effective as of the close of business December 31, 2000, by and between
Prime Medical Services, Inc., a Delaware corporation (the "Secured Party"), and
Innovative Medical Technologies, Inc., an exempted company incorporated in the
Cayman Islands with limited liability (the "Debtor").
RECITALS:
A. Debtor executed and delivered those certain Promissory Notes dated
December 31, 2000 (collectively, as amended, supplemented, or modified, and
including any replacements thereof or substitutions therefore, the "Notes") in
the original principal amounts of Nine Hundred Fifty Thousand Dollars ($950,000)
and One Hundred Fifty Thousand Dollars ($150,000) payable to the order of
Secured Party.
B. One of the Notes was issued pursuant to a Stock Purchase Agreement (the
"Stock Purchase Agreement"), between Debtor and Secured Party under which
Secured Party acquired all of the outstanding capital stock of Prostatherapies,
Inc., a Delaware corporation ("Prostatherapies").
C. The other of the Notes was issued pursuant to a certain Mutual
Non-Competition Agreement (the "Non-Compete Agreement") by and between Debtor,
Prostatherapies, Secured Party and Xxxxxx Xxxxxxxx, M.D.
D. Debtor and Prostatherapies each have received, and will continue to
receive, valuable consideration as a result of the transactions evidenced by, or
related to, the Stock Purchase Agreement, the Notes, the Non-Compete Agreement
and this Agreement (all of which are collectively referred to as the
"Transaction Documents").
E. Debtor has agreed to pledge the Collateral (as defined below) to
secure certain obligations and liabilities, including without limitation (i)
Debtor's obligations under the Notes, (ii) Debtor's and Prostatherapies'
performance of the covenants and agreements set forth in the Non-Compete
Agreement, (iii) Debtor's performance of the covenants and agreements set forth
in the Stock Purchase Agreement, and (iv) Debtor's performance of the covenants
more fully set forth herein.
Agreement:
Now, Therefore, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor acknowledges, Debtor and Secured Party
agree as follows:
Article I
Collateral and Secured Obligations
1.1 Grant of Security Interest. Debtor hereby assigns, transfers, and
pledges to Secured Party, and Debtor hereby grants to Secured Party a continuing
first priority security interest in and lien (the "Security Interest") upon, the
following described collateral, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"):
(a) Shares of Prostatherapies. All issued and outstanding
shares of capital stock (of all classes) of Prostatherapies, including without
limitation those shares evidenced by any stock certificates described in the
Stock Purchase Agreement, and any replacements, substitutions, or exchanges of
such certificates; and any additional shares of capital stock of Prostatherapies
subsequently delivered or issued to Debtor (the above described stock is
sometimes collectively referred to as the "Prostatherapies Shares"); and any
options, rescission rights, registration rights, conversion rights, subscription
rights, contractual or quasi-contractual rights, warrants, redemption rights,
redemption proceeds, calls, preemptive rights and all other rights and benefits
pertaining to the Prostatherapies Shares;
(b) Accounts. All accounts and rights now or hereafter
attributable to any of the Collateral described in (a) above, and all rights of
Debtor now or hereafter arising under any agreement pertaining to the Collateral
described in (a) above, including without limitation all distributions,
proceeds, fees, dividends, preferences, payments or other benefits of whatever
nature which Debtor is now or may hereafter become entitled to receive with
respect to any Collateral described in (a) above;
(c) Additional Property. "Collateral" shall also include the
following property (collectively, the "Additional Property") which Debtor
becomes entitled to receive or shall receive in connection with any other
Collateral: (i) any stock certificate, including without limitation, any
certificate representing a stock dividend or any certificate in connection with
any recapitalization, reclassification, merger, consolidation, conversion, sale
of assets, combination of shares, stock split, reverse stock split or spin-off;
(ii) any option, warrant, subscription or right, whether as an addition to or in
substitution of any other Collateral; (iii) any dividends or distributions of
any kind whatsoever, whether distributable in cash, stock or other property;
(iv) any interest, premium or principal payments; and (v) any conversion or
redemption proceeds; and
(d) Proceeds. All proceeds (cash and non-cash) arising out of
the sale, exchange, collection or other disposition of all or any portion of the
Collateral described in (a), (b) or (c) above, including without limitation
proceeds in the form of stock, accounts, chattel paper, instruments, documents,
goods, inventory and equipment.
