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EXHIBIT 10.6
TBCC
SECURITY AGREEMENT
OBLIGOR: ADVANCED MEDICAL PROCEDURES, INC.,
A DELAWARE CORPORATION
ADDRESS: 000X XXXX XXX XXXXXX
XXXXXXXXX, XX 00000
DATE: JULY 29, 1999
THIS SECURITY AGREEMENT is entered into as of the above date, between the above
Obligor (the "Obligor"), having its chief executive office and principal place
of business at the address shown above, and TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation, ("TBCC") having its principal office at
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 and having an office
at 00000 Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxxx Xxxx, Xxxxxxxxxx 00000. (Definitions
of certain terms used in this Agreement are set forth in Section 7 below.) The
parties agree as follows:
1. Security.
1.1. Grant of Security Interest. To secure the payment and performance when
due of all of the Obligations, Obligor hereby grants to TBCC a security interest
in all of its present and future Receivables, Inventory, Equipment, Other
Property, and other Collateral, wherever located.
1.2. Other Liens; Location of Collateral. Obligor represents, warrants and
covenants that all of the Collateral is, and will at all times continue to be,
free and clear of all Liens, other than Permitted Liens and Liens in favor of
TBCC. All Collateral is and will continue to be maintained at the locations
shown on the Schedule.
1.3. Records. Obligor shall maintain full, accurate and complete records
respecting the Receivables, Inventory (including without limitation records
describing the kind, type and quantity of the Inventory and Obligor's cost
therefor, withdrawals therefrom and additions thereto, including a perpetual
inventory for work in process and finished goods, and Equipment (including
without limitation records itemizing and describing the location, kind, type,
age and condition of the Equipment, Obligor's cost therefor and accumulated
depreciation thereof and retirements, sales, or other dispositions thereof).
1.4. Equipment. Obligor shall keep all of its Equipment in a satisfactory
state of repair and satisfactory operating condition in accordance with industry
standards, ordinary wear and tear excepted. No Equipment shall be annexed or
affixed to or become part of any realty, unless the owner of the realty has
executed and delivered a Landlord Waiver in such form as TBCC shall specify.
Where Obligor is permitted to dispose of any Equipment under this Agreement or
by any consent thereto hereafter given by TBCC, Obligor shall do so at arm's
length, in good faith and by obtaining the maximum amount of recovery
practicable therefor and without impairing the operating integrity or value of
the remaining Equipment.
1.5. Further Assurances. Obligor will perform any and all steps that TBCC may
reasonably request to perfect TBCC's security interests in the Collateral,
including, without limitation, executing and filing financing and continuation
statements in form and substance satisfactory to TBCC. TBCC is hereby authorized
by Obligor to sign Obligor's name or file any financing statements or similar
documents or instruments covering the Collateral whether or not Obligor's
signature appears thereon. Obligor agrees, from time to time, at TBCC's request,
to file notices of Liens, financing statements, similar document or instruments,
and amendments, renewals and continuations thereof, and cooperate with TBCC, in
connection with the continued perfection and protection of the Collateral. If
any Collateral is in the possession or control of any Person other than a public
warehouseman where the warehouse receipt is in the name of or held by TBCC,
Obligor shall notify such Person of TBCC's security interest therein and, upon
request, instruct such Person or Persons to hold all such Collateral for the
account of TBCC and subject to TBCC's instructions. If so requested by TBCC,
Obligor will deliver to TBCC warehouse receipts covering any Collateral located
in warehouses showing TBCC as the beneficiary thereof and will also cause the
warehouseman to execute and deliver such agreements as TBCC may request relating
to waivers of liens by such warehouseman and the release of the Inventory to
TBCC on its demand. Obligor shall defend the Collateral against all claims and
demands of all Persons.
1.6. Power of Attorney. Obligor hereby appoints and constitutes TBCC as
Obligor's attorney-in-fact (i) to request at any time from account debtors
verification of information concerning Receivables and the amount owing thereon,
(ii) upon the occurrence and during the continuance of an Event of Default, to
convey any item of Collateral to any purchaser thereof, (iii) to give or sign
Obligor's name to any notices or statements necessary or desirable to create or
continue the Lien on any Collateral
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TBCC SECURITY AGREEMENT
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granted hereunder and (iv) to make any payment or take any act necessary or
desirable to protect or preserve any Collateral. TBCC's authority hereunder
shall include, without limitation, the authority to execute and give receipt for
any certificate of ownership or any document, transfer title to any item of
Collateral and take any other actions arising from or incident to the powers
granted to TBCC under this Agreement. This power of attorney is coupled with an
interest and is irrevocable.
2. Representations and Warranties of Obligor. Obligor represents and warrants as
follows:
2.1. Organization, Good Standing and Qualification. Obligor (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State set forth above, (ii) has the corporate power and authority to own
its properties and assets and to transact the businesses in which it is engaged
and (iii) is duly qualified, authorized to do business and in good standing in
each jurisdiction where it is engaged in business, except to the extent that the
failure to so qualify or be in good standing would not have a Material Adverse
Effect.
2.2. Locations of Offices, Records and Collateral. The address of the
principal place of business and chief executive office of Obligor is *, and the
books and records of Obligor and all of its chattel paper and records relating
to Collateral are maintained exclusively in the possession of Obligor at ** the
address of Obligor specified in the heading of this Agreement. Obligor has
places of business, and Collateral is located, only at such address and at the
addresses set forth in the Schedule.
* THE ADDRESS OF OBLIGOR SPECIFIED IN THE HEADING OF THIS AGREEMENT
** 7 STUDEBAKER, XXXXXX, XXXXXXXXXX 00000 AND/OR AT
2.3. Authority. Obligor has the requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Loan Documents.
All corporate action necessary for the execution, delivery and performance by
Obligor of the Loan Documents has been taken.
2.4. Enforceability. This Agreement is, and, when executed and delivered,
each other Loan Document will be, the legal, valid and binding obligation of
Obligor enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
2.5. No Conflict. The execution, delivery and performance of each Loan
Document by Obligor does not and will not contravene (i) any of the Governing
Documents, (ii) any Requirement of Law or (iii) any Material Contract and will
not result in the imposition of any Liens other than in favor of TBCC.
2.6. Consents and Filings. No consent, authorization or approval of, or
filing with or other act by, any shareholders of Obligor or any Governmental
Authority or other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby or
thereby or the continuing operations of Obligor following such consummation,
except (i) those that have been obtained or made, and (ii) the filing of
financing statements under the Uniform Commercial Code.
2.7. Solvency. Obligor is Solvent and will be Solvent upon the completion of
all transactions contemplated to occur on or before the date of this Agreement.
2.8. Financial Data. Obligor has provided to TBCC complete Financial
Statements * which have been prepared in accordance with GAAP consistently
applied throughout the periods involved and fairly present the financial
position and results of operations of Obligor for each of the periods covered.
Obligor has no Contingent Obligation or liability ** for taxes, unrealized
losses, unusual forward or long-term commitments or long-term leases, which is
not reflected in such Financial Statements. Since the last date covered by such
Financial Statements, there has been no sale, transfer or other disposition by
Obligor of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the financial condition of Obligor at
said date. Since said date, (i) there has been no change, occurrence,
development or event which has had or could reasonably be expected to have a
Material Adverse Effect and (ii) none of the capital stock of Obligor has been
redeemed, retired, purchased or otherwise acquired for value by Obligor.
