SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of September 15, 2000 (the "Security
Agreement"), between HEALTHCOMP EVALUATION SERVICES CORPORATION, a
Nevada corporation (the "Company"), each Subsidiary of the Company a
signatory hereto, (each Subsidiary and the Company being herein called a
"Grantor" and collectively the "Grantors") and DILIGENTI, INC., a
Delaware corporation, the Lender under the Loan and Investment Agreement
referred to below.
WHEREAS, by a Loan and Investment Agreement dated September 15, 2000
(the "Loan Agreement") between the Company and the Lender, subject to
certain conditions the Lender has agreed to make a bridge loan to the
Company in an aggregate principal amount of $3,750,000;
WHEREAS, as a condition to the Loan Agreement each Grantor has entered
into this Security Agreement in order to secure the Company's
liabilities in respect of the Obligations (as herein defined);
WHEREAS, references in this Security Agreement to the Loan Documents (as
defined below) will be deemed to include references therein as they may
be amended, modified, varied or restated from time to time. Similarly,
references in this Security Agreement to Obligations will be deemed to
include any and all obligations which the Grantors may have under or in
connection with the Documents as they may be so varied, amended,
modified or restated from time to time;
WHEREAS, the Company and certain of its subsidiaries have entered into a
Factoring Agreement dated February 17, 0000 (xxx "Xxxx xx Xxxxxxx
Agreement") with Nationsbanc Business Finance Corporation
("Nationsbanc") pursuant to which the Company granted to Bank of
America, as successor in interest to Nationsbanc, a security interest in
certain receivables of the Company.
NOW THEREFORE, accordingly, the Grantors and the Lender hereby agree as
follows:
1. DEFINITIONS.
Capitalized terms used in this Security Agreement but not defined herein
shall have the meanings given to such terms in the Loan Agreement. The
meanings given to terms defined in this Security Agreement shall be
equally applicable to both the singular and plural forms of such terms.
As used herein, the following terms shall have the following meanings:
"Accounts" means, with respect to each Grantor all "accounts" (as
defined in the UCC) now owned or hereafter acquired by such Grantor and
shall also mean and include all accounts receivable, contract rights,
book debts, notes, drafts and other obligations or indebtedness owing to
such Grantor arising from the sale, lease or exchange of goods or other
property by it and/or the performance of services by it (including,
without limitation, any such obligation which might be characterized as
an account, contract right or General Intangible under the UCC in effect
in any jurisdiction) and all of such Grantor's rights in, to and under
all purchase orders for goods, services or other property, and all of
such Grantor's rights to any goods, services or other property
represented by any of the foregoing (including returned or repossessed
goods and unpaid sellers' rights of rescission, replevin, reclamation
and rights to stoppage in transit) and all monies due to or to become
due to such Grantor under all contracts for the sale, lease or exchange
of goods or other property and/or the performance of services by it
(whether or not yet earned by performance on the part of such Grantor),
in each case whether now in existence or hereafter arising or acquired
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts and all collateral security and guarantees
of any kind given by any Person with respect to any of the foregoing.
"Chattel Paper" has the meaning set forth in the UCC.
"Closing Date" means September 15, 2000.
"Collateral" means (a) with respect to each Grantor, all personal
property, wherever located, in which such Grantor now has or hereafter
acquires any right or interest (including, without limitation, all
Accounts, Chattel Paper, Contracts, Documents, Equipment, General
Intangibles, Instruments, Intellectual Property, Inventory Investment
Property, Pledged Deposits, Receivables, cash, bank accounts, special
collateral accounts and all books and records, customer lists and credit
files related to any of the foregoing), all fixtures, and all Proceeds
and products of any of the foregoing, and (b) when used generally, all
of the foregoing in which any Grantor now has or hereafter acquires any
right or interest.
"Contracts" means all contracts, agreements and other similar consensual
obligations, as the same may from time to time be amended, supplemented
or otherwise modified, including without limitation (a) all rights to
receive moneys due and to become due thereunder or in connection
therewith, (b) all rights to damages arising out of any breach or
default in respect thereof and (c) all rights to perform and to exercise
remedies thereunder.
"Copyrights" means (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished,
all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.
"Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or
hereafter acquired, by any Grantor.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by any Grantor, including, without limitation, all
Vehicles and rolling stock.
"Event of Default" means an "Event of Default" as set forth in the Loan
Agreement.
"Farm Products" has the meaning set forth in the UCC.
"General Intangibles" means all "general intangibles" (as defined in the
UCC) now owned or hereafter acquired by any Grantor, including, without
limitation, (i) all obligations, liabilities or indebtedness owing to
such Grantor from whatever source arising, (ii) all Intellectual
Property, copyright licenses, copyrights, patent licenses, patents,
trademark licenses, trademarks, other intellectual property rights,
trade secrets, permits and licenses and (iii) all rights or claims in
respect of refunds for taxes paid.
"Instruments" means all "instruments," "chattel paper" or "letters of
credit" (each as defined in the UCC), including without limitation those
evidencing, representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment of, any of the
Accounts, including (but not limited to) promissory notes, drafts, bills
of exchange and trade acceptances, now owned or hereafter acquired by
any Grantor.
"Intellectual Property" means all rights, priorities and privileges
relating to intellectual property, whether arising under United States,
multinational or foreign law or otherwise, including, without
limitation: all patents, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not reduced to
practice); all trademarks, service marks, trade dress, trade names and
corporate names and all the goodwill associated therewith; all
registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the foregoing; all
mask works; all trade secrets, confidential information, ideas,
formulae, compositions, know-how, manufacturing and production processes
and techniques, research and development information, drawings,
specifications, designs, plans, improvements, proposals, technical and
computer data, financial, business and marketing plans, and customer and
supplier lists and related information; all other proprietary rights
(including, without limitation, all computer software and documentation
and all license agreements and sublicense agreements to and from third
parties relating to any of the foregoing); all internet domain names;
all copies and tangible embodiments of the foregoing (in whatever form
or medium); all damages and payments for past, present and future
infringements of the foregoing; all royalties and income due with
respect to the foregoing; and the right to xxx (whether at law or in
equity) and recover for past, present and future infringements of the
foregoing, and for the avoidance of doubt, to the extent not included in
the foregoing, all Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks and Trademark Licenses.
"Intellectual Property Collateral" means any Intellectual Property
constituting a part of the Collateral.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by any Grantor, wherever located, and shall also mean
and include, without limitation, all raw materials and other materials
and supplies, work-in-process and finished goods and any products made
or processed therefrom and all substances, if any, commingled therewith
or added thereto.
"Investment Property" has the meaning set forth in the UCC.
"Lender" means at any time Diligenti, Inc. or any of its successors or
assigns under the Loan Agreement at such time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance, whether voluntary or
involuntary or arising by operation of law, in respect of such asset,
and including without limitation any "Encumbrance" as defined in the
Loan Agreement. For purposes of this Security Agreement, a Person shall
be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan Documents" has the meaning set forth in the Loan Agreement.
"Material Adverse Effect" has the meaning set forth in the Loan
Agreement.
"Obligations" means (a) when used with respect to any Grantor (for
example, references to a Grantor's "Obligations"), (i) all of such
Grantor's liabilities and obligations under this Security Agreement or
any other Loan Document to which Grantor is a party, whether for the
payment of money (including without limitation principal, interest,
costs, charges and other expenses) or otherwise, in any currency or
currencies, whether present or future, actual or contingent, whether
incurred solely or jointly with any other person and whether as
guarantor or otherwise as principal or surety, and (ii) all other
duties, liabilities, obligations and indebtedness of such Grantor to the
Lender at any time and however arising, including without limitation
those duties, liabilities, obligations and indebtedness of such Grantor
arising under or in respect of or related to this Security Agreement or
any other Loan Document and any amendments, restatements, renewals,
extensions or modifications of any of the foregoing, and (b) when used
generally, (i) all liabilities, obligations, duties and indebtedness of
the Grantors which are described in the preceding clauses (a)(i) or (ii)
of this definition.
"Obligor" shall mean the Company and each Subsidiary which has any
obligation under the Loan Documents.
"Patents" means (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, (ii) all
applications for letters patent of the United States or any other
country or any political subdivision thereof an all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to
obtain any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a
Patent.
"Permitted Liens" has the meaning set forth in the Loan Agreement and
those additional liens, if any, identified on Annex VI or as otherwise
agreed to in writing by the Lender.
"Person" means any individual, corporation, company, limited liability
company, voluntary association, partnership, limited liability
partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision
thereof).
"Pledged Deposits" means all deposits of money, whether or not evidenced
by certificates, with any bank, all rights to receive interest on such
deposits and all other sums credited by or due from third parties with
respect thereto.
"Proceeds" means all proceeds of, and all other profits, products,
rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
other realization upon, collateral, including, without limitation, all
claims of any Grantor against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums with
respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral, in
each case whether now existing or hereafter arising.
"Receivables" means the Accounts, Chattel Paper, Pledged Deposits,
Documents, General Intangibles, Intellectual Property representing
rights to the payment of money (however arising), and any related
Instruments; provided that, "Receivables" shall not include any of the
foregoing rights to the extent that, but only for so long as, such
rights shall remain subject to the Lien created pursuant to the Bank of
America Agreement.
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Obligations.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
trade dress, service marks, logos and other source or business
identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common-law rights
related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark.
"UCC" means the Uniform Commercial Code as from time to time in effect
on the date hereof in the State of New York; provided that if by reason
of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of a security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than New York, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Vehicles" means all cars, trucks, trailers, construction and earth-
moving equipment and other vehicles covered by a certificate of title of
any state of the United States and, in any event, shall include, without
limitation the vehicles listed on Annex III hereto and all tires and
other appurtenances to any of the foregoing.
The principles of construction set forth in Clause 1.2 of the Loan
Agreement shall also apply with respect to this Security Agreement.
When the context requires, terms and provisions relating to the
Collateral or any part thereof, when used in relation to a Grantor,
shall refer to that Grantor's Collateral or the relevant part thereof.
For the avoidance of doubt, the parties agree that this Security
Agreement is a "Security Document" as such term is defined in the Loan
Agreement.
2. GRANT.
To secure payment, performance and observance of the Obligations, each
Grantor hereby pledges, and grants to the Lender a continuing security
interest in, and a right of set-off against, the Collateral (including
without limitation the Intellectual Property Collateral) and all present
and future right, title and interest of such Grantor therein; provided,
however, that there shall be excluded from the Collateral any Contract
to the extent, and only to the extent, that such Contract contains as of
the Closing Date a legally enforceable provision which would be breached
by the grant of the security interest created herein pursuant to the
terms of this Security Agreement (except that if and when any
prohibition on the assignment, pledge or grant of a security interest in
such Contract is removed, the Lender will be deemed to have been granted
a security interest in such Contract as of the date hereof, and the
Collateral will be deemed to include such Contract); and provided
further, that there shall be excluded from the Collateral any
Intellectual Property to the extent, and only to the extent, that such
Intellectual Property, as of the Closing Date, is governed by or
contains a legally enforceable provision which would be breached by the
grant of the security interest created herein pursuant to the terms of
this Security Agreement (except that if and when any prohibition on the
assignment, pledge or grant of a security interest in such Intellectual
Property is removed, the Lender will be deemed to have been granted a
security interest in such Intellectual Property as of the date hereof,
and the Collateral and the Intellectual Property will be deemed to
include such Intellectual Property).