1.2 Obligations. This Agreement and the Security Interest shall secure
full and punctual payment and performance of the following indebtedness, duties
and obligations (collectively, the "Obligations"):
(a) All covenants, obligations, and liabilities of Debtor and
Prostatherapies under each of the Transaction Documents;
(b) All principal, interest, fees and other amounts payable to
the Secured Party pursuant to the Notes, including all future advances,
extensions, renewals, modifications, increases, or substitutions thereof whether
or not provided for in the Transaction Documents;
(c) All liabilities and obligations of Debtor to Secured Party
under and pursuant to this Agreement and/or any other contract or agreement
between Secured Party and Debtor; and
(d) All sums expended or advanced by Secured Party pursuant to
any term or provision of this Agreement (i) to collect and/or enforce the
Obligations, (ii) to maintain, protect and preserve the Collateral, and (iii)
all other sums now or hereafter loaned or advanced by Secured Party to Debtor,
or expended by Secured Party for the account of Debtor or otherwise owing by
Debtor to Secured Party, in respect to the Obligations.
1.3 Voting Rights. As long as no Event of Default (as hereinafter
defined) shall have occurred hereunder, any voting rights incident to any stock
or other securities pledged as Collateral may be exercised by Debtor; provided,
however, that Debtor will not exercise, or cause to be exercised, any such
voting rights, without the prior written consent of Secured Party, if the direct
or indirect effect of such vote will result in an Event of Default hereunder.
ARTICLE II
DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL
Debtor hereby represents and warrants to Secured Party as follows:
2.1 Ownership of Collateral. Debtor has good and marketable title to
the Collateral free and clear of any liens, security interests, shareholders
agreement, calls, charge, or encumbrance, except for this Security Interest. No
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except as may have
been filed in favor of Secured Party relating to this Agreement.
2.2 Power and Authority. Debtor has the lawful right, power, and
authority to grant the Security Interest in the Collateral. This Agreement,
together with all filings and other actions necessary or desirable to perfect
and protect such security interest, which have been duly taken, create a valid
and perfected first priority security interest in the Collateral securing the
payment and performance of the Obligations.
2.3 No Agreements. The Prostatherapies Shares are not subject to any
right of redemption by Prostatherapies or Debtor, or any call or put options,
voting trust, proxy, shareholders agreement, right of first refusal or any
provision of the respective articles of incorporation or bylaws of
Prostatherapies or any other document or agreement which would in any way impair
or adversely affect this Security Interest or the rights of Secured Party under
this Agreement.
2.4 Solvency of Debtor and the Subsidiaries. As of the date hereof, and
after giving effect to the Notes and the other Transaction Documents, and the
completion of all other transactions contemplated by Debtor and Prostatherapies
at the time of the closing of the transaction contemplated by the Transaction
Documents, (i) Debtor and Prostatherapies is and will be solvent, (ii) the fair
saleable value of Debtor's assets exceeds and will continue to exceed Debtor's
liabilities (both fixed and contingent), and (iii) Debtor has and will have
sufficient capital to carry on Debtor's businesses and all businesses in which
Debtor is about to engage.
2.5 Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights of any party or of any agreement by which Debtor or the issuer thereof is
bound. No restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral.
2.6 Ownership of Prostatherapies Shares. Debtor is, as of the date hereof,
the legal and beneficial owner of the Prostatherapies Shares.
ARTICLE III
DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES
3.1 Good Standing - Debtor. Debtor is a duly formed corporation, duly
organized and in good standing under the laws of the Cayman Islands, qualified
to do business in and in good standing in each state or country in which such
qualification is necessary for the conduct of its business, and has the power to
own its property and to carry on its business in each jurisdiction in which
Debtor operates.