* WHICH ARE ACCURATE IN ALL MATERIAL RESPECTS AND
** IN EXCESS OF $50,000
2.9. Accuracy and Completeness of Information. All data, reports and
information previously, now or hereafter furnished by or on behalf of Obligor to
TBCC or the Auditors are or will be true and accurate in all material respects
on the date as of which such data, reports and information are dated or
certified, and not incomplete by omitting to state any material fact necessary
to make such data, reports and information not materially misleading at such
time. There are no facts now known to Obligor which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect and
which have not been disclosed in writing to TBCC.
2.10. No Joint Ventures, Partnerships or Subsidiaries. Obligor is not engaged
in any joint venture or partnership with any other Person. Obligor has no
Subsidiaries.
2.11. Corporate and Trade Name. During the past five years, Obligor has not
been known by or used any other corporate, trade or fictitious name except for
its name as set forth on the signature page of this Agreement and the other
names specified in the Schedule.
2.12. No Actual or Pending Material Modification of Business. There exists no
actual or, to the best of Obligor's knowledge after due inquiry, threatened
termination, cancellation or limitation of, or any modification or change in the
business relationship of Obligor with any customer or group of customers whose
purchases individually or in the aggregate are material to the operation of
Obligor's business or with any material supplier.
2.13. Taxes and Tax Returns. * Obligor has properly completed and timely
filed all income tax returns it is required to file. The information filed is
complete and accurate in all material respects. * all deductions taken in such
income tax returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made in
accor-
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dance with GAAP. * all taxes, assessments, fees and other governmental charges
for periods beginning prior to the date of this Agreement have been timely paid
(or, if not yet due, adequate reserves therefor have been established) and
Obligor has no liability for taxes in excess of the amounts so paid or reserves
so established. No deficiencies for taxes have been claimed, proposed or
assessed by any taxing or other Governmental Authority against Obligor and no
notice of any tax Lien has been filed. There are no pending or threatened
audits, investigations or claims for or relating to any liability for taxes and
there are no matters under discussion with any Governmental Authority which
could result in an additional liability for taxes. No extension of a statute of
limitations relating to taxes, assessments, fees or other governmental charges
is in effect with respect to Obligor. Obligor is not a party to and does not
have any obligations under any written tax sharing agreement or agreement
regarding payments in lieu of taxes.
* EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT AND WOULD NOT MATERIALLY ADVERSELY AFFECT THE SECURITY INTEREST OF TBCC
IN THE COLLATERAL,
2.14. No Judgments or Litigation. No judgments, orders, writs or decrees are
outstanding against Obligor, nor is there now pending or, to the knowledge of
Obligor after due inquiry, threatened litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against Obligor
that (i) could individually or in the aggregate be likely in the reasonable
business judgment of TBCC to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Agreement, any other
Loan Document or the consummation of the transactions contemplated hereby or
thereby.
2.15. Investments; Contracts. Obligor (i) has not committed to make any
Investment; (ii) is not a party to any indenture, agreement, contract,
instrument or lease or subject to any charter, by-law or other corporate
restriction or any injunction, order, restriction or decree, which would
materially and adversely affect its business, operations, assets or financial
condition; (iii) is not a party to any "take or pay" contract as to which it is
the purchaser; or (iv) has no material contingent or long-term liability,
including management contracts (excluding employment contracts of full-time
individual officers or employees), which could have a Material Adverse Effect.
2.16. No Defaults; Legal Compliance. * Obligor is not in default under any
term of any Material Contract or in violation of any Requirement of Law, nor is
Obligor subject to any investigation with respect to a claimed violation of any
Requirement of Law.
* EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT AND WOULD NOT MATERIALLY ADVERSELY AFFECT THE SECURITY INTEREST OF TBCC
IN THE COLLATERAL,
2.17. Rights in Collateral; Priority of Liens. All Collateral is owned or
leased by Obligor, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. The Liens granted to TBCC pursuant to the
Loan Documents constitute valid, enforceable and perfected first-priority Liens
on the Collateral, except for Permitted Liens.
2.18. Intellectual Property. Obligor * patents, trademarks, trade names,
service marks and copyrights (registered and unregistered), ** applications
therefor and licenses thereof. Obligor owns or licenses all material patents,
trademarks, service-marks, logos, tradenames, trade secrets, know-how,
copyrights, or licenses and other rights with respect to any of the foregoing,
which are necessary or advisable for the operation of its business as presently
conducted or proposed to be conducted. To the best of its knowledge after due
inquiry, Obligor has not infringed any patent, trademark, service-xxxx,
tradename, copyright, license or other right owned by any other Person by the
sale or use of any product, process, method, substance, part or other material
presently contemplated to be sold or used, where such sale or use would
reasonably be expected to have a Material Adverse Effect and no claim or
litigation is pending, or to the best of Obligor's knowledge, threatened against
or affecting Obligor that contests its right to sell or use any such product,
process, method, substance, part or other material.
* HAS NO
** OR
2.19. Labor Matters. There are no existing or threatened strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which Obligor is a party which would, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
2.20. Licenses and Permits. Obligor has obtained and holds in full force and
effect, all franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary or advisable for the operation of its business as presently
conducted and as proposed to be conducted, except where the failure to possess
any of the foregoing (individually or in the aggregate) would not have a
Material Adverse Effect.
2.21. Government Regulation. Obligor is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
Requirement of Law that limits its ability to incur indebtedness or its ability
to consummate the transactions contemplated by this Agreement and the other Loan
Documents.
2.22. Business and Properties. The business of Obligor is not affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could reasonably be expected
to have a Material Adverse Effect.
2.23. Affiliate Transactions. Obligor is not a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of
Obligor is a party except * (i) in the ordinary course of and pursuant to the
reasonable requirements of the business of Obligor and (ii) upon fair and
reasonable terms no less favorable to Obligor than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
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* FOR THAT CERTAIN AGREEMENT AND PLAN OF MERGER DATED JUNE 30, 1999, BETWEEN
OBLIGOR AND BORROWER, AND EXCEPT
2.24. Survival of Representations. All representations made by Obligor in
this Agreement and in any other Loan Document executed and delivered by it in
connection herewith shall survive the execution and delivery hereof and thereof
and the closing of the transactions contemplated hereby and thereby.
3. AFFIRMATIVE COVENANTS OF THE OBLIGOR. Until termination of this Agreement and
payment and satisfaction of all Obligations:
3.1. Corporate Existence. Obligor shall (i) maintain its corporate existence,
(ii) maintain in full force and effect all material licenses, bonds, franchises,
leases, trademarks, qualifications and authorizations to do business, and all
material patents, contracts and other rights necessary or advisable to the
profitable conduct of its business, and (iii) continue in, and limit its
operations to, the same lines of business as presently conducted by it.
3.2. Maintenance of Property. Obligor shall keep all property useful and
necessary to its business in good working order and condition (ordinary wear and
tear excepted) in accordance with its past operating practices.