The security interests and assignments granted herein shall not relieve
any Grantor from the performance of any term, covenant, condition or
agreement on such Grantor's part to be performed or observed under or in
respect of any of the Collateral or impose any obligation on the Lender
to perform or observe any such term, covenant, condition or agreement on
such Grantor's part to be so performed or observed or impose any
liability on the Lender for any act or omission on the part of such
Grantor relative thereto or for any breach of any representation or
warranty on the part of such Grantor contained in this Security
Agreement or any of the Loan Documents or in respect of the Collateral
or made in connection herewith or therewith.
3. REPRESENTATIONS AND WARRANTIES.
Except as provided in the Loan Agreement, each Grantor hereby represents
and warrants to the Lender, as of the date hereof, that:
Section 3.01. Principal Location. Each Grantor's mailing address,
and the location of its chief executive office and each location of any
books and records (including, without limitation, all computer data and
related software including source codes) relating to the Accounts is
disclosed in Annex I hereto; each Grantor has no other places of
business except those set forth in Annex I hereto.
Section 3.02. Property Locations. Except as permitted hereby, the
Inventory, Equipment and Fixtures are located solely at the locations
described in Annex I hereto. Except as permitted hereby, none of said
locations are leased by any Grantor as lessee except those so designated
in Annex I hereto.
Section 3.03. No Other Names. Except as listed on Annex II hereto,
none of the Grantors conducts or has conducted any trade or business
under any name except the name in which it has executed this Security
Agreement. None of the Grantors has been a party to any merger or
consolidation in the last five years except as disclosed on Annex II.
Section 3.04. Filing Requirements. None of the Equipment is covered
by any certificate of title, except for the Vehicles described in Annex
III hereto. None of the Collateral consists of property subject to a
statute or treaty referred to in Section 9-302(3) of the UCC (other than
Intellectual Property Collateral). None of the Collateral is of a type
with respect to which any Lien may be filed under any federal statute
except for patents, copyrights and trademarks held by any Grantor and
described in Annex IV hereto.
Section 3.05. No Financing Statements. Except as disclosed in Annex
VI hereto, no financing statement describing all or any portion of the
Collateral which has not lapsed or been terminated has been filed in any
jurisdiction identified on Annex I, or to the knowledge of Grantor in
any other jurisdiction, except financing statements naming the Lender as
secured party or financing statements purporting to perfect Permitted
Liens and for no other purpose.
Section 3.06. Title to Properties. Each Grantor has good and
marketable title to and ownership of the Collateral held by it, free and
clear of all Liens except Permitted Liens. Each Grantor has taken all
actions necessary under the UCC to perfect its interest in any Accounts
purchased or otherwise acquired by it, as against its assignors and
creditors of its assignors. Except as set forth in Sections 4.04 and
4.10 of this Security Agreement or on Annex I, no Collateral is in the
possession of any Person (other than a Grantor) asserting any claim
thereto or Security Interest therein, except that the Lender may have
possession of Collateral as contemplated hereby.
Section 3.07. Intellectual Property. Annex IV hereto contains a
complete and accurate list as of the date hereof of all patented and
registered Intellectual Property owned by any Grantor and all pending
patent applications and applications for the registration of other
Intellectual Property owned or filed by any Grantor. Annex IV also
contains a complete and accurate list of all licenses and other rights
granted by any Grantor to any third party with respect to the
Intellectual Property and licenses and other rights granted by any third
party to any Grantor. Except as set forth on Annex IV each Grantor has
made all necessary filings and recordations and has paid all required
fees and taxes to record and maintain its ownership of the patented or
registered intellectual property rights in the United States Patent and
Trademark Office and the United States Copyright Office and in each
other applicable filing office (whether in the United States or
otherwise) and no consents are required under any licenses listed in
Annex IV to the grant of the security interest to, and exercise of any
rights and remedies of, the Lender.
Section 3.08. Accounts. Except as permitted hereby and in the Loan
Agreement, the bank accounts with the banks described on Annex V are the
only bank or deposit accounts which any Grantor maintains.
Section 3.09. Contracts. No consent of any party to any Contract is
required in connection with the execution, delivery and performance of
this Security Agreement, other than consents which if not obtained would
not, individually or in the aggregate, result in a Material Adverse
Effect.
Section 3.10. Farm Products. None of the Collateral constitutes, or
is the Proceeds of, Farm Products.
Section 3.11. Fair Labor Standards Act. None of the Inventory of any
Grantor will be produced in violation of any provision of the Fair Labor
Standards Act of 1938, 29 U.S.C. Section 201 et seq. (the "Fair Labor Act").
None of the Inventory of any Grantor produced prior to the date of this
Security Agreement has been produced in violation of any provision of
the Fair Labor Act or in violation of any other law which would not
result in a Material Adverse Effect.
Section 3.12. Security Interest. The Security Interests constitute
valid security interests under the UCC and other applicable law securing
the Obligations. When proper financing statements are filed in proper
filing offices in the states identified in Annex I (and the Grantors
shall provide the Lender with all information necessary in determining
such filing offices), the Security Interests will constitute perfected
security interests in the Collateral to the extent that a security
interest therein may be perfected (a) by filing pursuant to the UCC, (b)
with respect to registered Intellectual Property Collateral, by filing
with the United States Patent and Trademark Office or the United States
Copyright Office, or (c) with respect to money, as defined in the UCC,
instruments and certificated securities as defined in the UCC, by
possession of the Collateral if maintained by the Lender. Such
perfected Security Interests are and at all times shall be prior to all
Liens and rights of others therein except for (a) unrecorded Liens
permitted by this Security Agreement or the Loan Agreement which are (i)
not for borrowed money, (ii) are not securing obligations which are past
due and (iii) have priority over the Security Interests by operation of
law (b) Liens existing on the Closing Date and identified on Annex VI
and (c) Permitted Liens.
Section 3.13. Receivables. No amount payable to any Grantor under or
in connection with any Receivable is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Lender; none of the
obligors on any Receivable is a governmental authority except as
identified on Annex VII (including, without limitation, any the United
States, any state thereof, or any other United States or foreign
federal, state or local governmental agency, authority, instrumentality,
regulatory body or subdivision); and the amounts represented by any
Grantor to any Bank from time to time as owing to such Grantor in
respect of the Receivables will at all such times be accurate in all
material respects. If required by local law, each Grantor shall provide
the Lender with a list of the Receivables at set reasonable intervals.
4. COVENANTS.
Except as provided in the Loan Agreement, from the date of this Security
Agreement, and thereafter until this Security Agreement is terminated:
Section 4.01. Inspection and Verification. The Lender and such
persons as the Lender may designate shall have the right, at any
reasonable time or times upon prior notice and during any Grantor's
usual business hours, to inspect the Collateral, all records related
thereto (and to make extracts and copies from such records), and the
premises upon which any of the Collateral is located. In addition, the
Lender and its designees shall have such other inspection and
verification rights concerning the Collateral as are provided or
permitted under other of the Loan Documents.
Section 4.02. Records and Reports. Each Grantor will maintain
complete and accurate books and records with respect to the Collateral,
and furnish to the Lender such reports relating to the Collateral as the
Lender shall from time to time reasonably request.
Section 4.03. Financing Statements and Other Actions. Each Grantor
will execute and deliver to the Lender all financing statements and
amendments thereto and other documents, and take such other actions, as
are from time to time reasonably requested by the Lender in order to
perfect and to maintain and protect a first priority perfected Security
Interest in the Collateral (subject to Permitted Liens) or to enable the
Lender to exercise and enforce its rights and remedies hereunder with
respect to the Collateral.
Section 4.04. Change in Location or Name. None of the Grantors will
(i) have any Inventory or Equipment or products thereof (other than
Inventory sold in the ordinary course of its business) at a location
other than a location specified in Annex I hereto, except for Inventory
and Equipment in transit between such locations, (ii) maintain records
relating to the Receivables at a location other than those locations
specified on Annex I hereto as a location where such records are kept,
(iii) maintain a place of business at a location other than a location
specified on Annex I hereto, (iv) change its name, or (v) change its
mailing address, unless in each such case such Grantor shall have given
the Lender at least 30 days' prior written notice thereof and delivered
any financing statements or other documents reasonably requested by the
Lender.
Section 4.05. Other Financing Statements; Other Liens. None of the
Grantors will sign or authorize the signing on its behalf of any
financing statement naming it as debtor which covers all or any portion
of the Collateral, except financing statements naming the Lender as
secured party and those signed in respect of Permitted Liens. None of
the Grantors shall create, permit or suffer to exist any Liens on or
with respect to any of the Collateral except Permitted Liens.
Section 4.06. Accounts.
(a) Except as otherwise provided in this Security Agreement, each
Grantor will collect and enforce in accordance with its past collection
practices and procedures, at such Grantor's sole expense, all amounts
due or hereafter due to such Grantor under the Accounts.
(b) Except in the ordinary course of business, consistent with the
Grantors' past practices, none of the Grantors will, without the
Lender's prior written consent, grant any extension of the time of
payment of any of the Accounts, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
(c) Each Grantor will ensure that (i) except as required by the
provisions of the Grantors' agreement with Bank of America all of its
present and future Receivables (other than intra-group Receivables set-
off in accordance with the terms of this Security Agreement) are or will
be duly paid into its Accounts set forth on Annex V, or an Account
opened after the Closing Date of which the Lender has received notice;
and (ii) all sums received from its debtors will be paid into the
Accounts set forth on Annex V, or an Account opened after the Closing
Date of which the Lender has received notice.
(d) Each Grantor will notify the banks with which it has Accounts of
the existence of the Lender's interest in such Account, and each Grantor
will provide the Lender with a copy of the bank's acknowledgment of
receipt of such notification and in jurisdictions where the bank's
consent is required, a copy of the bank's consent to the security
interest created hereby.
Section 4.07. Maintenance of Inventory and Equipment. Each Grantor
will do all things reasonably necessary to maintain, preserve, protect
and keep the Inventory in saleable condition and the Equipment in as
good a state of repair and condition as at the Closing Date except for
ordinary wear and tear, subject in either case to the disposition of
obsolete or outdated assets in accordance with such Grantor's past
business practices.