3.2 Authority and Compliance. Debtor has full power and authority to
enter into this Agreement and to enter into and perform its obligations under
the Notes, this Agreement and the other Transaction Documents, all of which have
been duly authorized by all proper and necessary corporate action. Debtor is in
compliance with all applicable laws, ordinances, statutes, orders, regulations,
judgments, writs, or decrees of any Governmental Entity ("Laws") to which it is
subject. "Governmental Entity" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency, or other
governmental authority having jurisdiction over Debtor, any subsidiary, or any
of its or their respective businesses, operations, assets, or properties.
3.3 Binding Agreement. The Notes, this Agreement, and the other
Transaction Documents, constitute valid and legally binding obligations of
Debtor, in accordance with their terms, subject to the applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally.
3.4 No Conflicting Agreements. There are no charter, bylaw or stock
provisions of Debtor and no provisions of any existing agreement, mortgage,
indenture or contract binding on Debtor or affecting its property, which would
conflict with or in any way prevent the execution, delivery, or carrying out of
the terms of the Notes, this Agreement, or the other Transaction Documents.
3.5 Ownership of Assets. Debtor has good and full title to the
Collateral, and the Collateral is owned free and clear of liens, charges,
claims, security interests, and other encumbrances.
ARTICLE IV
DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL
Debtor covenants and agrees that from the date hereof and until the
payment and performance in full of the Obligations unless Secured Party
otherwise consents in writing:
4.1 Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Debtor covenants and agrees to deliver to Secured Party any
certificates, documents, or instruments representing or evidencing the
Collateral, with Debtor's endorsement thereon and/or accompanied by property
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party.
4.2 Further Assurances. Debtor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the priority of such security interest, (ii) to enable Secured Party
to exercise and enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party;
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured Party;
and (E) obtaining written confirmation of the pledge of any securities
constituting Collateral from any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and substance
satisfactory to Secured Party.
4.3 Additional Property. All Additional Property received by Debtor
shall be received in trust for the benefit of Secured Party. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Debtor, together with such instruments of transfer as Secured Party may request,
shall immediately be delivered to or deposited with Secured Party and held by
Secured Party as Collateral under the terms of this Agreement. If the Additional
Property received by Debtor and delivered to Secured Party pursuant to this
Section shall be shares of stock or other securities, such shares of stock or
other securities shall be duly endorsed in blank or accompanied by proper
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Party, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party. Secured Party shall be
deemed to have possession of any Collateral in transit to Secured Party or its
agent.
4.4 Sale, Transfer, Encumbrance. Debtor will not sell, transfer,
mortgage, or otherwise encumber any Collateral or impair the value thereof in
any manner without Secured Party's prior written consent, including without
limitation by purchase, lease, barter, trade, payment deferral, or the creation,
assumption or guarantee of indebtedness or other lending of credit. Secured
Party's written consent to any sale, mortgage, transfer, or encumbrance shall
not be construed to be a waiver of this provision in respect to any subsequent
proposed sale, mortgage, transfer, or encumbrance.
4.5 Liens. Neither Debtor nor any person acting on Debtor's behalf has,
or shall have any right, power, or authority to and shall not create, incur, or
permit to be placed or imposed, upon the Collateral, any lien of any type or
nature whatsoever, other than the liens in favor of Secured Party.
4.6 Matters or Occurrences Affecting Collateral or this Agreement.
Debtor will promptly notify Secured Party of any and all matters or occurrences
that may have a material adverse effect on the status or value of the Collateral
or this Agreement, including without limitation the occurrence of an Event of
Default, or an event which, with giving of notice or lapse of time, or both,
would constitute an Event of Default.
4.7 Agreements Pertaining to Collateral. Debtor will not enter into any
type of contract or agreement pertaining to any of the Collateral or in any way
transfer any voting rights pertaining to the Collateral to any person or entity.
4.8 Dilution of Ownership. Except for issuance of shares pursuant to
incentive stock option grants made by an issuer pursuant to its incentive stock
option plan (not to exceed 20% in the aggregate of such issuer's outstanding
capital stock on a fully diluted basis), Debtor will not, as to any securities
pledged as Collateral, consent to or approve of, and will prohibit, the issuance
of (i) any additional shares of any class of securities of such issuer, (ii) any
instrument convertible voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such securities, or (iii) any warrants, options, contracts or other
commitments entitling any third party to purchase or otherwise acquire any such
securities.