3.3. Affiliate Transactions. Obligor shall conduct transactions with any of
its Affiliates on an arm's-length basis or other basis no less favorable to
Obligor and which are approved by the board of directors of Obligor.
3.4. Taxes. Obligor shall pay when due (i) all tax assessments, and other
governmental charges and levies imposed against it or any of its property and
(ii) all lawful claims that, if unpaid, might by law become a Lien upon its
property; provided, however, that, unless such tax assessment, charge, levy or
claim has become a Lien on any of the property of Obligor, it need not be paid
if it is being contested in good faith, by appropriate proceedings diligently
conducted and an adequate reserve or other appropriate provision shall have been
made therefor as required in accordance with GAAP.
3.5. Requirements of Law. Obligor shall comply with all Requirements of Law
applicable to it, including, without limitation, all applicable Federal, State,
local or foreign laws and regulations, including, without limitation, those
relating to environmental matters, employee matters, the Employee Retirement
Income Security Act of 1974, and the collection, payment and deposit of
employees' income, unemployment and social security taxes, provided that Obligor
shall not be deemed in violation hereof if Obligor's failure to comply with any
of the foregoing would not require more than * to cure the same.
* $75,000
3.6. Insurance. Obligor shall maintain public liability insurance, business
interruption insurance, third party property damage insurance and replacement
value insurance on its assets (including the Collateral) under such policies of
insurance, with such insurance companies, in such amounts and covering such
risks as are at all times satisfactory to TBCC in its commercially reasonable
judgment, all of which policies covering the Collateral shall name TBCC as an
additional insured and lender loss payee in case of loss, and contain other
provisions as TBCC may reasonably require to protect fully TBCC's interest in
the Collateral and any payments to be made under such policies.
3.7. Books and Records; Inspections. Obligor shall (i) maintain books and
records (including computer records) pertaining to the Collateral in such
detail, form and scope as is consistent with good business practice and (ii)
provide TBCC and its agents access to the premises of Obligor at any time and
from time to time, during normal business hours and upon reasonable notice under
the circumstances, and at any time on and after the occurrence of a Default or
Event of Default, for the purposes of (A) inspecting and verifying the
Collateral, (B) inspecting and copying (at Obligor's expense) any and all
records pertaining thereto, and (C) discussing the affairs, finances and
business of Obligor with any officer, employee or director of Obligor or with
the Auditors. Obligor shall reimburse TBCC for the reasonable travel and related
expenses of TBCC's employees or, at TBCC's option, of such outside accountants
or examiners as may be retained by TBCC to verify or inspect Collateral, records
or documents of Obligor on a regular basis or for a special inspection if TBCC
deems the same appropriate. If TBCC's own employees are used, Obligor shall also
pay therefor $600 per person per day (or such other amount as shall represent
TBCC's then current standard charge for the same), or, if outside examiners or
accountants are used, Obligor shall also pay TBCC such sum as TBCC may be
obligated to pay as fees therefor.
3.8. Notification Requirements. Obligor shall give TBCC the following notices
and other documents:
(a) Notice of Defaults. Obligor shall give TBCC written notice of any
Default or Event of Default within two Business Days after becoming aware of the
same.
(b) Proceedings or Adverse Changes. Obligor shall give TBCC written notice
of any of the following, promptly, and in any event within five Business Days
after Obligor becomes aware of any of the following: (i) any proceeding being
instituted or threatened by or against it in any federal, state, local or
foreign court or before any commission or other regulatory body involving a sum,
together with the sum involved in all other similar proceedings, in excess of *
in the aggregate, (ii) any order, judgment or decree being entered against
Obligor or any of its properties or assets involving a sum, together with the
sum of all other orders, judgments or decrees, in excess of * in the aggregate,
and (iii) any actual or prospective change, development or event which has had
or could reasonably be expected to have a Material Adverse Effect.
* $75,000
(c) Change of Name or Chief Executive Office; Opening Additional Places of
Business. Obligor shall give TBCC at least 30 days prior written notice of any
change of Obligor's corporate name or its chief executive office or of the
opening of any additional place of business.
(d) Casualty Loss. Obligor shall (i) provide written notice to TBCC, within
ten Business Days, of any material damage to, the destruction of or any other
material loss to any asset or property owned or used by Obligor other than any
such asset or property with a net book value (individually or in the aggregate)
less than * or any condemnation, confiscation or other taking, in whole or in
part, or any event that otherwise diminishes so as to render impracticable or
unreasonable the use of such asset or prop-
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erty owned or used by Obligor together with the amount of the damage,
destruction, loss or diminution in value and (ii) diligently file and prosecute
its claim or claims for any award or payment in connection with a any of the
foregoing.
* $30,000
3.9. Qualify to Transact Business. Obligor shall qualify to transact business
as a foreign corporation in each jurisdiction where the nature or extent of its
business or the ownership of its property requires it to be so qualified or
authorized and where failure to qualify or be authorized would have a Material
Adverse Effect.
3.10. Financial Reporting. Obligor shall timely deliver to TBCC such
information respecting Obligor or any Collateral as TBCC may from time to time
request in its good-faith business judgment. Obligor authorizes TBCC to
communicate directly with its officers, employees and Auditors and to examine
and make abstracts from its books and records. Obligor authorizes its Auditors
to disclose to TBCC any and all financial statements, work papers and other
information of any kind that they may have with respect to Obligor and its
business and financial and other affairs. Obligor shall deliver a letter
addressed to the Auditors requesting them to comply with the provisions of this
paragraph when requested by TBCC.
3.11. Payment of Liabilities. Obligor shall pay and discharge, in the
ordinary course of business, all Indebtedness, except where the same may be
contested in good faith by appropriate proceedings and adequate reserves with
respect thereto have been provided on the books and records of Obligor in
accordance with GAAP.
3.12. Trademarks. Obligor shall do and cause to be done all things necessary
to preserve and keep in full force and effect all of its material registrations
of trademarks, service marks and other marks, trade names and other trade
rights.
3.13. Proceeds of Collateral. Without limiting any of the other terms of this
Agreement, and without implying any consent to any sale or other transfer of
Collateral in violation of any provision of this Agreement, Obligor shall
deliver to TBCC all proceeds of any sale or other transfer or disposition of any
Collateral, immediately upon receipt of the same and in the same form as
received, with any necessary endorsements, and Obligor will not commingle any
such proceeds with any of its other funds or property, but will segregate them
from the other assets of Obligor and will hold them in trust and for the account
and as the property of TBCC.
3.14. Solvency. Obligor shall be Solvent at all times.
3.15. Interest. Obligor shall pay TBCC interest on all sums due from Obligor
to TBCC hereunder at an interest rate equal to the highest interest rate
applicable to any of the Loans, from the date due to the date paid.
4. Negative Covenants. Until termination of this Agreement and payment and
satisfaction of all Obligations:
4.1. Contingent Obligations. Obligor will not, directly or indirectly, incur,
assume, or suffer to exist any Contingent Obligation, excluding indemnities
given in connection with this Agreement or the other Loan Documents in favor of
TBCC or in connection with the sale of Inventory or other asset dispositions
permitted hereunder.
4.2. Corporate Changes. Obligor will not, directly or indirectly, merge or
consolidate with any Person*, or liquidate or dissolve (or suffer any
liquidation or dissolution)**.