Section 4.08. Insurance. Each Grantor shall procure and maintain
insurance at its own expense in respect of all its assets and business
with insurers previously approved by the Lender in writing. Such
insurance shall:
(a) provide cover against all risks which are normally insured against
by other companies:
(i) owning or possessing similar assets, including, without
limitation, in the case of any freehold or leasehold property loss or
damage by fire, lightning, explosion, xxxxx, xxxxxxx, flood, aircraft
(other than hostile aircraft) and other aerial devices or articles
dropped therefrom, including subsidence and, if deemed necessary by the
Lender (acting reasonably), terrorism; and
(ii) carrying on similar businesses, including, without limitation,
insurance against business interruption, loss of profits, product
liability, professional indemnity, pollution and public liability;
(b) be in such amounts as would in the circumstances be prudent for
such companies and shall include, without limitation, an entitlement to
receive the full replacement or reinstatement value from time to time of
any assets destroyed or otherwise becoming a total loss, and in the case
of any freehold or leasehold property, providing for architects' and
surveyors' fees, demolition costs, and the costs of shoring up and three
years' loss of rent, in each such case subject to automatic index
adjustments;
(c) have the interest of the Lender as mortgagee noted on all relevant
policies;
and each Grantor will supply on request copies of each policy of
insurance required to be maintained in accordance with this Section
4.08, together with the current premium receipts relating thereto.
Section 4.09. Titled Vehicles. Upon request of the Lender, each
Grantor shall promptly execute and deliver any instruments and documents
that may be reasonably necessary or that the Lender may reasonably
request in order to perfect the Security Interests in all property of
the Grantor subject to a certificate of title.
Section 4.10. Bailees. If any Inventory or Equipment of any Grantor
is in the possession or control of any warehouseman, processor or other
bailee, including such subcontractors as identified in Annex I, upon the
request of the Lender, such Grantor shall notify such warehousemen,
processors and other bailees in writing (with a copy to the Lender) of
the Lender's security interest therein and, upon the occurrence and
continuation of an Event of Default and upon the Lender's request,
instruct such Persons to hold all such Inventory and Equipment for the
Lender's account and subject to the Lender's instructions. If more than
$50,000 of Inventory or Equipment of the Grantors is held by a bailee,
the Grantors will file a financing statement in the appropriate
jurisdiction against such bailee in a form appropriate for the
underlying transaction and will promptly send a copy of such financing
statement to the Lender. In addition, each Grantor agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or
receipt in the nature of a warehouse receipt shall not be "negotiable"
(as such term is defined in Section 7-104 of the Uniform Commercial Code
as in effect in any relevant jurisdiction or under other relevant law),
or, if any warehouse receipt or receipt in the nature thereof is
"negotiable" (as such term is so used), such Grantor shall promptly take
all action as may reasonably be required under the relevant jurisdiction
to grant a perfected security interest in such Collateral to the Lender.
Section 4.11. Delivery of Pledged Collateral. To the extent not
required to be delivered to the Lender pursuant to another provision of
this Security Agreement or pursuant to another Loan Document, the
Grantors will hold in trust for the Lender upon receipt and, upon the
occurrence of an Event of Default and the continuation thereof or if
otherwise reasonably requested by the Lender, promptly deliver to the
Lender the originals of all Instruments, Documents, Chattel Paper,
letters of credit, certificated securities and certificates issued in
respect of Pledged Deposits, which shall be endorsed in blank, marked
with such legends and accompanied by such stock powers and assignments
as the Lender shall specify.
Section 4.12. Uncertificated Investment Property. If any Grantor
acquires any Investment Property which is not a certificated security,
such Grantor (i) shall take and cause all other relevant parties to take
all such actions as may reasonably be requested by the Lender (including
without limitation obtaining for the Lender the agreement of any
securities intermediary to comply with instructions and entitlement
orders originated by the Lender without further consent of the Grantor
or other registered owner or entitlement holder) in order to cause the
Security Interests in such Collateral to be perfected by "control" (as
such term is used in Articles 8 and 9 of the NYUCC) and (ii) will take
and will cause such other relevant parties to take all other action
reasonably necessary or appropriate to create and maintain a perfected
first priority Lien in such Investment Property in favor of the Lender.
Section 4.13. Intellectual Property Covenant. Each Grantor shall
(unless the Lender is of the opinion (acting reasonably)), that the
relevant Intellectual Property is of minor importance to the Grantors);
(a) do all acts as are reasonably practicable to maintain, protect and
safeguard (including, without limitation, registration with all relevant
authorities) its Intellectual Property and not discontinue the use of
any of its Intellectual Property;
(b) take all such reasonable steps, including the commencement of
legal proceedings, as may be necessary to safeguard and maintain the
validity, reputation, integrity, registration or subsistence of its
Intellectual Property;
(c) within 60 days after the Closing Date, the Company shall procure
that such steps as are necessary are taken to protect the ExamWriter
v.1.0. and Exam Writer v.2.0. copyrights in the United States and that
security on terms acceptable to the Lender is entered into by the
Company in relation to the ExamWriter copyright.
Section 4.14. Federal Claims.
(a) Claims. The Grantors will notify the Lender of any material
Receivable which constitutes a claim against the United States
government or any instrumentality or agency thereof, the assignment of
which claim is restricted by federal law.
(b) Action. Upon the request of the Lender, the Grantors will take
all reasonable actions required to comply, to the Lender's satisfaction,
with the Assignment of Claims Act of 1940, as amended, or any similar
applicable law, with respect to any such material Receivable.
Section 4.15. Deposit Accounts.
(a) After the Closing Date, the Grantors shall not without the prior
written consent of the Lender open or maintain any account with any
recognized bank or building society other than the Accounts listed in
Annex V.
(b) Other than with respect to the escrow accounts designated on Annex
V maintained by the Grantors, each Grantor will execute and deliver to
the Lender, for delivery by the Lender to each bank or other financial
institution with which it maintains any bank or deposit account (or if
so instructed by the Lender will execute and deliver directly to each
such bank or other financial institution) such notices as the Lender may
from time to time reasonably request advising each such bank or other
financial institution that such account and all deposits therein
constitute Pledged Deposits hereunder, subject to the Security Interest
granted hereby, and instructing each such bank or other financial
institution that such Pledged Deposits are to be maintained by such bank
or other financial institution subject to the absolute dominion and
control of the Lender and are to be delivered, disbursed or otherwise
distributed solely in accordance with the instructions of the Lender,
and Grantor shall take all such other actions as may be otherwise be
required under applicable law to perfect the Security Interest in the
Pledged Deposits; provided, however, the Lender hereby grants to the
Grantors a license, revocable upon the occurrence and during the
continuance of an Event of Default, to make withdrawals from such
deposit accounts in the ordinary course of business for ordinary
business purposes permitted under the Loan Agreement.
Section 4.16. Notice. Each Grantor shall notify the Lender of any
Default, forthwith upon becoming aware of the occurrence thereof and,
upon receipt of a written request to that effect from the Lender,
promptly confirm in writing to the Lender that, save as previously
notified to the Lender, or as notified in such confirmation, no such
event has, so far as such Grantor is aware, occurred.
5. REMEDIES UPON DEFAULT.
Upon the occurrence and during the continuance of an Event of Default,
whether or not all of the Obligations shall have become due and payable,
the Lender may, in addition to its rights under any of the Loan
Documents:
Section 5.01. General. Exercise any or all of the rights and remedies
provided (i) in this Security Agreement, (ii) to a secured party when a
debtor is in default under a security agreement governed by the UCC or
(iii) to a secured party when a debtor is in default by any other
applicable law. Without precluding any other methods of sale, the sale
of Collateral shall be deemed to have been made in a commercially
reasonable manner if conducted in conformity with reasonable commercial
practices of commercial lenders disposing of similar property, but in
any event the Lender may sell Collateral on such terms as the Lender may
choose without assuming any credit risk and without any obligation to
advertise or give notice of any kind not expressly required under this
Security Agreement or required by applicable law (to the extent such
notice may not be waived under applicable law).
Section 5.02. Contingent Obligations. With respect to Obligations
which are contingent and cannot be accelerated by their nature,
reasonably require the Grantors to provide additional collateral in an
amount equal to the maximum exposure of the Lender with respect thereto
(as reasonably determined in good faith by the Lender).
Section 5.03. Sale or Disposition of Collateral. Collect, receive,
appropriate and realize upon the Collateral, and sell, resell, assign,
lease, give option or options to purchase, or otherwise dispose of,
transfer and deliver all or any part of the Collateral (or contract to
do any of the foregoing), in one or more parcels at public or private
sale or sales, at any exchange, broker's board or office of the Lender
or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may reasonably deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Lender
shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any
right or equity or redemption in any Grantor, which right or equity is
hereby waived and released to the fullest extent permitted by applicable
law. To the fullest extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Lender
arising out of the exercise by them of any rights hereunder.
Section 5.04. Access to Leased Premises. Immediately enter upon any
premises leased by any Grantor for the storage, warehousing or
maintenance of Inventory and remove, take possession and dispose of, or
store at another site, such Inventory in the Lender's sole discretion.
Section 5.05. Pledged Deposits. Without any necessity on the Lender's
part to resort to other security or sources of reimbursement for the
Obligations, at any time during the continuance of an Event of Default
and without notice to any, exercise rights of set-off against any of the
Pledged Deposits (general or special, time or demand, provisional or
final) or other sums of any Grantor in the possession of or in transit
to the Lender for application to the Obligations, which rights shall be
cumulative with the Lender's other rights and remedies including other
rights of set-off.
Section 5.06. Grant of License to Use General Intangibles. For the
purpose of enabling the Lender to exercise rights and remedies
thereunder during the continuation of an Event of Default, each Grantor
hereby grants to the Lender an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to such
Grantor) to use, assign, license or sublicense any of the General
Intangibles to the extent permitted by the terms of such General
Intangibles, wherever the same may be located, including in such license
reasonable access to all media in which any of the General Intangibles
may be recorded or stored and to all computer programs used for the
compilation or printout thereof. Notwithstanding the foregoing, the
Lender shall have no obligations or liabilities regarding any or all or
the General Intangibles by reason of, or arising out of, this Security
Agreement.
Section 5.07. Specific Performance. Each Grantor agrees that, in
addition to all other rights and remedies granted to the Lender in this
Security Agreement and any other Loan Document, the Lender shall be
entitled to specific performance and injunctive and other equitable
relief, and each Grantor further agrees to waive any requirement for the
securing or posting of any bond or other security in connection with the
obtaining of any such specific performance and injunctive or other
equitable relief.
Section 5.08. Additional Liabilities Upon Default. Upon the request
of the Lender after the occurrence and during the continuance of an
Event of Default, each Grantor will promptly:
(a) Assembly of Collateral. Assemble and make available to the Lender
the Collateral and all records relating thereto at any place or places
specified by the Lender within the continental United States of America.