4.9 Restrictions on Securities. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock split, stock dividend, reclassification, or other similar act or
transaction regarding such capital stock unless all other shares of such capital
stock which constitute Collateral hereunder are included in such act or
transaction and effected thereby in all respects the same as any other shares,
or class of shares, of such capital stock.
4.10 Transfer of Prostatherapies Assets. Debtor covenants and agrees
not to create any new subsidiary by transfer of, or otherwise convey or transfer
to any subsidiary, or to itself, any assets, rights or properties belonging to
Prostatherapies. For purposes of this Agreement, the term "subsidiary" means any
corporation, limited liability company, partnership or other entity that,
directly or indirectly, is owned or controlled by Debtor; it being agreed that,
without limitation, Debtor shall conclusively be deemed to have control for
purposes of this definition if it, directly or indirectly, owns or has the right
to vote twenty percent (20%) or more of the voting ownership interests, however
designated, of any corporation, limited liability company, partnership or other
entity.
ARTICLE V
DEBTOR'S AFFIRMATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees as follows:
5.1 Existence and Compliance. Debtor and each subsidiary shall maintain
its corporate existence in good standing and comply with all Laws applicable to
it or to any of its property, business operations and transactions. Debtor and
each subsidiary shall qualify as a foreign corporation in all jurisdictions
wherein any property now or hereafter owned or any business now or hereafter
transacted by Debtor or such subsidiary makes such qualifications necessary.
5.2 Adverse Conditions or Events. Debtor and the subsidiaries shall
promptly advise Secured Party in writing of any litigation filed against Debtor
or any subsidiary and of any condition, event or act which comes to its
attention that would or might have a material adverse effect on Debtor's or any
subsidiary's financial condition or on Debtor's ability to perform the
Obligations or any subsidiary's ability to perform under its guaranty agreement
executed in favor of Secured Party with respect to the Obligations.
5.3 Dividend Rights. Secured Party shall have the sole right to
receive, hold and apply as Collateral any dividends or other distributions with
respect to the Collateral, or any part thereof, in cash or in kind. All dividend
and other distributions which are received by Debtor contrary to the provisions
the preceding sentence shall be received in trust for the benefit of Secured
Party, shall be segregated from other funds of Debtor, and shall be forthwith
paid over to Secured Party in the exact form received (properly endorsed or
assigned if requested by Secured Party), to be held by Secured Party as
Collateral, or, in Secured Party's sole discretion, to be applied against
payment of any Obligation.
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance of all principal, interest and any other
amounts due under the Notes, or any renewals, replacements, or modifications
thereof, Debtor covenants and agrees that Debtor and each of its subsidiaries
will not, without the prior written consent of Secured Party:
6.1 Transfer of Assets. Enter into any merger or consolidation, or
sell, lease, assign, or otherwise dispose of or transfer any assets having a
book value or fair market value of greater than Ten Thousand Dollars ($10,000)
except in the normal course of its business.
6.2 Change in Ownership or Structure. Dissolve or liquidate; become a
party to any merger or consolidation; reorganize; acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any
corporation or other entity; or sell, transfer, lease, or otherwise dispose of
all or any substantial part of its property or assets or business.
6.3 Liens. Knowingly grant, suffer, or permit liens on or security
interests in Prostatherapies' assets, or fail to promptly pay all lawful claims,
whether for labor, materials, or otherwise, except for purchase money security
interests arising in the ordinary course of business.
6.4 Dividends. Declare any dividends on any shares of any class of its
capital stock, or apply any of its property or assets to the purchase,
redemption or other retirement of any shares of any class of capital stock or in
any way amend its capital structure.
6.5 Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not reasonably
related to its business as presently and normally conducted.