* OTHER THAN BORROWER
** UNLESS ALL OF OBLIGOR'S ASSETS ARE TRANSFERRED TO BORROWER
4.3. Change in Nature of Business. Obligor will not at any time make any
material change in the lines of its business as carried on at the date of this
Agreement or enter into any new line of business.
4.4. Sales of Assets. Obligor will not, directly or indirectly, in any fiscal
year, sell, transfer or otherwise dispose of any assets, or grant any option or
other right to purchase or otherwise acquire any assets other than (i) Equipment
with an aggregate value of less than * the proceeds of which shall be paid to
TBCC and applied to the Obligations, and (ii) sales of Inventory in the ordinary
course of business.
* $37,500
4.5. Cancellation of Debt. Obligor will not cancel any claim or debt owed to
it, except in the ordinary course of business.
4.6. Loans to Other Persons. Obligor will not at any time make loans or
advance any credit (except to trade debtors in the ordinary course of business)
to any Person in excess of * in the aggregate at any time for all such loans.
* $37,500
4.7. Liens. Obligor will not, directly or indirectly, at any time create,
incur, assume or suffer to exist any Lien on or with respect to any of the
Collateral, other than: Liens created hereunder and by any other Loan Document;
and Permitted Liens.
4.8. Dividends, Stock Redemptions. Obligor will not, directly or indirectly,
pay any dividends or distributions on, purchase, redeem or retire any shares of
any class of its capital stock or any warrants, options or rights to purchase
any such capital stock, whether now or hereafter outstanding ("Stock"), or make
any payment on account of or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of its Stock, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Obligor, except
for dividends paid solely in stock of the Obligor*.
* AND EXCEPT FOR DIVIDENDS PAID TO BORROWER
4.9. Investments in Other Persons. Obligor will not, directly or indirectly,
at any time make or hold any Investment in any Person (whether in cash,
securities or other property of any kind) other than Investments in Cash
Equivalents.
4.10. Partnerships; Subsidiaries; Joint Ventures; Management Contracts.
Obligor will not at any time create any direct or indirect Subsidiary, enter
into any joint venture or similar arrangement or become a partner in any general
or limited partnership or enter into any management contract (other than an
employment contract for the employment of an officer or employee entered into in
the regular course of Obligor's business) permitting third party management
rights with respect to Obligor's business.
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4.11. Fiscal Year. Obligor will not change its fiscal year.
4.12. Accounting Changes. Obligor will not at any time make or permit any
change in accounting policies or reporting practices, except as required by
GAAP.
4.13. Broker's or Finder's Fees. Obligor will not pay or incur any broker's
or finder's fees in connection with this Agreement or the transactions
contemplated hereby.
4.14. Unusual Terms of Sale. Obligor will not sell goods or products on
extended terms, consignment terms, on a progress billing or xxxx and hold basis,
or on any other unusual terms*.
* , EXCEPT THAT OBLIGOR MAY FROM TIME TO TIME (I) LOAN A CRYOCARE SYSTEM TO A
USER, AND (II) TRANSFER A CRYOCARE SYSTEM TO A USER WHO HAS PURCHASED A
SUFFICIENT NUMBER OF DISPOSABLE UNITES WHICH ARE USED IN CONNECTION WITH SUCH
CRYOCARE SYSTEM
4.15. Amendments of Material Contracts. Obligor will not amend, modify,
cancel or terminate, or permit the amendment, modification, cancellation or
termination of, any Material Contract, if such amendment, modification,
cancellation or termination could * have a Material Adverse Effect.
* REASONABLY BE EXPECTED TO
4.16. Sale and Leaseback Obligations. Obligor will not at any time create,
incur or assume any obligations as lessee for the rental of real or personal
property in connection with any sale and leaseback transaction.
4.17. Acquisition of Stock or Assets. Obligor will not acquire or commit or
agree to acquire all or any stock, securities or assets of any other Person
other than Inventory and Equipment acquired in the ordinary course of business.
5. Events of Default.
5.1. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) Obligor shall fail to pay any Obligation when payable, whether at
stated maturity, by acceleration, or otherwise; or
(b) Obligor shall default in the performance or observance of any
agreement, covenant, condition, provision or term contained in Section 3.7,
3.13, 4 (and its Sections and subsections), or 6.2 of this Agreement, or Obligor
shall fail to perform any non-monetary Obligation which by its nature cannot be
cured; or
(c) Obligor shall default in the performance or observance of any other
agreement, covenant, condition, provision or term of this Agreement (other than
those referred to in Section 5.1(a) above or Section 5.1(b) above) or any other
Loan Document, and such failure continues uncured for a period of * Business
Days after the date it occurs; or
* TEN
(d) Obligor shall dissolve, wind up or otherwise cease to conduct its
business*; or
* UNLESS IN CONNECTION THEREWITH ALL OF OBLIGOR'S ASSETS ARE TRANSFERRED TO
BORROWER
(e) Obligor shall become the subject of (i) an Insolvency Event except as
set forth in clause (e) of the definition of Insolvency Event or (ii) an
Insolvency Event as set forth in clause (e) of the definition of Insolvency
Event that is not dismissed within sixty days; or
(f) any representation or warranty made by or on behalf of Obligor to TBCC,
under this Agreement or otherwise, shall be incorrect or misleading in any
material respect when made or deemed made; or
(g) A change in the ownership or control of more than * of the voting stock
of the Obligor compared to such ownership on the date of this Agreement;
* 30%
(h) any judgment or order for the payment of money shall be rendered
against Obligor and shall not be stayed, vacated, bonded or discharged within
thirty days; or
(i) Obligor shall deny or disaffirm its obligations under any of the Loan
Documents or any Liens granted in connection therewith or shall otherwise
challenge any of its obligations under any of the Loan Documents; or any Liens
granted in any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated by this
Agreement; or
(j) any Loan Document shall for any reason cease to create a valid and
perfected Lien on the Collateral purported to be covered thereby, of first
priority (except for Permitted Liens)*; or
*AND, IF THE FOREGOING IS THROUGH NO FAULT OF THE OBLIGOR, THE SAME SHALL
NOT BE CURED WITHIN FIVE (5) DAYS
(k) the independent public accountants for Obligor shall deliver a
Qualified opinion on any Financial Statement; or
(l) Obligor (i) shall fail to pay any Indebtedness in excess of * owing to
any Person other than TBCC or any interest or premium thereon, when due (whether
at scheduled maturity or by required prepayment, acceleration, demand or
otherwise), or (ii) shall otherwise be in breach or default in any of its
obligations under any agreement with respect to any such Indebtedness, if the
effect of such breach, default or failure to pay is to cause such Indebtedness
to become due or redeemed or permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to declare such
Indebtedness due or require such Indebtedness to be redeemed prior to its stated
maturity**; or
* $75,000
** AND THE HOLDER OR HOLDERS OF SUCH INDEBTEDNESS (OR A TRUSTEE OR AGENT ON
BEHALF OF SUCH HOLDER OR HOLDERS) DO DECLARE SUCH INDEBTEDNESS DUE OR REQUIRE
SUCH INDEBTEDNESS TO BE REDEEMED PRIOR TO ITS STATED MATURITY
(m) the occurrence of any event or condition that, in TBCC's * judgment,
could reasonably be expected to have a Material Adverse Effect.