(b) Secured Party Access. Permit the Lender, or the Lender's
representatives and agents, to enter any premises where all or any part
of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral and
to remove all or any part of the Collateral.
6. WAIVERS, AMENDMENTS AND REMEDIES.
No failure on the part of the Lender to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy by the Lender preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. The Lender shall not be deemed to have waived
any rights hereunder or under any other agreement or instrument unless
such waiver shall be in writing and signed by such parties.
7. PROCEEDS; COLLECTION OF RECEIVABLES.
Section 7.01. Collection of Receivables. Upon the satisfaction in
full of any indebtedness constituting a Permitted Lien with respect to
the Receivables as set forth on Annex VI, the Lender may at any time
upon the occurrence and during the continuance of an Event of Default,
without notice to the Grantors, elect to enforce collection of any
Receivable and to require that the Receivables be paid directly to the
Lender. In such event, the Grantors shall (if requested to do so by the
Lender), and shall permit the Lender to, promptly notify the account
debtors or obligors under the Receivables of the Lender's interest
therein and direct such account debtors or obligors to make payment of
all amounts then or thereafter due under the Receivables directly to the
Lender. Upon receipt of any such notice from the Lender, each Grantor
shall thereafter hold in trust for the Lender all amounts and proceeds
received by it with respect to the Receivables and other Collateral,
shall segregate all such amounts and proceeds from other funds of the
Grantors, and shall at all times thereafter promptly deliver to the
Lender all such amounts and proceeds in the same form as so received,
whether by cash, check, draft or otherwise, with any necessary
endorsements.
Section 7.02. Application of Proceeds.
(a) During the continuance of an Event of
Default, the Lender shall have the continuing and exclusive right to
apply or reverse and re-apply any and all payments to any portion of the
Obligations. To the extent that any Grantor makes a payment or payments
to the Lender or the Lender receives any payment or proceeds of the
Collateral, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds, the Obligations
or part thereof intended to be satisfied and this Security Agreement
shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by such party.
(b) The proceeds of any sale of or
collection of Collateral, as well as any Collateral consisting of cash,
shall be applied by the Lender first to the payment of the costs and
expenses of any such sale or collection, including reasonable fees and
disbursements of the Lender's agents and counsel, and of any judicial
proceeding wherein the same may be made, and of all expenses,
liabilities and advances (to the extent such advances are reasonably
made for the protection of the Collateral or the enforcement of the
Lender's security interest in the Collateral) made or incurred by the
Lender, together with interest thereon, second in satisfaction of the
Obligations and third, to whomsoever may be lawfully entitled to receive
any surplus. Each Grantor waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the NYUCC. Each
Grantor shall remain liable for any deficiency if the proceeds of sale
or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Lender to collect such deficiency. Upon any sale of the Collateral
by the Lender (including, without limitation, pursuant to a power of
sale granted by statute or under a judicial proceeding), the receipt of
the Lender or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and
such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Lender or
such officer or be answerable in any way for the misapplication thereof.
8. GENERAL PROVISIONS.
Section 8.01. Notice of Disposition of Collateral. Each Grantor
hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any
part of the Collateral may be made. To the extent such notice may not
be waived under applicable law, any notice made shall be deemed
reasonable if given to such Grantor at least 10 days prior to the time
of any such public sale or the time after which any such private sale or
other disposition may be made.
Section 8.02. Compromises and Collection of Collateral. Each Grantor
recognizes that set-offs, counterclaims, defenses and other claims may
be asserted by obligors with respect to certain of the Receivables, that
certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a
disputed Receivable may exceed the amount that reasonably may be
expected to be recovered with respect to a Receivable. In view of the
foregoing, each Grantor agrees that the Lender may at any time and from
time to time upon the occurrence and during the continuance of an Event
of Default, compromise with the obligor on any Receivable, accept in
full payment of any Receivable such amount as the Lender in its sole
discretion shall determine or abandon any Receivable, and any such
action by the Lender shall be commercially reasonable so long as the
Lender acts in good faith based on information known to it at the time
it takes any such action.
Section 8.03. Secured Party Performance of Debtor Secured Liabili-
ties. Without having any obligation to do so, in its reasonable
discretion, the Lender may perform or pay any obligation which such
Grantor has agreed to perform or pay in this Security Agreement but has
not performed or paid on the due date therefor and the Grantors shall
reimburse the Lender for any amounts paid or reasonably incurred
pursuant to this Section 8.03. The Grantors' obligation to reimburse
pursuant to the preceding sentence shall be Obligations payable on
demand.
Section 8.04. Authorization for Secured Party To Take Certain Action.
Each Grantor irrevocably authorizes the Lender at any time and from time
to time in the sole discretion of the Lender, and appoints the Lender as
its attorney-in-fact to act on behalf of such Grantor, in the name of
such Grantor or otherwise, from time to time in the Lender's reasonable
discretion, to take any action and to execute any instrument which the
Lender may reasonably deem necessary or advisable to accomplish the
purposes of this Security Agreement, including without limitation (but
as to the matters described in the following clauses (ii), (iv), (v),
(vi), (vii), (viii), (x) and (xi), only upon the occurrence and during
the continuance of an Event of Default): (i) to execute on behalf of
such Grantor as debtor and to file financing statements necessary or
desirable in the Lender's sole discretion to perfect and to maintain the
perfection and priority of the Lender's security interest in the
Collateral; (ii) to endorse, deposit and collect any cash, Instruments
and other proceeds of the Collateral; (iii) to file a carbon, photo-
graphic or other reproduction of this Security Agreement or any
financing statement with respect to the Collateral as a financing
statement in such offices as the Lender in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and
priority of the Lender's security interest in the Collateral; (iv) to
enforce payment of the Receivables in the name of the Lender or such
Grantor; (v) to cause the proceeds of any Collateral received by the
Lender to be applied to the Obligations as contemplated by the Loan
Documents; (vi) to sign such Grantor's name on any invoice or xxxx of
lading relating to any Receivable, on drafts against customers, on
schedules and assignments of Receivables, on notices of assignment,
financing statements and other public records, on verifications of
accounts and on notices to customers; (vii) to notify the post office
authorities to change the address for delivery of such Grantor's mail to
an address designated by the Lender, and to receive, open and dispose of
all mail addressed to such Grantor; (viii) to send requests for
verification of Receivables to customers or account debtors (provided
that this clause (viii) shall not limit the Lender's rights under
Section 4.01); (ix) to do any act or thing which the Lender reasonably
ought to execute and do under the terms of this Security Agreement or
which may reasonably be required or deemed proper in the exercise of any
rights or powers conferred on the Lender for any of the purposes of this
Security Agreement; (x) to grant or issue any exclusive or nonexclusive
license under the Collateral to anyone, and (xi) to assign, pledge,
convey or otherwise transfer title in or to or dispose of the Collateral
to anyone, including without limitation assignments, recordings,
registrations and applications therefor in the United States Patent and
Trademark Office, the United States Copyright Office or any similar
office or agency of the United States, any State thereof or any other
country or political subdivision thereof, and to execute and deliver any
and all agreements, documents, instruments of assignment or other papers
necessary or advisable to effect any of the foregoing or the
recordation, registration, filing or perfection thereof. Each Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in this Security Agreement are coupled with an interest and
are irrevocable until this Security Agreement is terminated and the
security interests created hereby are released. The powers conferred on
the Lender and the other Security Beneficiaries hereunder are solely to
protect the Lender's and the Security Beneficiaries' interests in the
Collateral and shall not impose any duty upon the Lender to exercise any
such powers. The Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
Section 8.05. Use and Possession of Certain Premises. Upon the
occurrence and during the continuance of an Event of Default, the Lender
or its agents or representatives shall be entitled to occupy and use any
premises owned or leased by any Grantor where any of the Collateral or
any records relating to the Collateral are located until the Obligations
are paid in full or until the Collateral is removed therefrom, whichever
occurs first, without any obligation to pay any Grantor for such use and
occupancy.
Section 8.06. Standard of Care. The Lender's sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the NYUCC or otherwise, shall
be to deal with it in the same manner as the Lender deals with similar
property for its own account. Neither the Lender nor any of its
officers, directors, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other
person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
Section 8.07. Specific Provisions Regarding Execution and Filing of
Financing Statements. Pursuant to Section 9-402 of the NYUCC and any
other applicable law, each Grantor authorizes the Lender to file or
record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such
Grantor in such form and in such offices as the Lender reasonably
determines appropriate to perfect the security interests granted
hereunder. If otherwise acceptable under local law, a photographic or
other reproduction of this Security Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument
for filing or recording in any jurisdiction.
9. MISCELLANEOUS
Section 9.01. Security Interest Absolute. The obligations of each
Grantor under this Security Agreement are independent of the obligations
under any of the other Loan Documents, and a separate action or actions
may be brought and prosecuted against such Grantor to enforce this
Security Agreement. All rights of the Lender hereunder, the security
interest granted hereby, and all Obligations of each Grantor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of any of the Loan Documents, any agreement
with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment 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 any of the Loan Documents or any other agreement or
instrument, (c) any exchange, release or non-perfection of any other
Collateral, or any release, amendment or waiver of, or consent to or
departure from, any guaranty for all or any of the Obligations, or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Grantor in respect of the
Obligations or in respect of this Security Agreement.
Section 9.02. Further Assurances. The Grantors agree to do such
further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Lender may
at any time reasonably request in connection with the administration and
enforcement of this Security Agreement, with respect to the Collateral
or any part thereof or in order better to assure and confirm unto the
Lender its rights and remedies hereunder.
Section 9.03. Lender's Fees and Expenses; Indemnification.
(a) The Grantors agree to pay upon demand
to the Lender the amount of any and all out-of-pocket expenses,
including the reasonable fees and expenses of its counsel (including
without limitation the allocated fees and expenses of in-house counsel)
and of any experts or agents, which the Lender may reasonably incur in
connection with (i) the administration of this Security Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Lender hereunder, or (iv) the
failure by the Grantors to perform or observe any of the provisions
hereof.
(b) Without limiting the foregoing, each
Grantor agrees to pay, and to save the Lender harmless from, and to
indemnify it against, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Security Agreement (provided, however,
that Grantors may contest any taxes in good faith in proper
proceedings). Any such amounts payable as provided hereunder shall be
additional Obligations secured by this Security Agreement and the other
Loan Documents to which the Grantors are party. Each Grantor further
agrees to pay, and to save the Lender harmless from, and to indemnify it
against, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, and reasonable costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Security Agreement, or arising out of or relating to the Lender's
relationship with any Grantor hereunder or under any other Loan Document
(including without limitation for all Environmental Claims).
Section 9.04. Binding Agreement; Assignments. This Security
Agreement, and the terms, covenants and conditions hereof, shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that none of the
Grantors shall be permitted to assign this Security Agreement or any
interest herein.