ARTICLE VII
DEFAULT AND REMEDIES
7.1 Events of Default. An Event of Default (herein so called) shall exist
if any one or more of the following events shall occur:
(a) The failure of Debtor to pay any Obligation within fifteen
(15) calendar days after such payment is due, including, without limitation,
principal and/or interest payments on the Notes;
(b) Excluding payment defaults which are addressed in
subsection (a) above, any breach by Debtor, Prostatherapies or any of the
affiliates of Debtor who are parties thereto, of any covenant, term or condition
in this Agreement or any other Transaction Documents, or any other failure to
perform any of their respective obligations under this Agreement, or any other
Transaction Documents; provided that Debtor shall first have fifteen days
following delivery of written notice by Secured Party describing the breach with
reasonable specificity, within which period Debtor may cure such breach to the
reasonable satisfaction of Secured Party;
(c) If Debtor or Prostatherapies: (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due and Secured
Party, in good faith, determines that such event or condition could lead to a
material impairment of the Collateral, or any part thereof, or of any other
payment security for any of the Obligations; (iii) has a receiver, trustee or
custodian appointed for, or take possession of, all or any substantial portion
of the assets of such party or any of the Collateral, either in a proceeding
brought by such party or in a proceeding brought against such party and such
appointment is not discharged or such possession is not terminated within thirty
(30) days after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a petition for relief
under the United States Bankruptcy Code or any other present or future federal
or state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary
petition for relief is filed against such party under any Applicable Bankruptcy
Law and such involuntary petition is not dismissed within thirty (30) days after
the filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by such party; (v) fails to have discharged within a period of
ten (10) days any attachment, sequestration or similar writ levied upon, any
claim against or affecting, any property of such party; or (vi) fails to pay
within ninety (90) days any final money judgment against such party; or
(d) The issuer of any securities constituting Collateral files
a petition for relief under any Applicable Bankruptcy Law, an involuntary
petition for relief is filed against any such issuer under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within thirty (30)
days after the filing thereof, or an order for relief naming any such issuer is
entered under any Applicable Bankruptcy Law.
7.2 Secured Party's Remedies. Upon the occurrence of an Event of Default:
(a) Secured Party may declare the Obligations in whole or part
immediately due and may enforce payment and performance of the same and exercise
any rights under the Texas UCC, rights and remedies of Secured Party under this
Agreement, or otherwise.
(b) Secured Party may, at Secured Party's option and at the
expense of Debtor, either in Secured Party's own right or in the name of Debtor
and in the same manner and to the same extent that Debtor might reasonably so
act if this Agreement had not been made: (i) do all things requisite,
convenient, or necessary to enforce the performance and observance of all
rights, remedies and privileges of Debtor arising from the Collateral, or any
part thereof, including without limitation compromising, waiving, excusing, or
in any manner releasing or discharging any obligation of any party to or arising
from the Collateral; (ii) take possession of the books, papers, chattel paper,
documents of title, and accounts of Debtor, wherever located, relating to the
Collateral; (iii) xxx or otherwise collect and receive money attributable to the
Collateral; and (iv) exercise any other lawfully available powers or remedies,
and do all other things which Secured Party deems requisite, convenient or
necessary or which the Secured Party deems proper to protect the Security
Interest.
(c) Secured Party may foreclose this Agreement in the manner
now or hereafter provided or permitted by law and may upon such reasonable
notification prior thereto as may be required by applicable law (Debtor hereby
agreeing that ten days' notice is commercially reasonable), sell, assign,
transfer, or otherwise dispose of the Collateral at public or private sale, in
whole or in part, and Secured Party may, in its own name or as Debtor's
attorney-in-fact effectively assign and transfer the Collateral, or any part
thereof, absolutely, and execute and deliver all necessary assignments,
conveyances, bills of sale, and other instruments with power to substitute one
or more persons or corporations with like power. Any such foreclosure sale,
assignment, transfer, or other disposition shall, to the extent permitted by
law, be a perpetual bar, both at law and in equity, against Debtor and all
persons and corporations lawfully claiming by or through or under Debtor. Any
such foreclosure sale may be adjourned from time to time. Upon any sale, Secured
Party may bid for and purchase the Collateral, or any part thereof, and upon
compliance with the terms of sale may hold, retain, possess and dispose of the
Collateral, in its absolute right without further accountability. Secured Party
shall have the right to be credited on the amount of its bid a corresponding
amount of the Obligations as of the date of such sale.