* REASONABLE GOOD FAITH
5.2. Remedies. Upon the occurrence and during the continuance of an Event of
Default, TBCC shall have all rights and remedies under applicable law and the
Loan Documents, and TBCC may do any or all of the following:
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(a) Declare all Obligations to be immediately due and payable (except with
respect to any Event of Default with respect to Obligor set forth in Section
5.1(e), in which case all Obligations shall automatically become immediately due
and payable) without presentment, demand, protest or any other action or
obligation of TBCC.
(b) Cease making any extensions of credit to Obligor of any kind.
(c) Take possession of all documents, instruments, files and records
(including the copying of any computer records) relating to the Receivables or
other Collateral and use (at the expense of Obligor) such supplies or space of
Obligor at Obligor's places of business necessary to administer and collect the
Receivables and other Collateral;
(d) Accelerate or extend the time of payment, compromise, issue credits, or
bring suit on the Receivables and other Collateral (in the name of Obligor or
TBCC) and otherwise administer and collect the Receivables and other Collateral;
(e) Sell, assign and deliver the Receivables and other Collateral, with or
without advertisement, at public or private sale, for cash, on credit or
otherwise, subject to applicable law; and
(f) Foreclose the security interests created pursuant to the Loan Documents
by any available procedure, take possession of any or all of the Collateral,
with or without judicial process and enter any premises where any Collateral may
be located for the purpose of taking possession of or removing the same.
(g) TBCC may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by Obligor, if permitted under
applicable law. If notice of intended disposition of any Collateral is required
by law, it is agreed that ten days' notice shall constitute reasonable
notification. Obligor will assemble the Collateral and make it available at such
locations as TBCC may specify, whether at the premises of Obligor or elsewhere,
and will make available to TBCC the premises and facilities of Obligor for the
purpose of TBCC's taking possession of or removing the Collateral or putting the
Collateral in salable form.
5.3. Receivables. Upon the occurrence and during the continuance of an Event
of Default, or at any time that TBCC believes in good faith that fraud has
occurred or that Obligor has failed to deliver the proceeds of Receivables or
other Collateral to TBCC as required by this Agreement or any other Loan
Document, TBCC may (i) settle or adjust disputes or claims directly with account
debtors for amounts and upon terms which it considers advisable, and (ii) notify
account debtors on the Receivables and other Collateral that the Receivables and
Collateral have been assigned to TBCC, and that payments in respect thereof
shall be made directly to TBCC. If an Event of Default has occurred and is
continuing or TBCC reasonably believes in good faith that fraud has occurred, or
that Obligor has failed to deliver the proceeds of Receivables or other
Collateral to TBCC as required by this Agreement or any other Loan Document,
Obligor hereby irrevocably authorizes and appoints TBCC, or any Person TBCC may
designate, as its attorney-in-fact, at Obligor's sole cost and expense, to
exercise, all of the following powers, which are coupled with an interest and
are irrevocable, until all of the Obligations have been indefeasibly paid and
satisfied in full in cash: (A) to receive, take, endorse, sign, assign and
deliver, all in the name of TBCC or Obligor, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral; (B) to receive,
open and dispose of all mail addressed to Obligor and to notify postal
authorities to change the address for delivery thereof to such address as TBCC
may designate; and (C) to take or bring, in the name of TBCC or Obligor, all
steps, actions, suits or proceedings deemed by TBCC necessary or desirable to
enforce or effect collection of Receivables and other Collateral or file and
sign Obligor's name on a proof of claim in bankruptcy or similar document
against any obligor of Obligor.
5.4. Right of Setoff. In addition to all rights of offset that TBCC may have
under applicable law, upon the occurrence and during the continuance of any
Event of Default, and whether or not TBCC has made any demand or the Obligations
of Obligor have matured, TBCC shall have the right to appropriate and apply to
the payment of the Obligations of Obligor all deposits and other obligations
then or thereafter owing by TBCC to or for the credit or the account of Obligor.
In the event that TBCC exercises any of its rights under this Section, TBCC
shall provide notice to Obligor of such exercise, provided that the failure to
give such notice shall not affect the validity of the exercise of such rights.
5.5. License for Use of Software and Other Intellectual Property. After the
occurrence and during the continuance of an Event of Default, unless expressly
prohibited by any licensor thereof, TBCC is hereby granted a license to use all
computer software programs, data bases, processes, trademarks, tradenames and
materials used by Obligor in connection with its businesses or in connection
with the Collateral.
5.6. No Marshalling; Deficiencies; Remedies Cumulative. The net cash proceeds
resulting from TBCC's exercise of any of its rights with respect to Collateral,
including any and all Collections (after deducting all of TBCC's reasonable
expenses related thereto), shall be applied by TBCC to such of the Obligations
in such order as TBCC shall elect in its sole and absolute discretion, whether
due or to become due. Obligor shall remain liable to TBCC for any deficiencies
and TBCC shall remit to Obligor or its successor or assign, any surplus
resulting therefrom. The remedies specified in this Agreement are cumulative,
may be exercised in such order and with respect to such Collateral as TBCC may
deem desirable and are not intended to be exclusive, and the full or partial
exercise of any of them shall not preclude the full or partial exercise of any
other available remedy under this Agreement, under any other Loan Document, at
equity or at law.
5.7. Waivers. Obligor hereby waives any bonds, security or sureties required
by any statute, rule or any other law as an incident to any taking of possession
by TBCC of any Collateral. Obligor also waives any damages (direct,
consequential or otherwise) occasioned by the enforcement of TBCC's rights under
this Agreement or any other Loan Document including the taking of possession of
any Collateral or the giving of notice to any account debtor or the collection
of any Receivable or other Collateral (other than damages that are the result of
acts or omissions constituting gross negligence or willful misconduct of TBCC).
These waivers and all other waivers provided for in this Agreement and the other
Loan Documents have been
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negotiated by the parties and Obligor acknowledges that it has been represented
by counsel of its own choice and has consulted such counsel with respect to its
rights hereunder.
5.8. Right to Make Payments. In the event that Obligor shall fail to purchase
or maintain insurance required hereunder, or to pay any tax, assessment,
government charge or levy, except as the same may be otherwise permitted
hereunder, or in the event that any Lien prohibited hereby shall not be paid in
full or discharged, or in the event that Obligor shall fail to perform or comply
with any other covenant, promise or obligation to TBCC hereunder or under any
other Loan Document, TBCC may (but shall not be required to) perform, pay,
satisfy, discharge or bond the same for the account of Obligor, and Obligor
shall immediately reimburse TBCC for all amounts so paid by TBCC.
6. TERM, Assignments and Participations.
6.1. Term. This Agreement shall continue in effect until all of the
Obligations have been paid and performed in full and the Loan Agreement has
terminated.
6.2. Assignments. Obligor shall not assign this Agreement or any right or
obligation hereunder without the prior written consent of TBCC. TBCC may assign
(without the consent of Obligor) to one or more Persons all or a portion of its
rights and obligations under this Agreement and the other Loan Documents.
6.3. Participations. TBCC may sell participations in or to all or a portion
of its rights and obligations under this Agreement; provided, however, that
TBCC's obligations under this Agreement shall remain unchanged.