Section 9.05. Governing Law. This Security Agreement shall be
construed in accordance with and governed by the laws of the State of
New York, without giving effect to principles of conflicts of laws.
Section 9.06. Notices.
(a) All notices or other communications to
be made hereunder shall be made by facsimile or otherwise in writing.
(b) Any notices, or other communications
to be served on any Grantor (except as provided in Section 9.11 of this
Security Agreement) pursuant to this Security Agreement shall be made or
delivered to it at the address and/or facsimile number set out under its
name and signature of its authorised signatory at the end of this
Security Agreement, marked for the attention of the Chief Executive
Officer, or at such other address and/or facsimile as such Grantor may
hereafter advise the Lender of in writing.
(c) Any notice to the Lender shall be addressed and
delivered to the Lender at the address set out under its name and
signature of its authorised signatory at the end of this Security
Agreement, or to such other address as the Lender may hereafter notify
the Company of in writing.
(d) Any notice to any Grantor shall be deemed to
have been given:
(i) if delivered personally, at the time
of such delivery;
(ii) if mailed on the second Business Day
following the day on which it was dispatched by first class mail
(airmail, if appropriate) postage prepaid; and
(iii) if sent by facsimile transmission, on
the Business Day on which transmitted.
(e) Any notice to the Lender shall be deemed to
have been given only on actual receipt by the Lender.
Section 9.07. Severability. In case any one or more of the
provisions contained in this Security Agreement should be invalid,
illegal or unenforceable in any respect, no party hereto shall be
required to comply with such provision for so long as such provision is
held to be invalid, illegal or unenforceable and the validity, legality
and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal and
unenforceable provisions with valid provisions, the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
Section 9.08. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be
taken into consideration in interpreting, this Security Agreement.
Section 9.09. Counterparts. This Security Agreement may be executed
in two or more counterparts, each of which shall constitute an original,
but all of which, when taken together, shall constitute but one
instrument.
Section 9.10 Termination.
(a) At such time as all of the Obligations
(other than any indemnity and similar obligations which expressly
survive termination of this Security Agreement or the Loan Agreement and
are not then due and payable) have been paid irrevocably and in full,
this Security Agreement and all obligations (other than those expressly
stated to survive such termination) of the Lender and each Grantor shall
terminate, and the Collateral shall be released from the Security
Interests created hereby, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral
shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Lender shall deliver to such
Grantor any Collateral then held by the Lender hereunder and shall
execute and deliver to such Grantor, but without recourse to or warranty
by the Lender, such Uniform Commercial Code termination statements and
similar documents prepared by such Grantor which such Grantor shall
reasonably request to evidence the release of the Collateral from the
security constituted hereby.
(b) Notwithstanding anything to the
contrary contained in this Security Agreement, this Security Agreement
shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Grantors or any of them
for liquidation or reorganization, should any Grantor become insolvent
or make an assignment for any benefit of creditors or should a receiver
or trustee be appointed for all or any significant part of any Grantor's
assets, and shall continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference," "fraudulent
conveyance" or otherwise, all as though such payment, or any part
thereof, had not been made.
Section 9.11. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN NEW YORK CITY, NEW YORK, U.S.A. AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT THE GRANTORS ACCEPT FOR THEMSELVES AND IN
CONNECTION WITH THEIR RESPECTIVE PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS,
AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. TO THE EXTENT PERMITTED BY LAW, EACH
GRANTOR HEREBY AGREES THAT SERVICE UPON IT BY CERTIFIED MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE AND SERVICE OF PROCESS. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST
ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
Section 9.12. WAIVER. Notwithstanding anything contained in this
Security Agreement to the contrary, no claim may be made by the Grantors
against the Lender for any lost profits or any special, indirect or
consequential damages in respect of any breach or wrongful conduct
(other than wilful misconduct or actual fraud) in connection with,
arising out of or in any way related to the transactions contemplated
hereunder, or any act, omission or event occurring in connection
therewith; and the Grantors hereby waive, release and agree not to xxx
upon any such claim for any such damages. THE GRANTORS AGREE THAT THIS
SECTION 9.12 IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND
ACKNOWLEDGE THAT THE LENDER WOULD NOT EXTEND TO THE GRANTORS OR OBLIGORS
ANY AMOUNTS UNDER THE LOAN DOCUMENTS IF THIS SECTION 9.12 WERE NOT PART
OF THIS AGREEMENT.
Section 9.13. WAIVER OF JURY TRIAL. THE GRANTORS AND THE LENDER
HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF. THE
GRANTORS AGREE THAT THIS SECTION 9.13 IS A SPECIFIC AND MATERIAL ASPECT
OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE LENDER WOULD NOT EXTEND TO
THE GRANTORS OR OBLIGORS ANY AMOUNTS UNDER THE LOAN DOCUMENTS IF THIS
SECTION 9.13 WERE NOT PART OF THIS AGREEMENT.
Section 9.14. Joint and Several Obligations; Waiver of Joinder. All
obligations, covenants, undertakings, representations and warranties of
the Grantors or by any of them hereunder shall be their joint and
several obligations. Each Grantor hereby waives any requirement that any
other Grantor, Obligor or Person be joined in or made party to any
action to enforce this Security Agreement or any right or remedy
hereunder.
Section 9.15. Acknowledgments. Each Grantor acknowledges that: (a)
it has been advised by counsel in the negotiation, execution and
delivery of this Security Agreement and the other Loan Documents to
which it is a party; (b) the Lender, does not have any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Security Agreement of any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Lender on
the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and (c) no joint venture is created hereby or by
the Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby.
Section 9.16. Additional Grantors. Each person or entity that is
required to become a party to this Security Agreement pursuant to the
Loan Agreement shall become a Grantor for all purposes of this Security
Agreement upon execution and delivery by such person or entity of an
Assumption Agreement in the form of Annex 1 hereto.
Section 9.17. Additional Information. Each Grantor will provide
additional information regarding the Collateral and the Security
Interests upon reasonable request by the Lender.
Section 9.18. Coordination with Pledge Agreement. We refer to that
certain Pledge Agreement of even date herewith among the Company and its
Subsidiaries (the "Pledgors") and the Lender (the "Pledge Agreement"),
pursuant to which the Pledgors thereunder, some of whom are also
Grantors under this Security Agreement, have pledged and granted
security interests in certain "Pledged Securities" (as therein defined)
and certain other property to the Lender as additional collateral for
the Obligations. In the event of any conflict between the provisions
hereof and of the Pledge Agreement with respect to such Pledged
Securities, the provisions of the Pledge Agreement shall control.
Section 9.19. Conflicts. Only to the extent of a direct conflict
between the provisions of the Loan Agreement and Sections 3 and 4
hereof, the provisions of the Loan Agreement shall control.
Section 9.20. Concerning Revised Article 9 of the Uniform Commercial
Code. The parties acknowledge and agree to the following provisions of
this Security Agreement in anticipation of the possible application, in
one or more jurisdictions to the transaction contemplated hereby, of the
revised Article 9 of the Uniform Commercial Code in the form or
substantially in the form approved in 1998 by the American Law Institute
and the National Conference of Commissioners on Uniform State Law
("Revised Article 9").
(a) Attachment. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral is all assets of each
Obligor, whether or not within the scope of Revised Article 9. The
Collateral shall include, without limitation, the following categories
of assets as defined in Revised Article 9: goods (including inventory,
equipment and any accessions thereto), instruments (including promissory
notes), documents, accounts (including health-care-insurance
receivables), chattel paper (whether tangible or electronic), deposit
accounts, letter-of-credit rights (whether or not the letter of credit
is evidenced by a writing), commercial tort claims, securities and all
other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all
proceeds of any thereof, wherever located, whether now owned and
hereafter acquired. If any Obligor shall at any time, whether or not
Revised Article 9 is in effect in any particular jurisdiction, acquire a
commercial tort claim, as defined in Revised Article 9, such Obligor
shall immediately notify the Lender in writing signed by such Obligor of
the brief details thereof and grant to the Lender in such writing a
security interest therein and in the proceeds thereof, all upon the
terms of this Security Agreement, with such writing to be in form and
substance satisfactory to the Lender.
(b) Perfection by Filing. The Lender may at any time and from time
to time, pursuant to this Security Agreement, file financing statements,
continuation statements and amendments thereto that describe the
Collateral as all assets of each Obligor or words of similar effect and
which contain any other information required by Part 5 of Revised
Article 9 for the sufficiency of filing office acceptance of any
financing statement, continuation statement or amendment, including
whether each obligor is an organization, the type of organization and
any organization identification number issued to each such Obligor.
Each Obligor agrees to furnish any such information to the Lender
promptly upon request. Any such financing statements, continuation
statements or amendments may be signed by the Lender on behalf of each
Obligor, and may be filed at any time in any jurisdiction whether or not
Revised Article 9 is then in effect in that jurisdiction.
(c) Other Perfection, etc. Each Obligor shall at any time and from
time to time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, take such steps as the Lender may reasonably
request for the Lender (i) to obtain an acknowledgment, in form and
substance satisfactory to the Lender, of any bailee having possession
of any of the Collateral that the bailee holds such Collateral for the
Lender, (ii) to obtain "control" of any investment property, deposit
accounts, letter-of-credit rights or electronic chattel paper (as such
terms are defined in Revised Article 9 with corresponding provisions in
Rev. Sections 9-104, 9-105, 9-106 and 9-107 relating to what constitutes
"control" for such items of Collateral), with any agreements
establishing control to be in form and substance satisfactory to the
Lender, and (iii) otherwise to insure the continued perfection and
priority of the Lender's security interest in any of the Collateral and
of the preservation of its rights therein, whether in anticipation and
following the effectiveness of Revised Article 9 in any jurisdiction.
(d) Other provisions. In applying the law of any jurisdiction in
which Revised Article 9 is in effect, the following references to
existing Article 9 shall be to the Revised Article 9 Section of that
jurisdiction indicated below:
Existing Article 9 Revised Article 9
Section 9-103(3) Rev. Section 9-102(a)(34)
Sections 8-106 and 9-115 (1994) Rev. Section 8-106 and 9-
106
Section 9-504(1)(c) Rev. Section 9-608(a)(1)(C) and 9-
1615(a)(3)
(e) Savings Clause. Nothing contained in this Section 9.20 shall be
construed to narrow the scope of the Lender's security interest in any
of the Collateral or the perfection or priority thereof or to impair or
otherwise limit any of the rights, powers, privileges or remedies of the
Lender hereunder except (and then only to the extent) mandated by
Revised Article 9 of the extent then applicable.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first above written.
GRANTORS: HEALTHCOMP EVALUATION SERVICES CORPORATION
By: ______________________________
Name:
Title:
Address:
Fax:
AFTON, INC.