(d) If, in the opinion of Secured Party, there is any question
that a public sale or distribution of any Collateral will violate any state or
federal securities law, Secured Party (i) may offer and sell securities
privately to purchasers who will agree to take them for investment purposes and
not with a view to distribution and who will agree to imposition of restrictive
legends on the certificates representing the security, or (ii) may sell such
securities in an intrastate offering under Section 3(a)(11) of the Securities
Act of 1933, and no sale so made in good faith by Secured Party shall be deemed
to be not "commercially reasonable" because so made.
(e) Not in limitation of any other provision of this
Agreement, Secured Party shall have all rights and remedies of a secured party
under the Texas UCC.
7.3 Application of Proceeds. Secured Party may apply the proceeds of
any foreclosure sale hereunder or from any other permitted disposition of the
Collateral or any part thereof as follows: (a) first, to the payment of all
reasonable costs and expenses of any foreclosure and collection hereunder and
all proceedings in connection therewith, including reasonable attorneys' fees;
(b) then, to the reimbursement of Secured Party for all disbursements made by
Secured Party for taxes, assessments or liens superior to the Security Interest
and which Secured Party shall deem expedient to pay; (c) then, to the
reimbursement of Secured Party of any other disbursements made by Secured Party
in accordance with the terms hereof; (d) then, to or among the amounts of fees,
interest and principal then owing and unpaid in respect of the Obligations, in
such priority as Secured Party may determine in its discretion; and (e) the
remainder of such proceeds, if any, shall be paid to Debtor. If such proceeds
shall be insufficient to discharge the entire Obligations, Secured Party shall
have any other available legal recourse against Debtor and all other persons
obligated under, or for the performance of, the Notes, this Agreement, and the
other Transaction Documents, for the deficiency, together with interest thereon
at the maximum non-usurious rate per annum.
7.4 Enforcement of Obligations. Nothing in this Agreement or in any
other agreement shall affect or impair the unconditional and absolute right of
the Secured Party to enforce the Obligations as and when the same shall become
due in accordance with the terms of the Notes or other governing document,
agreement, or instrument.
7.5 Voting Rights. Upon the occurrence of an Event of Default, Debtor
will not exercise any voting rights with respect to securities pledged as
Collateral. Debtor hereby irrevocably appoints Secured Party as Debtor's
attorney-in-fact (such power of attorney being coupled with an interest) and
proxy to exercise any voting rights with respect to Debtor's securities pledged
as Collateral upon the occurrence of an Event of Default.
ARTICLE VIII
RIGHTS OF SECURED PARTY
8.1 Subrogation. Upon the occurrence of an Event of Default, Secured
Party, at its election, may subrogate to all of the interest, rights and
remedies of the Debtor, in respect to any of the Collateral or agreements
pertaining thereto.
8.2 Secured Party Appointed Attorney-in-Fact. Debtor hereby appoints
Secured Party as attorney-in-fact of Debtor, with full authority in the place
and stead of Debtor and in the name of Debtor, Secured Party or otherwise, from
time to time on Secured Party's discretion and upon the occurrence of an Event
of Default, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation: (a) to ask, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (b) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) of this Section; (c) to file any claims or take any
action or institute any proceeding which Secured Party may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Secured Party against any of the Collateral; and (d) to assign and
transfer the Collateral, or any part thereof, absolutely and to execute and
deliver endorsements, assignments, conveyances, bills of sale and other
instruments with power to substitute one or more persons or corporation with
like power.
8.3 Performance by Secured Party. If Debtor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause the
performance of, such agreement, and the reasonable expenses of Secured Party
incurred in connection therewith shall be payable by Debtor. In no event,
however, shall Secured Party have any obligation or duties whatsoever to perform
any covenant or agreement of Debtor contained herein, and any such performance
by Secured Party shall be wholly discretionary with Secured Party.