6.4. Disclosure. TBCC may, in connection with any permitted assignment or
participation or proposed assignment or participation pursuant to this
Agreement, disclose to the assignee or participant or proposed assignee or
participant any information relating to Obligor furnished to TBCC by or on
behalf of Obligor.
7. DEFINITIONS.
7.1. General Definitions. As used herein, the following terms shall have the
meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
(a) "Affiliate" means as to any Person, any other Person who directly or
indirectly controls, is under common control with, is controlled by or is a
director or officer of such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common control
with") means possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of voting
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person who owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of the members of the board of directors or other
governing body of a corporation or twenty percent (20%) or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation, partnership or other Person.
(b) "Agreement" means this Security Agreement, as amended, supplemented or
otherwise modified from time to time.
(c) "Auditors" means a nationally recognized firm of independent public
accountants selected by Obligor and reasonably satisfactory to TBCC.
(d) "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as that title may be amended from time to time, or any successor
statute.
(e) "Borrower" means Endocare, Inc., a Delaware corporation, and its
successors.
(f) "Business Day" means any day other than a Saturday, Sunday or any other
day on which commercial banks in Chicago, Illinois are required or permitted by
law to close.
(g) "Cash Equivalents" means (i) securities issued, guaranteed or insured
by the United States or any of its agencies with maturities of not more than one
year from the date acquired; (ii) certificates of deposit with maturities of not
more than one year from the date acquired, issued by any U.S. federal or state
chartered commercial bank of recognized standing which has capital and
unimpaired surplus in excess of $100,000,000; (iii) investments in money market
funds registered under the Investment Company Act of 1940; and (iv) other
instruments, commercial paper or investments acceptable to TBCC in its sole
discretion.
(h) "Collateral" means Receivables, Inventory, Equipment, and Other
Property, and all additions and accessions thereto and substitutions and
replacements therefor and improvements thereon, and all proceeds (whether cash
or other property) and products thereof, including, without limitation, all
proceeds of insurance covering the same and all tort claims in connection
therewith, and all records, files, computer programs and files, data and
writings relating to the foregoing, and all equipment containing the foregoing.
(i) "Collections" means all cash, funds, checks, notes, instruments, any
other form of remittance tendered by account debtors in respect of payment of
Receivables and any other payments received by Obligor with respect to any other
Collateral.
(j) "Compliance Certificate" means a certificate as to compliance with the
Obligations, on TBCC's standard form (in effect from time to time).
(k) "Contingent Obligation" means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another Person,
except endorsements in the ordinary course of business.
(l) "Default" means any of the events specified in Section 5.1, whether or
not any of the requirements for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
(m) "Equipment" means all machinery, equipment, furniture, fixtures,
conveyors, tools, materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware, including central processing
units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, molds, dies, stamps, vehicles, and
other equipment of every
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kind and nature and wherever situated now or hereafter owned by Obligor or in
which Obligor may have any interest as lessee or otherwise (to the extent of
such interest), together with all additions and accessions thereto, all
replacements and all accessories and parts therefor, all manuals, blueprints,
know-how, warranties and records in connection therewith, all rights against
suppliers, warrantors, manufacturers, sellers or others in connection therewith,
and together with all substitutes for any of the foregoing.
(n) "Event of Default" means the occurrence of any of the events specified
in Section 5.1.
(o) "Financial Statements" means the balance sheets, profit and loss
statements, for the period specified, prepared in accordance with GAAP and
consistent with prior practices.
(p) "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination. Whenever any accounting term is
used herein which is not otherwise defined, it shall be interpreted in
accordance with GAAP.
(q) "Governing Documents" means the articles or certificate of
incorporation and by-laws of Obligor.
(r) "Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
(s) "Indebtedness" means, with respect to any Person, as of the date of
determination any indebtedness, liability or obligation of such Person
(including without limitation obligations under capital leases and contingent
obligations).
(t) "Insolvency Event" means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, (c) such Person
shall make a general assignment for the benefit of its creditors, or consent to
or acquiesce in the appointment of a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business, (d) such Person
shall file a voluntary petition under any bankruptcy, insolvency or similar law
or take any corporate or similar act in furtherance thereof, or (e) such Person,
or a substantial portion of its property, assets or business shall become the
subject of an involuntary proceeding or petition for its dissolution,
reorganization, and such proceeding is not dismissed or stayed within sixty
days, or the appointment of a receiver, trustee, custodian or liquidator, and
such receiver is not dismissed within sixty days.
(u) "Inventory" means all present and future goods intended for sale, lease
or other disposition by Obligor including, without limitation, all raw
materials, work in process, finished goods and other retail inventory, goods in
the possession of outside processors or other third parties, goods consigned to
Obligor to the extent of its interest therein as consignee, materials and
supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of any such goods, and all documents of title or documents
representing the same.
(v) "Investment" in any Person means, as of the date of determination
thereof, any payment or contribution, or commitment to make a payment or
contribution, by any Person including, without limitation, property contributed
or committed to be contributed by any Person, on its account for or in
connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person in
whom such Investment is made or any evidence of indebtedness by reason of a
loan, advance, extension of credit, guaranty or other similar obligation for any
debt, liability or indebtedness of such Person in whom the Investment is made.
(w) "Lien" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
(x) "Loan Agreement" means the Loan and Security Agreement dated
approximately even date herewith between TBCC and the Borrower (and all
extensions, renewals, replacements and modifications thereof).
(y) "Loan Documents" means this Agreement, the Loan Agreement, and all
present and future documents and instruments delivered or to be delivered by
Borrower, Obligor or any of their Affiliates under, in connection with or
relating to this Agreement or the Loan Agreement as each of the same may be
amended, supplemented or otherwise modified from time to time.
(z) "Material Adverse Effect" means (i) a material adverse effect on the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Obligor, (ii) the impairment of Obligor's
ability to perform its obligations under the Loan Documents to which it is a
party or of TBCC to enforce the Obligations or realize upon the Collateral or
(iii) a material adverse effect on the value of the Collateral or the amount
which TBCC would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of the Collateral.
(aa) "Material Contract" means any contract or other arrangement to which
Obligor is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material Adverse
Effect.
(bb) "Obligations" means and includes all debts, liabilities, obligations,
guaranties, covenants and duties owing by Obligor to TBCC of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, which may arise under, out of, or in connection with, that certain
Guaranty dated approximately even date herewith executed by Obligor in favor of
TBCC with respect to the Borrower (and all extensions, renewals, replacements
and modifications thereof), this Agreement,
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any other Loan Document or any other agreement executed in connection herewith
or therewith, whether or not for the payment of money, whether arising by reason
of an extension of credit, opening, guaranteeing or confirming of a letter of
credit, loan, guaranty, indemnification or in any other manner, whether direct
or indirect (including those acquired by assignment, purchase, discount or
otherwise), whether absolute or contingent, due or to become due, now due or
hereafter arising and however acquired. The term includes, without limitation,
all interest (including interest accruing on or after an Insolvency Event,
whether or not an allowed claim), charges, expenses, reasonable attorneys' fees,
and any other sum properly chargeable to Obligor under this Agreement, the other
Loan Documents or any other agreement executed in connection herewith or
therewith.