By: ______________________________
Name:
Title:
Address:
Fax:
MEDICAL DRUG TESTING, INC.
By: ______________________________
Name:
Title:
Address:
Fax:
HEALTH EVALUATION PROGRAMS CORPORATION
By: ______________________________
Name:
Title:
Address:
Fax:
AFTON-NORTH DAKOTA, INC.
By: ______________________________
Name:
Title:
Address:
Fax:
AMERITEST, INC.
By: ______________________________
Name:
Title:
Address:
Fax:
QUALITY HEALTH SERVICES, INC.
By: ______________________________
Name:
Title:
Address:
Fax:
LENDER: DILIGENTI, INC.
By: ______________________________
Name:
Title:
Fax:
Attention:
Address:
ANNEX I
Healthcomp Evaluation Services Corporation
A. Mailing Address: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures:
0000 Xxxxxx Xxxxx 00-X Xxxxxxxxxx Xxxx
Xxxxx 000 Xxxxxxxxxx, XX 00000
Xxxxxxxx, XX 00000 (excluding mobile assets)
D. Locations of Assets Held by Bailees: NA
Afton, Inc.
A. Mailing Address: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures: Sarasota, FL
D. Locations of Assets Held by Bailees: NA
Medical Drug Testing, Inc.
A. Mailing Address: 0000 Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxx Xxxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures: Cranberry
Township, PA
ANNEX I
Medical Drug Testing, Inc.
(continued)
D. Locations of Assets Held by Bailees: NA
Health Evaluation Programs, Inc.
A. Mailing Address: 0000 Xxxx Xxxxxx Xxxxxx
Xxxx X
Xxxxxxxxx Xxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures:
0000 Xxxx Xxxxxx Xxxxxx 0000 Xxxx Xxxxxx
Xxxx X Xxxxxxxxxx, XX 00000-0000
Xxxxxxxxx Xxxxxxx, XX 00000
(excluding mobile assets) (excluding mobile assets)
D. Locations of Assets Held by Bailees: NA
AmeriTest, Inc.
A. Mailing Address: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures:
National Dispatch Center Minneapolis Office
0000 Xxxxxx Xxxxx 0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xx. Xxxx, XX 00000
Detroit Office Pocatello Office
0000 Xxxxxxxxx Xxxx Xxxx, Xxxxx 000 0000 Xxxx Xxxxxx
Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
ANNEX I
AmeriTest, Inc.
(continued)
D. Locations of Assets Held by Bailees: NA
Afton-North Dakota, Inc.
A. Mailing Address: 0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx 00
Xxxxxxxx, XX 00000-0000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures: Bismarck, ND
D. Locations of Assets Held by Bailees: NA
Quality Health Services, Inc.
A. Mailing Address: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
B. Location of Chief Executive Office: 0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures:
0000 Xxxx Xxxxxx 0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000 Suite 302
(excluding mobile assets) Xxxxxxxx, XX 00000
D. Locations of Assets Held by Bailees: NA
Note: All facilities shown herein are leased by HESc or its
subsidiaries.
ANNEX I
Preventive Services Division
A. Mailing Address:
Mobile Testing:
1600 Genessee 0000 Xxxxxxx
Xxxxx 000 Xxxxxx Xxxx, XX
Xxxxxx Xxxx, XX 00000
Consulting:
Suite A 000 Xxxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxx Xxxx Xxxxxx Xxxx, XX
Xxxxxxxxxx, XX 00000
0000 Xxxx 00xx Xxxxxx 8310 University Executive
Park
Indianapolis, IN 00000 Xxxxx, Xxxxx 000
Xxxxxxxxx, XX
B. Location of Chief Executive Office: U.S. HealthWorks, Inc.
(current owner) 0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
C. Locations of Inventory, Equipment and Fixtures:
0000 Xxxxxxxx Xxxxx X
Xxxxx 000 420 Xxxxxxxxx Dairy Road
Kansas City, MO 64102 Xxxxxxxxxx, XX 00000
(excluding mobile assets)
D. Locations of Assets Held by Bailees: NA
Note: All facilities are leased by U.S. HealthWorks, Inc., Preventive
Services Division or their subsidiaries.
ANNEX II
Trade Names, Merger/Consolidation/Other Operating Names
Trade Names
Healthcomp Evaluation Services Corporation was incorporated as Xxxxxxx-
Xxxxx, Inc. ("HGI") during November 1993. HGI changed its name to
Healthcomp Evaluation Services Corporation on March 17, 1999 following
its acquisition of Afton, Inc.
Afton, Inc. conducted business under the names Health Evaluation Systems
Corporation and Healthcomp Evaluation Services Corporation. Use of the
d/b/a Health Evaluation Systems Corporation was discontinued during 1998
following a challenge to use of the name by a Pennsylvania based firm
using the same name.
Quality Health Services, Inc. conducted business under the name Quality
Mobile Health Services until its acquisition by Afton, Inc. during
December 1998.
Merger/Consolidation
Healthcomp Evaluation Services Corporation acquired all of the
outstanding common stock of Afton, Inc. during March 1999 and all of the
outstanding common stock of Medical Drug Testing, Inc. during October
1999. Healthcomp Evaluation Services Corporation also acquired the
assets of the following companies during 1999:
Health Services of Florida (4/99)
Mobile Health Services (6/99)
Vehicle Specialty Services, Inc. (6/99)
Medical Drug Testing, Inc. (10/99)
Mobile Medical Testing Service, Inc. (10/99)
Afton, Inc. acquired all of the outstanding common stock of Quality
Health Services, Inc. (December 1998) and Health Evaluation Programs,
Inc. (January 1999). In addition, Afton, Inc. acquired the assets of
the following companies as of the dates shown:
1996
Risk Assessment Systems, Inc. (5/96)
NTSA (7/96)
1997
Aries Medical (7/97)
Substance Abuse Solutions (10/97)
Occupational Testing Services (10/97)
Xxxxx Drug Screening (10/97)
1998
On-Time Phlebotomy (1/98)
Ace OnSite (5/98)
Afton-North Dakota, Inc. acquired the assets of AdMed, Ltd. during May
1996.
AmeriTest, Inc. acquired the assets of National AmeriTest, Inc. during
February 1997.
PSD TRADEMARKS, TRADE NAMES, SERVICE MARKS, SERVICE NAMES, ETC.
ELB & Associates
E.L.B. & Associates
Health & Hygiene/ELB, a U.S. HealthWorks Company
U.S. HealthWorks Preventive Services
USH Preventive Services
Health & Hygiene
Health & Hygiene Midwest
Health & Hygiene Clinical Evaluation Center
"How American Business Stays Healthy"
H&H
Preventative Services
U.S. HealthWorks Preventative Services Division
ELB
Ennis, Lumsden, Boylston and Associates, Inc.
MSDSPRINT
INTOXISPRINT
SPRINTTRACK
SPRINTWARE
AudioSPRINT
SpiroSPRINT
SPRINTLOG
MONIFAX
ANNEX III
Vehicles
Owned Vehicles
Office Company Description Serial Number
Pittsburgh HESc Plymouth Grand Voyager (1993) 0X0XX00XXXX000000
Hartford HESc 1996 Chrysler Town & Country minivan 0X0XX00X0XX000000
Hartford HESc 1996 Plymouth Voyager minivan 2P46P44R4TR6698094
Hartford HESc 1993 Plymouth Voyager minivan 0X0XX00X0XX000000
Pittsburgh HESc Gerstenlager trailer (1975) T7531
Pittsburgh HESc GMC tractor (1979) T19CC9V607733
Pittsburgh HESc GMC truck (1987) 0XXXX00X0X0000000
Hartford HESc International 4900 truck 1HTSDAAMIRH595558
Chicago HEP International 8300 tractor (1988) 0XXXXXXX0XX000000
Pittsburgh HESc International truck (1988) 0XXXXXXX0XX000000
Pittsburgh HESc Intrepid Medicoach (1980) 32896380301HE
Pittsburgh HESc Medicoach trailer (1981) 0X0X0X000XX000000
Pittsburgh HESc Trailmobile (1980) 556013
Chicago HEP Van 01-Gerstenslager (1973) 268514G523827
Chicago HEP Van 02-Gerstenslager (1973) 26852CGB21077
Chicago HEP Van 04-Gerstenslager (1977) 13366
Chicago HEP Van 05-Calumet Coach (1978) 14214
Chicago HEP Van 06-Calumet Coach (1979) 14677
Chicago HEP Van 00-0000 Xxxxxxxxxxx
Xxxxxxx HEP Van 09-Gerstenslager (1977) 13367
Chicago HEP Van 12-Gerstenslager (0000) 0000000971
Chicago HEP Van 21-International (1984) 0XXXXXXX0XXX00000
Chicago HEP Van 22-International (1986) 0XXXXXXX0XXX00000
Chicago HEP Van 24-
Chicago HEP Van 51-Xxxxx Cargo (1983) 1WC200F2OD102949
Chicago HEP Van 52-FRP trailer (1990) 0X0000X00X0000000
Clearwater HESc Mammography van 01 (Xxxx Deere) 17N640122W002112
Clearwater HESc Mammography van 02 (Winnebago) 0XXXX00X0X0000000
ANNEX III
Vehicles
Owned Vehicles
Office Company Description Serial Number
Chapel Hill PSD Chevrolet Astrovan (1993) 0XXXX00X0XX000000
Chapel Hill PSD Chevrolet Astrovan (1993) 0XXXX00X0XX000000
Chapel Hill PSD Chevrolet (1987) 0XXXX00XXX0000000
Chapel Hill PSD Chevrolet Astrovan (1991) 0XXXX00XXXX000000
Chapel Hill PSD Chevrolet Astrovan (1992) 0XXXX00X0XX000000
Fort Xxxxx PSD GMC Audio Truck (1995) 0047
Indianapolis PSD Ford Econoline (1992) 1FDKE37HONHB40125
Greensboro PSD Chevrolet (1992) 0XXXX00X0XX000000
Kansas City PSD Spartan SP-1242 coach (1990)
0X0XX0X00XX000000
Los Angeles PSD Haulmark G822CC4 trailer (1994)
00XXX0000XX000000
Indianapolis PSD Ford F350 (1994) 0XXXX00X0XXX00000
Indianapolis PSD Haulmark G822CC4 trailer (1994)
00XXX0000XX000000
Kansas City PSD Ford F350 (1991) 0XXXX00X0XXX00000
Greensboro PSD Dodge (1990) 0X0XX000XXX000000
Greensboro PSD Chevrolet Astrovan (1992) 0XXXX00X0XX000000
Greensboro PSD Chevrolet cabin (1995) 0XXXX00X0XX000000
Greensboro PSD Ford Econoline (1995) 0XXXX00X0XXX00000
Kansas City PSD Ford Econoline (1995) 0XXXX00X0XXX00000
Kansas City PSD Ford E350 (1987) 0XXXX00X0XX000000
Dallas PSD Ford E350 (1991) 0XXXX00X0XXX00000
Kansas City PSD Ford E350 (1991) 0XXXX00X0XXX00000
Indianapolis PSD Ford E350 (1991) 0XXXX00X0XXX00000
Stockton PSD Ford E350 (1992) 0XXXX00X0XXX00000
Detroit PSD Ford E350 (1993) 0XXXX00X0XXX00000
Pittsburgh PSD Ford E350 (1994) 0XXXX00X0XXX00000
Allentown PSD Ford E350 (1994) 0XXXX00X0XXX00000
Dallas PSD Ford F450 (1994) 0XXXX00X0XXX00000
Houston PSD Ford F450 (1994) 1FDLF47KOREA00036
Chicago PSD Ford F450 (1994) 0XXXX00XXXXX00000
Dallas PSD Ford F700 (1991) 0XXXX00X0XXX00000