8.4 Duties of Secured Party. The powers conferred upon Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for money actually
received by it hereunder, Secured Party shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation, duty
or responsibility to do any of the following: (a) ascertain any maturities,
calls, conversions, exchanges, offers, tenders or similar matters relating to
the Collateral or informing Debtor with respect to any such matters; (b) fix,
preserve or exercise any right, privilege or option (whether conversion,
redemption or otherwise) with respect to the Collateral; (c) collect any amounts
payable in respect of the Collateral; (d) sell all or any portion of the
Collateral to avoid market loss; (e) sell all or any portion of the Collateral;
or (f) hold the Collateral for or on behalf of any party other than Debtor.
8.5 No Liability of Secured Party. Neither the acceptance of this
Agreement by Secured Party, nor the exercise of any rights hereunder by Secured
Party, shall be construed in any way as an assumption by Secured Party of any
obligations, responsibilities, or duties of Debtor arising in connection with
the Collateral assigned hereunder or otherwise bind Secured Party to the
performance of any obligations respecting the Collateral, it being expressly
understood that Secured Party shall not be obligated to perform, observe, or
discharge any obligation, responsibility, duty, or liability of Debtor in
respect of any of the Collateral, including without limitation appearing in or
defending any action, expending any money or incurring any expense in connection
therewith.
8.6 Right of Secured Party to Defend Action Affecting Security. Secured
Party may, at the expense of Debtor, appear in and defend any action or
proceeding at law or in equity purporting to affect Secured Party's Security
Interest under this Agreement.
8.7 Right of Secured Party to Prevent or Remedy Default. If Debtor
shall fail to perform any of the covenants, conditions and agreements required
to be performed and observed by Debtor under the Notes, or any other instruments
secured hereby, or in respect of the Collateral (subject to any applicable
default cure period), Secured Party (a) may but shall not be obligated to take
any action Secured Party deems necessary or desirable to prevent or remedy any
such default by Debtor or otherwise to protect the Security Interest, and (b)
shall have the absolute and immediate right to take possession of the Collateral
or any part thereof (to the extent Secured Party has not previously taken
possession) to such extent and as often as the Secured Party, in its sole
discretion, deems necessary or desirable in order to prevent or to cure any such
default by Debtor, or otherwise to protect the security of this Agreement.
Secured Party may advance or expend such sums of money for the account of Debtor
as Secured Party in its sole discretion deems necessary for any such purpose.
8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision of this Agreement for the protection of its security or for the
enforcement of any of its rights hereunder, or in foreclosure proceedings
commenced and subsequently abandoned, or in any dispute or litigation in which
Secured Party or the holder of any of the Obligations may become involved by
reason of or arising out of the Notes, or the Collateral shall be a part of the
Obligations and shall be paid by Debtor to Secured Party, upon demand, and shall
bear interest until paid at the rate otherwise chargeable on the Notes, but not
to exceed the maximum rate of interest permitted by applicable law, from the
date of such payment until repaid by Debtor.
8.9. Convertible Collateral. Secured Party may present for conversion
any Collateral which is convertible into any other instrument or investment
security or a combination thereof with cash, but Secured Party shall not have
any duty to present for conversion any Collateral unless it shall have received
from Debtor detailed written instructions to that effect at a time reasonably
far in advance of the final conversion date to make such conversion possible.
8.10 Remedies. No right or remedy herein reserved to Secured Party is
intended to be exclusive of any other right or remedy, but each and every such
remedy shall be cumulative, not in lieu of, but in addition to any other rights
or remedies given under this Agreement and all other Transaction Documents. Any
and all of Secured Party's rights and remedies may be exercised from time to
time and as often as such exercise as deemed necessary or desirable by Secured
Party.
8.11 Debtor's Waivers. Debtor waives notice of the creation, advance,
increase, existence, extension, or renewal of, and of any indulgence with
respect to, the Obligations; waives notice of intent to accelerate, notice of
acceleration, notice of intent to demand, presentment, demand, notice of
dishonor, and protest; waives notice of the amount of the Obligations
outstanding at any time, notice of any change in financial condition of any
person liable for the Obligations or any part thereof, notice of any Event of
Default, and all other notices respecting the Obligations; and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by Secured Party in its discretion, without notice
to Debtor.