(cc) "Other Property" means all present and future: instruments, documents,
documents of title, securities, investment securities, bonds, notes, promissory
notes, drafts, acceptances, letters of credit and rights to receive proceeds of
letters of credit, deposit accounts, chattel paper, certificates, insurance
policies, insurance proceeds, leases, computer tapes, causes of action,
judgments, claims against third parties, leasehold rights in any personal
property, books, ledgers, files and records, general intangibles (including
without limitation, all contract rights, tax refunds, rights to receive tax
refunds, patents, patent applications, copyrights (registered and unregistered),
royalties, licenses, permits, franchise rights, authorizations, customer lists,
rights of indemnification, contribution and subrogation, computer programs,
discs and software, trade secrets, computer service contracts, trademarks, trade
names, service marks and names, logos, goodwill, deposits, choses in action,
designs, blueprints, plans, know-how, telephone numbers and rights thereto,
credits, reserves, and all forms of obligations whatsoever now or hereafter
owing to Obligor), all property at any time in the possession or under the
control of TBCC, and all security given by Obligor to TBCC pursuant to any other
Loan Document or agreement.
(dd) "Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and be continuing: (i) Liens for taxes, assessments and other
governmental charges or levies or the claims or demands of landlords, carriers,
warehousemen, mechanics, laborers, materialmen and other like Persons arising by
operation of law in the ordinary course of business for sums which are not yet
due and payable, (ii) deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance or other social security benefits or
obligations, public or statutory obligations, surety or appeal bonds, bid or
performance bonds, or other obligations of a like nature incurred in the
ordinary course of business (but nothing in this clause (ii) shall permit the
creation of Liens on Receivables or Inventory or Other Property), (iii) zoning
restrictions, easements, encroachments, licenses, restrictions or covenants on
the use of the Property which do not materially impair either the use of the
Property in the operation of the business of Obligor or the value of the
Property, (iv) rights of general application reserved to or vested in any
municipality or other governmental, statutory or public authority to control or
regulate property, or to use property in a manner which does not materially
impair the use of the property for the purposes for which it is held by Obligor,
(v) state and municipal Liens for personal property taxes which are not yet due
and payable, and (vi) Purchase Money Liens.
(ee) "Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization, joint
stock company, association, corporation, institution, entity, party or
government (including any division, agency or department thereof) or any other
legal entity, whether acting in an individual, fiduciary or other capacity, and,
as applicable, the successors, heirs and assigns of each.
(ff) "Plan" means any employee benefit plan, program or arrangement
maintained or contributed to by Obligor or with respect to which it may incur
liability.
(gg) "Purchase Money Lien" means a Lien on any item of Equipment created
substantially simultaneously with the acquisition of such Equipment for the
purpose of financing such acquisition, provided that such Lien shall attach only
to the Equipment acquired.
(hh) "Qualification" or "Qualified" means, with respect to any report of
independent public accountants covering Financial Statements, a material
qualification to such report (i) resulting from a limitation on the scope of
examination of such Financial Statements or the underlying data, (ii) as to the
capability of Obligor to continue operations as a going concern or (iii) which
could be eliminated by changes in Financial Statements or notes thereto covered
by such report (such as by the creation of or increase in a reserve or a
decrease in the carrying value of assets) and which if so eliminated by the
making of any such change and after giving effect thereto would result in a
Default or an Event of Default.
(ii) "Receivables" means all present and future accounts and accounts
receivable, together with all security therefor and guaranties thereof and all
rights and remedies relating thereto, including any right of stoppage in
transit.
(jj) "Requirement of Law" means (a) the Governing Documents, (b) any law,
treaty, rule, regulation, order or determination of an arbitrator, court or
other Governmental Authority or (c) any franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right or
approval binding on Obligor or any of its property.
(kk) "Schedule" means the Schedule to this Agreement being signed
concurrently by Obligor and TBCC, as amended from time to time.
(ll) "Solvent" means when used with respect to any Person that as of the
date as to which such Person's solvency is to be measured: (a) the fair salable
value of its assets is in excess of the total amount of its liabilities
(including contingent liabilities as valued in accordance with applicable law*)
as they become absolute and matured; (b) it has sufficient capital to conduct
its business; and (c) it is able to meet its debts as they mature.
* , PROVIDED THAT, IN DETERMINING WHETHER OR NOT OBLIGOR IS SOLVENT, ANY
LIABILITIES OF OBLIGOR TO BORROWER SHALL BE EXCLUDED
(mm) "Subsidiary" means, as to any Person, a corporation or other entity in
which that Person directly or indirectly owns or controls shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or appoint other managers of such corporation or other
entity.
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7.2. Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the Financial Statements delivered to TBCC on or before the date of this
Agreement. All accounting determinations for purposes of determining compliance
with this Agreement shall be made in accordance with GAAP as in effect on the
date of this Agreement and applied on a basis consistent in all material
respects with the audited Financial Statements delivered to TBCC on or before
the date of this Agreement. The Financial Statements required to be delivered
hereunder, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used in preparing the audited
Financial Statements delivered to TBCC on or before the date of this Agreement,
the Compliance Certificates required to be delivered pursuant to this Agreement
shall include calculations setting forth the adjustments necessary to
demonstrate how Obligor is in compliance with the Financial Covenants (if any)
based upon GAAP as in effect on the date of this Agreement.
7.3. Other Terms; Headings; Construction. Capitalized terms used in this
Agreement, which are not defined, shall have the meanings set forth in the Loan
Agreement. Unless otherwise defined herein, terms used herein that are defined
in the Uniform Commercial Code, from time to time in effect in the State of
Illinois, shall have the meanings set forth therein. Each of the words "hereof,"
"herein," and "hereunder" refer to this Agreement as a whole. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". An Event of Default shall "continue" or be "continuing" unless and
until such Event of Default has been waived or cured within the grace period
specified therefor under Section 5.1. References to Articles, Sections, Annexes,
Schedules, and Exhibits are internal references to this Agreement, and to its
attachments, unless otherwise specified. The headings and any Table of Contents
are for convenience only and shall not affect the meaning or construction of any
provision of this Agreement. This Agreement has been fully reviewed and
negotiated between the parties and no uncertainty or ambiguity in any term or
provision of this Agreement shall be construed strictly against TBCC or Obligor
under any rule of construction or otherwise.
8. GENERAL PROVISIONS.
8.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
8.2. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE OBLIGOR AND TBCC,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO
WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT TBCC SHALL HAVE
THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
OBLIGOR OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED BY TBCC IN GOOD
FAITH TO ENABLE TBCC TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TBCC. THE OBLIGOR AGREES THAT IT WILL NOT ASSERT
ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT
BY TBCC. THE OBLIGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
8.3. SERVICE OF PROCESS. THE OBLIGOR HEREBY IRREVOCABLY DESIGNATES * AS THE
DESIGNEE AND AGENT OF THE OBLIGOR TO RECEIVE, FOR AND ON BEHALF OF THE OBLIGOR,
SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO THE OBLIGOR, BUT THE FAILURE OF THE OBLIGOR TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
*XXXXXXXX-XXXX CORPORATION SYSTEM, INC., 0000 XXXXXX XXXX, XXXXXXXXXX,
XXXXXXXX 00000
8.4. LIMITATION OF LIABILITY. TBCC SHALL HAVE NO LIABILITY TO THE OBLIGOR
(WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE
OBLIGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE
TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON TBCC THAT THE
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF TBCC. THE OBLIGOR HEREBY WAIVES ALL FUTURE CLAIMS AGAINST
TBCC FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
8.5. Delays; Partial Exercise of Remedies. No delay or omission of TBCC to
exercise any right or remedy hereunder shall impair any such right or operate as
a waiver thereof. No single or partial exercise by TBCC of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.