Los Angeles PSD Dodge W250 (1991) 0X0XX00X0XX000000
Spokane PSD Chevrolet van (1984) 0XXXX00X0X0000000
Springfield (MS) PSD Ford F450 (1995) 0XXXX00X0XXX00000
ANNEX III
Vehicles
Owned Vehicles
Office Company
Los Angeles PSD Ford F450 (1995) 0XXXX00X0XXX00000
Atlanta PSD Ford F450 (1995) 0XXXX00XXXXX00000
Portland (OR) PSD Ford F450 (1995) 0XXXX00X0XXX00000
Chapel Hill PSD Ford F450 (1995) 0XXXX00X0XXX00000
Newark PSD Ford F450 (1995) 0XXXX00X0XXX00000
Spokane PSD Ford F450 (1995) 0XXXX00X0XXX00000
Kansas City PSD Ford F350 (1996) 0XXXX00X0XXX00000
Dallas PSD XxXxxxx 5th wheel trailer (1999) MCH18463DEM4151
Kansas City PSD Tanco 5th wheel trailer (1984) No VIN
Los Angeles PSD Xxxxx 5th wheel trailer (1980) No VIN
Leased Vehicles
Office Company
Hartford HESc International 7000 tractor 1HSHANHNOLH292761
Minneapolis PSD Ford F450 (1999) 0XXXX00X0XXX00000
Orlando PSD Ford F450 (1999) 0XXXX00X0XXX00000
Chicago PSD Ford F450 (1999) 0XXXX00X0XXX00000
Kansas City PSD Ford F450 (1999) 0XXXX00X0XXX00000
Dallas PSD Ford F450 (1999) 0XXXX00XXXXX00000
Los Angeles PSD Ford F350 (1999) 0XXXX00X0XXX00000
Greensboro PSD Ford F450 (1999) 0XXXX00X0XXX00000
Kansas City PSD Ford F450 (1999) 0XXXX00X0XXX00000
Kansas City PSD Ford F450 (1999) 0XXXX00X0XXX00000
Kansas City PSD Ford F450 (1999) 0XXXX00X0XXX00000
Los Angeles PSD Ford F350 (1999) 0XXXX00X0XXX00000
ANNEX IV
Intellectual Property
Registered Trademarks
Company Xxxx Registration No. (Serial No.) Registration Filing Date
Healthcomp Evaluation
Services Corporation HEP 1,297,158 SN 443,260 9-18-84
Healthcomp Evaluation
Services Corporation Enjoy Good Health! 1,784,600 SN 77-310,826 7-27-93
Trademarks Applied For
Company Xxxx Registration/Application No. Application Filing Date
Afton, Inc. HESC N/A N/A
Material Unregistered Trademarks or Trade Names
[None]
Proprietary Software
ExamWriter v 1.0
ExamWriter v 2.0 - a)
Physical Exam processing system
Results processing software (drug testing & mobile screening)
Scheduling software
Licensed Software
WinnData MRO software
WinFrame processing software
Great Plains accounting software v 9.0
Microsoft Office
Microsoft Map
Radiographic software
Hear/Trak system software
Wellsource program
RW multiuser upgrade
Xxxxx Xxxxx software
UNIXWARE 7.1/SCO server
Vision 3.0/SCO/configuration
Novell Netware 4.2
Oracle Database
Create-A-Check Professional
(a - balance owed to MSYS, Inc. totals $100,000.
PSD TRADEMARKS, TRADE NAMES, SERVICE MARKS, SERVICE NAMES, ETC.
ELB & Associates
E.L.B. & Associates
Health & Hygiene/ELB, a U.S. HealthWorks Company
U.S. HealthWorks Preventive Services
USH Preventive Services
Health & Hygiene
Health & Hygiene Midwest
Health & Hygiene Clinical Evaluation Center
"How American Business Stays Healthy"
H&H
Preventative Services
U.S. HealthWorks Preventative Services Division
ELB
Ennis, Lumsden, Boylston and Associates, Inc.
MSDSPRINT
INTOXISPRINT
SPRINTTRACK
SPRINTWARE
AudioSPRINT
SpiroSPRINT
SPRINTLOG
MONIFAX
PSD SOFTWARE
1. Sprintware - Several application modules developed and maintained
internally.
-VanSprint
-AudioDP
-AudioReview
-SpiroReview
-AudioSprint
-SpiroSprint
-SprintLog
-SprintTrack
-LapSprint
-SprintTime
-IntoxiSprint
2. Client Information Database (CID)
3. Time Billing - Computer based timesheets for Consulting Division
4. Client Support Desk - Support Desk tracking software used by
products department
5. MAX/90 - billing and accounting software licensed from a third-
party vendor
6. Microsoft Office Professional (M/S Word, Excel, Powerpoint,
Access, Outlook)
7. Visual Studio - software development suite
8. FoxPro - software development software
9. Microsoft Back Office
10. Cotton Dust Reporting Application
11. Norton Antivirus
12. Winport
ANNEX V
DEPOSIT ACCOUNTS
Company Bank Account No.
Healthcomp Evaluation Services Corporation Bank of America 003662593952
Bank of America 003662593965
Bank of America 003662593978
First Security Bank 00000000
First Security Bank-a) 00000000
SouthTrust Bank 00-000-000
SouthTrust Bank-b)
PNC Bank 00-0000-0000
Xxxxxxx Bank 0009056352
Afton-North Dakota, Inc. Norwest Bank 136-0000000
AmeriTest, Inc. Norwest Bank 202-0000000
Health Evaluation Programs, Inc. Bank One Chicago 1115000909934
(a - Escrow account held by HESc for the benefit of Burlington Northern
Sante Fe.
(b - Escrow account held by HESc for the benefit of Baptist Minor
Medical Center.
Name of Bank Account Name Account Number Location of Account
[___________]
Central Carolina Bank 00-0000000 North Carolina
Xxxxx Xxxxxxx
BB&T 5110289814 North Carolina
BB&T 5110289806 North Carolina Xxxx Xxxxxx
Bank of America 000-000-0000 North Carolina lock-box None
Fifth Third Bank 0075041413 Indiana Xxxx Xxxxxxx
Bank of America 0000-0000-0000 Missouri Xxxxxxx Xxxx, Time
Xxxxxxxx, Xxxxx Jonas
Bank of America 0000-0000-0000 Missouri Xxx Xxxxxxxx
ANNEX VI
Certain Permitted Liens -a)
Accounts Receivable
Bank of America (HESc) - amounts will fluctuate based on outstanding
receivable balance
Xxxxxx Financial (PSD) - amounts will fluctuate based on outstanding
receivable balance
Fixed Assets
First Security Bank (HESc)
Mammography equipment (2 loans)
Deutsche Financial (HESc)
Cisco Systems telephone system (capital lease)
Chrysler Financial (HESc)
Plymouth Voyager and Chrysler Town & Country minivans based at
Hartford office (2 loans)
American Technology Leasing (PSD)
Master lease for computer equipment at Greensboro office and
medical equipment at Kansas City office (capital lease)
Bank of America (HESc)
Secondary lien on fixtures, equipment and inventories
Dollar Bank Leasing (HESc)
Computer equipment
Dominion Financial Group International, LDC (HESc)
Secondary lien on certain receivables of Afton, Inc.
(a - Excludes vehicles (trucks) and equipment (e.g., breathalyzers,
copiers, postage machines and film processing equipment) leased under
operating leases.
ANNEX VII
Government Receivables
Xxxxx County
Alcona County Road Commission
Allamakee County Highway Department
Alpena County Road Commission
Anoka County Highway & Parks Department
Appanoose County Secondary Road Department
Xxxxx School Jointg District No. 8
Xxxxxxxxx County Jail
Audobon County Secondary Road Department
Bay Area Rapid Transit District
Bedford Area School District
Belgrade School District No. 44
Belt Public Schools
Beltrami County
Xxxxxx County Highway Department
Bexar County Adult Probation Department
Blue Springs School District
Xxxxx County
Xxxxxxx School District
Xxxxxx County Engineer
Brighton Municipal Gas Water & Pipe
Brooklyn Municipal Electric & Gas
Xxxxx County
Brule County
Xxxxxxxx County
Buena Vista County Solid Waste Commission
Buena Vista County
Bureau of Public Debt
Xxxxxx County Children's Center
Xxxxxx County
Xxxxxxx County
Xxxxxxxx County
Carbon County
Xxxxxxx County
Xxxxxxx County Detention
Xxxxxx County
Cascade County
Cass County Secondary Roads Department
Cedar County
Central Mountain Schools
Cerro Gordo County
Cherokee County Secondary Roads Department
Xxxxxxx School District No. 33
Chickasaw County
Cities of:
Ames
Andover
Ankeny
Xxxxxxxxx
Xxxxxx
Xxxxxxxx
Barnesville
Belle Xxxxxx
Xxxxxxx
Bismarck
Bloomfield
Blytheville
Bozeman
Brooklyn Center
Brooklyn Park
Buffalo (IA)
Burlington
Xxxxxxxxxx
Xxxxxxx
Carthage
Central City
Chanhassen
Xxxxxxxx
Xxxxxxx City
Chaska
Cherokee
Xxxxxxxx
Choteau
Chubbuck
Clarion
Clear Lake (IA)
Xxxxxxx
Xxxxx
Colfax
Collierville
Council Bluffs
Cresco
Decorah
Deephaven
Deer River
Xxxxxx
Xxxxxxx
Xxxxxx
Dyersville
Eagan
Eagle Grove
Early
Eden Prairie
Edina
Xxxxxx
Elkader
Estherville
Evansville
Evansdale
Fargo
Farmington (MI)
Faulkton
Fayette
Fergus Falls
Xxxxxx
Xxxxx
Xxxxxx Xxxx
Xxxx Xxxxxxx
Xxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxx
Xxxxxxx
Grand Forks
Great Falls
Green River
Grinnell
Xxxxxx Center
Guttenberg
Hampton
Hardin (MT)
Hawarden
Humboldt
Independence
Iowa Falls
Xxxxxxxx
Xxxxxxx
Knoxville
La Porte City
Lake City
Lake Xxxxx
Lake Park
Lake View
Laurel (IA)
Laurens
Lemars
Lewisburg
Xxxxx
Xxxxxxxxx
Xxxxx
Xxxxxx
Manchester
Xxxxxxx
Xxxxxxxx
Marshalltown
Xxxxx City
Mazeppa
McLeansboro
Memphis
Miles City
Xxxxxxx
Xxxxxxxxxx
Minneota
Minnetonka
Minnetrista
Missoula
Monona
Monticello (GA)
Monticello (MN)
Mound
Mount Xxxxxx
Nashua
Nevada
New Bedford City Hall
New Hampton
New London
New York DOT/Bridge
New York-Staten Island Ferry
Xxxxxx
North Liberty
Northwood
Norwalk
Oelwein
Okoboju
Onawa
Oronogo
Oskaloosa
Ottumwa
Xxxxxxxx
Xxxxx
Perry (IA)
Perry (MO)
Pipestone
Pleasant Hill
Postville
Pringhar
Readlyn
Red Lodge
Riceville
Rochester
Rock Springs
Xxxxxxx
Sauk Rapids
Xxxxxx
Xxxxxxx
Xxxxxxx
Shenandoah
Xxxxxx
Sioux Center
Spirit Lank
St. Xxxxxxx
St. Cloud
St. Xxxx
Stillwater
Storm Lake
Story City
Xxxxxx
Xxxxxxxx Falls
Xxxxxx
Xxxxxxxx
Two Harbors
Urbandale
Valley City
Vinton
Waseca
Washington
Waterloo
Waukon
Xxxxxxx
Xxxxxxx City
West Des Moines
West Point
West St. Xxxx
Xxxxxx
Xxxxxxxx
Xxxxxxxx
Yankton
Big Lake Public Works
Winterset Municipal Utilities
Clay County
Clay County-Xxxxxxx
Xxxxxxx County
Clinton County Secondary Roads Department
Connecticut Army National Guard
Corvallis School District No. 1
Council Bluffs Water Works
Xxxxxx-Xxxxxxx High School District No. 188
Xxxxxxxx County
Xxxxxx County Commission
Dakota County
Dallas County Secondary Roads Department
Decatur County
Delaware County Engineer
Dension Municipal Utilities
Department of Interior
Des Moines County Secondary Roads Depart.