8.12 Other Parties and Other Collateral. No renewal or extension of or
any other indulgence with respect to the Obligations or any part thereof, no
release of any security, no release of any person (including any maker,
endorser, guarantor, or surety) liable on the Obligations, no delay in
enforcement of payment, and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any security
therefor or guaranty thereof or under this Agreement shall in other manner
impair or affect the rights of Secured Party under the law, under this
Agreement, or under any other agreement pertaining to the other security for the
Obligations, before foreclosing upon the Collateral for the purpose of paying
the Obligations. Debtor waives any right to the benefit of or to require or
control application of any other security or proceeds thereof, and Debtor agrees
that Secured Party shall have no duty or obligation to Debtor to apply to the
Obligations any such other security or proceeds thereof.
ARTICLE IX
MISCELLANEOUS
9.1 Terms Commercially Reasonable. The terms of this Agreement shall be
deemed commercially reasonable within the meaning of the Texas UCC.
9.2 Notices. Any notices or demands required or permitted to be given
hereunder shall be deemed sufficiently given if in writing and personally
delivered or mailed (with all postage and charges prepaid), addressed to Secured
Party or to Debtor their respective addresses set forth below, or at such other
address as the above parties may from time to time designate by written notice
to the other given in accordance with this Section. Any such notice, if
personally delivered or transmitted by telecopy, shall be deemed to have been
given on the date so delivered or transmitted or, if mailed, be deemed to have
been given on the day after such notice is placed in the United States mail in
accordance with this Section.
Secured Party: Prime Medical Services, Inc.
0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx X. XxXxxx, Esq.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
1900 Frost Bank Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Debtor: Innovative Medical Technologies, Inc.
c/o Daedalus Consulting Group
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, M.D.
Facsimile: (000) 000-0000
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, XX
0000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
9.3 Parties Bound. Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any assignment or transfer of any of the Obligations or the
Collateral, Secured Party thereafter shall be fully discharged from any
responsibility with respect to the Collateral so assigned or transferred, but
Secured Party shall retain all rights and powers hereby given with respect to
any of the Obligations or Collateral not so assigned or transferred. All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives, heirs,
successors, and assigns of Debtor.
9.4 Waiver. No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right. No waiver by Secured Party of any right hereunder of
any default by Debtor shall be binding upon Secured Party unless in writing, and
no failure by Secured Party to exercise any power or right hereunder or waiver
of any default by Debtor shall operate as a waiver of any other or further
exercise of such right or power of any further default.
9.5 Agreement Continuing. This Agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether or
not of the character contemplated at the date of this Agreement, and if all
transactions between Secured Party and Debtor shall be closed at any time, shall
be equally applicable to any new transactions thereafter. Provisions of this
Agreement, unless by their terms exclusive, shall be in addition to other
agreements between the parties.
9.6 Definitions. Unless the context indicated otherwise, definitions in
the Texas Business and Commerce Code ("Texas UCC") apply to words and phrases in
this Agreement; if Texas UCC definitions conflict, Chapter 9 definitions apply.
9.7 Miscellaneous. In this Agreement, whenever the context so requires,
the neuter gender includes the masculine and feminine, and the singular number
includes the plural and vice versa. The headings of paragraphs herein are
inserted only for convenience and shall in no way define, describe or limit the
scope of intent of any provisions of this Agreement. No change, amendment,
modification, cancellation, or discharge of any provision of this Agreement
shall be valid unless consented to in writing by Secured Party.
9.8 Assignment of Secured Party's Interest. Secured Party shall have
the right to assign all or any portion of its rights in this Agreement without
approval or consent. Debtor may not assign this Agreement or any of its rights
or obligations hereunder without the express prior written consent of Secured
Party in each instance.
9.9 Applicable Laws. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
9.10 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT, AND THE OTHER TRANSACTION
DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[Signature page follows]
S-1
SIGNATURE PAGE
TO
ASSIGNMENT AND SECURITY AGREEMENT
EXECUTED as of the close of business December 31, 2000.
DEBTOR: INNOVATIVE MEDICAL TECHNOLOGIES, INC.
By:
Xxxxxx Xxxxxxxx, M.D., President
SECURED PARTY: PRIME MEDICAL SERVICES, INC.
By:
Xxxxxx Xxxxxxxx, Senior Vice President
and Chief Financial Officer