8.6. Notices. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, by overnight delivery service, with all charges
prepaid, or by telecopier followed by a hard copy sent by
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TBCC SECURITY AGREEMENT
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regular mail, to the parties at their addresses set forth in the heading to this
Agreement. All such notices and correspondence shall be deemed given (i) if sent
by certified or registered mail, three Business Days after being postmarked,
(ii) if sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by telecopier
transmission, when receipt of such transmission is acknowledged. Obligor's and
TBCC's telecopier numbers for purpose of notice hereunder are set forth in the
Schedule; each party's number may be changed by written notice to the other
party.
8.7. Indemnification; Reimbursement of Expenses of Collection. Obligor hereby
indemnifies and agrees, whether or not any of the transactions contemplated by
this Agreement or the other Loan Documents are consummated, to defend and hold
harmless (on an after-tax basis) TBCC, its successors and assigns and their
respective directors, officers, agents, employees, advisors, shareholders,
attorneys and Affiliates (each, an "Indemnified Party") from and against any and
all losses, claims, damages, liabilities, deficiencies, obligations, fines,
penalties, actions (whether threatened or existing), judgments, suits (whether
threatened or existing) or expenses (including, without limitation, reasonable
fees and disbursements of counsel, experts, consultants and other professionals)
incurred by any of them (collectively, "Claims") (except, in the case of each
Indemnified Party, to the extent that any Claim is determined in a final and
non-appealable judgment by a court of competent jurisdiction to have directly
resulted from such Indemnified Party's gross negligence or willful misconduct)
arising out of or by reason of (i) any litigation, investigation, claim or
proceeding which arises out of or is related to (A) Obligor, or this Agreement,
any other Loan Document or the transactions contemplated hereby or thereby, (B)
any actual or proposed use by Borrower of the proceeds of the Loans, or (C)
TBCC's entering into this Agreement or any other Loan Document or any other
agreements and documents relating hereto, including, without limitation, amounts
paid in settlement, court costs and the reasonable fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding, (ii) any remedial or other action taken by Obligor in connection
with compliance by Obligor, or any of its properties, with any federal, state or
local environmental laws, rules or regulations, and (iii) any pending,
threatened or actual action, claim, proceeding or suit by any shareholder or
director of Obligor or any actual or purported violation of Obligor's charter,
by-laws or any other agreement or instrument to which Obligor is a party or by
which any of its properties is bound. In addition and without limiting the
generality of the foregoing, Obligor shall, upon demand, pay to TBCC all
reasonable costs and expenses incurred by TBCC (including the reasonable fees
and disbursements of counsel and other professionals) in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents, and pay to TBCC all reasonable costs and expenses (including
the reasonable fees and disbursements of counsel and other professionals) paid
or incurred by TBCC in order to enforce or defend any of its rights under or in
respect of this Agreement, any other Loan Document or any other document or
instrument now or hereafter executed and delivered in connection herewith,
collect the Obligations or otherwise administer this Agreement, foreclose or
otherwise realize upon the Collateral or any part thereof, prosecute actions
against, or defend actions by, account debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of Obligor's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce TBCC's security interest
in, the Collateral; and otherwise represent TBCC in any litigation relating to
Obligor. If either TBCC or Obligor files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys' fees, including
(but not limited to) reasonable attorneys' fees and costs incurred in the
enforcement of, execution upon or defense of any order, decree, award or
judgment. If and to the extent that the Obligations of Obligor hereunder are
unenforceable for any reason, Obligor hereby agrees to make the maximum
contribution to the payment and satisfaction of the Obligations which is
permissible under applicable law. Obligor's obligations under this Section shall
survive any termination of this Agreement and the other Loan Documents and the
payment in full of the Obligations, and are in addition to, and not in
substitution of, any of the other Obligations.
8.8. Amendments and Waivers. Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and signed by Obligor and TBCC and then any such amendment or
waiver shall be effective only to the extent set forth therein. The failure of
TBCC at any time or times to require Obligor to strictly comply with any of the
provisions of this Agreement or any other present or future agreement between
Obligor and TBCC shall not waive or diminish any right of TBCC later to demand
and receive strict compliance therewith. Any waiver of any default shall not
waive or affect any other default, whether prior or subsequent, and whether or
not similar. None of the provisions of this Agreement or any other agreement now
or in the future executed by Obligor and delivered to TBCC shall be deemed to
have been waived by any act or knowledge of TBCC or its agents or employees, but
only by a specific written waiver signed by an authorized officer of TBCC and
delivered to Obligor.
8.9. Counterparts; Telecopied Signatures. This Agreement and any waiver or
amendment hereto may be executed in counterparts and by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but both of which shall together constitute one and the same
instrument. This Agreement and each of the other Loan Documents and any notices
given in connection herewith or therewith may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original manual counterpart.
8.10. Severability. In case any provision in or obligation under this
Agreement or any other Loan Document shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
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TBCC SCHEDULE TO LOAN AND SECURITY AGREEMENT
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8.11. Joint and Several Liability. If Obligor consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Obligor shall not constitute a compromise
with, or a release of, any other Obligor.
8.12. Entire Agreement; Successors and Assigns. This Agreement and the other
Loan Documents constitute the entire agreement between the parties, supersede
any prior written and verbal agreements between them, and shall bind and benefit
the parties and their respective successors and permitted assigns. There are no
oral understandings, oral representations or oral agreements between the parties
which are not set forth in this Agreement or in other written agreements signed
by the parties in connection herewith.
8.13. MUTUAL WAIVER OF JURY TRIAL. TBCC AND OBLIGOR EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN TBCC AND OBLIGOR; OR (III) ANY CONDUCT,
ACTS OR OMISSIONS OF TBCC OR OBLIGOR OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR
OBLIGOR; IN EACH OF THE FOREGOING
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
OBLIGOR:
ADVANCED MEDICAL PROCEDURES, INC.
By /s/ Xxxxxxx Xxxxxx
---------------------------------
Title Chief Financial Officer
---------------------------------
TBCC:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By /s/ Xxx Xxxxxxxx
---------------------------------
Title
---------------------------------
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SCHEDULE TO
SECURITY AGREEMENT
Prior Names of Obligor (Section 2.11): Advanced Medical Procedures, LLC
Prior Trade Names of Obligor (Section 2.11): Advanced Medical Procedures, LLC
Existing Trade Names of Obligor (Section 2.11): Advanced Medical Procedures, Inc.
Other Places of Business and
Locations of Collateral (Section 2.2): 7 Studebaker, Xxxxxx, XX 00000
Facsimile Numbers:
Obligor: (000) 000-0000
TBCC: (000) 000-0000