Xxxxxxxxx County Secondary Roads Department
Dodge County
Xxxxxxx County (MN)
Drug Enforcement Agency
Dubuque County
Duluth Transit Authority
Duluth Water & Gas
Edinburgh School District No. 106
Ellwood City Transit
Emmet County Engineer
Emmetsburg Municipal Utilities
Eureka Public School District
Fall River County
Faribault County
Farmington Public Schools
Xxxxx County
Fayette County
Fayette County Housing Authority
Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxxx Secondary Roads Department
Gallatin County
Glasgow School District No. 1A
Gloucester Fire Department
Xxxxxxx County
Granite County
Grant County Detention
Great Falls Transit District
Grundy County
Xxxxxxx County Secondary Roads Department
Xxxxxxxx County
Xxxxxxx County Secondary Roads Department
Xxxxxx County
Xxxxxx Municipal Utilities
Xxxxxxxx County
Head Start of Fayette County
Hennepin County Adult Correctional Facility
Hennepin County Adult Probation
Hennepin County Home School
Hennepin County Human Resources
Hennepin County Juvenile Probation
Hennepin County Medical Center
Hennepin County Public Safety
Hennepin County Public Works
Hennepin County Sheriffs Department
Xxxxx County Secondary Roads Department
Hill County
Hill County Electric Xxxx
Xxxxx Area Public Schools
Houston County Highway Department
Xxxxxxx County
Humboldt County
Huron Valley Schools
Xxxxxxxxxx County
Idaho National Guard
Iowa County
Itasca County-Administrative
J-I Public Schools
Xxxxxxx County Highway Department
Xxxxxxx County (IA)
Jasper County Highway Department
Jefferson County Adult Probation
Jefferson County (IA)
Joliet School District No. 7
Xxxxx County Secondary Roads Department
Xxxxxx Basin County
Kaniyohi County
Koochiching County
Kentucky Corrections
Xxxxxxxxx
Danville
Hopkinsville
Lexington
Louisville
Main
Half Way Houses
Kentucky Law Enforcement Council
Lake County Highway Department
Lake County (MT)
Lake Orion Schools
Lakeview Community Schools
Xxxxxxx County Hazmat
Lavallette Township Fire Department
Xxx County
Lincoln County Highway Department
Louisa County
Xxxxx County Health Center
Xxxxx County Secondary Roads Department
MSA Xxxxx City
Madison County Secondary Roads Department
Madison County
Mahaska County Highway Department
Xxxxxx County
Xxxxxxxx County (IA)
Memphis Housing Authority
Mille Lacs County
Xxxxx County
Mineral County
Minnehaha County
Minnesota Municipal Utility Association
Missoula County
Minnesota Department of Human Services
Minnesota Department of Natural Resources
Minnesota Department of Transportation
Missouri National Guard
Missouri State Occupational Health
Morbridge School District Xx. 00-0
Xxxxxx Xxxxxx Xxxxxxxx
Xxxxxxxxxx Xxxxxx Secondary Roads Department
Xxxxxxxx County Public Works
Mower County
Mt. Pleasant Municipal Utilities
Mt. Pleasant Public Works
Montana School District 5
Montana School District No. 17-H & 1
New York State Thruway Authority
Nicollet County Public Works
Xxxxxx County
North Madison Fire Department
Northland Bus Services
Northland Regional Transit
Ogeman County Road Commission
Osage Municipal Utilities
Osceola County Secondary Roads Department
Otter Tail County
Oxford Area Schools
Page County
Park County
Park River School District
Xxxxxxx Highway District
Xxxxxxxxxx County Highway Department
Petroleum County
Xxxxxxxx Xxxxxx
Xxxx Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Pinellas County Health Department
Pocahontas County
Polk County (WI)
Polk County Personnel Department (IA)
Xxxx County Highway Department
Poplar School District Nos. 9 & 9B
Pottawattamie County
Powder River County
Xxxxxx County
Prairie Hills Transit
Xxxxx Public Schools
Xxxxxx County Parks & Recreation
Xxxxxx County Public Works
Xxxxxxxx Fire Department
Xxxxxx County Senior
T
ransport
Ravalli County
Red Lodge School District No. 0
Xxxxxxx Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxxx Xxxxxx
Rice County
Richland County
Ringgold County
Riverside Fire Department
Rock Rapids Municipal Utilities
Sabula Municipal Utilities
Sarasota County
Xxxxx County Government Center
South Dakota Bureau of Administration
South Dakota Department of Environmental and Natural Resources
South Dakota Department of Game Fish & Parks
South Dakota Department of Transportation
South Dakota Northern State University
South Dakota Redfield Trusty Unit
South Dakota State Peniteniary
South Dakota State University
Shelby County
Shelby Public Schools
Shepherd Public Schools
Xxxxxxxxx County Highway Department
South Lyon Schools
Southfield Public Schools
Southwestern Minnesota Opportunity Commission
State of Iowa
Xxxxxxx County
Xxxxxx County
Sun River Valley Schools
Sweet Grass County
Sweetwater County School District No. 1
Sweetwater County School District No. 2
Sweetwater County Transit
Sweetwater County Road & Bridge
Tama County
Xxxxxx County Secondary Roads Department
Teton County
Xxxxxxxx School District No. 1
Township of Glenville
Township of Laketon
Traverse Xxxxxx
Xxxxx Xxxx Xxxxxx Xxxxxxxx
Xxxxx Xxxxxx Secondary Roads Department
US Bureau of Printing & Engraving
Van Buren County
Wadena County
Wakpala School District
Waseca County Highway Department
Washington County
Washington County (MN)
Washington County Muni Xxxx
Waterford Public Schools
Watowan County
Xxxxx County
West Bend Municipal Utilities
West Bloomfield Schools
West Nodaway R-I Schools
Westport Fire Department
Williston Fire Department
Wing Public Schools
Winnebago County Secondary Roads Department
Winneshiek County
Winona County
Woodbridge Fire Department
Woodbury County
Worth County
Xxxxxx County
Xxxxxx County Secondary Roads Department
Wyoming Test
Wyoming Department of Transportation
Yankton School District No. 63-3
Yellowstone County Roads
Schedule 1
Form of Accession Agreement
FORM OF ACCESSION AGREEMENT TO SECURITY AGREEMENT
This ACCESSION AGREEMENT dated as of __________________ is
BETWEEN:
___________________, a _________________ organized under the
laws of ______________________ (hereinafter called the "New Grantor"),
and
Diligenti, Inc. (the "Lender").
WHEREAS, this Agreement is entered into in connection with a
Security Agreement (the "Security Agreement") dated September 15, 2000
among Healthcomp Evaluation Services Corporation, Afton Inc., Medical
Drug Testing, Inc., Health Evaluation Programs Corporation, Afton-North
Dakota, Inc., AmeriTest, Inc., Quality Health Services, Inc. and the
Lender.
WHEREAS, the New Grantor under the laws relating thereto is duly
authorized to enter into the Security Agreement and all things
necessary, including any necessary consents of shareholders of the New
Grantor, have been done and performed to make the Security Agreement a
valid and binding obligation of the New Grantor;
WHEREAS, this Agreement has been entered into to record the
admission of the New Grantor pursuant to the Loan Agreement (as defined
in the Security Agreement);
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the premises and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the New Grantor covenants
and agrees with the Lender as follows:
1. DEFINITIONS
Terms defined in the Security Agreement shall have the same
meaning when used in this agreement.
2. WARRANTIES
The New Grantor hereby makes to the Lender the representations,
warranties and covenants set forth in Sections 3 and 4 of the Security
Agreement.
3. UNDERTAKING
Effective as of the date hereof, the New Grantor undertakes all
obligations of a Grantor under the Security Agreement.
4. NOTICE
All communications and notices provided for under the Security
Agreement to the New Grantor shall be addressed as follows:
__________________
__________________
__________________
Attention: __________________
Telephone: _________________
Facsimile: __________________
with a copy to:
Diligenti, Inc.
Attention: __________________
Telephone: _________________
Facsimile: __________________
5. APPLICABLE LAW
This Agreement shall be governed and construed in accordance
with the internal laws of the State of New York.
IN WITNESS WHEREOF the New Grantor has duly executed this
Accession Agreement as of the date first set forth above.
[Name of New Grantor]
By: ______________________
Name:
Title:
Accepted:
Diligenti, Inc.
By: _______________________
Name:
Title:
