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EXHIBIT 10.35
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is dated as of the 25th day of
September, 1995, by and between HORIZON MEDICAL PRODUCTS, INC., a Georgia
corporation ("Borrower"), and SIRROM CAPITAL CORPORATION, a Tennessee
corporation ("Lender").
WITNESSETH:
WHEREAS, Lender is making a loan (the "Loan") in the amount of $1,500,000
to Borrower, pursuant to that certain Loan Agreement of even date herewith by
and between Borrower and Lender (the "Loan Agreement"); and
WHEREAS, in connection with the making of the Loan, Lender desires to
obtain from Borrower and Borrower desires to grant to Lender a security interest
in certain collateral more particularly described below.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. Borrower hereby grants to Lender a security
interest in the following described property and any and all proceeds and
products thereof and accessions thereto, whether now or hereafter acquired
(collectively the "Collateral"):
(a) Equipment. All equipment of Borrower of any kind and description,
whether now owned or hereafter acquired and wherever located, together with
all parts, accessories and attachments and all replacements thereof and
additions thereto;
(b) Inventory, Accounts, Contract Rights, Chattel Paper and General
Intangibles. All of Borrower's inventory and any agreements for lease of
same and rentals therefrom, and all of Borrower's accounts, accounts
receivable, contract rights, chattel paper and general intangibles and the
proceeds therefrom, whether now in existence or owned or hereafter arising
or acquired, entered into or created, and wherever located; and whether
held for lease or sale, or furnished or to be furnished under contracts of
service;
(c) Trademarks, Etc. All trademarks and service marks now held or
hereafter acquired by Borrower, both those that are registered with the
United States Patent and Trademark Office and any unregistered marks used
by Borrower in the United States, and trade dress, including logos and
designs, in connection with which any such marks
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are used, together with all registrations regarding such marks and the
rights to renewals thereof, and the goodwill of the business of Borrower
symbolized by such marks;
(d) Copyrights. All copyrights now held or hereafter acquired by
Borrower and any applications for U.S. copyrights hereafter made by
Borrower; and
(e) Proprietary Information, Computer Data, Etc. All proprietary
information and trade secrets of Borrower, whether now or hereafter
acquired, with respect to Borrower's business and all of Borrower's
computer programs and the information contained therein and all
intellectual property rights with respect thereto.
2. Secured Indebtedness. The obligations secured hereby shall include (a)
loans to be made concurrently or in connection with this Agreement or the Loan
Agreement as evidenced by one or more promissory notes payable to the order of
Lender that shall be due and payable as set forth in such promissory notes, and
any renewals or extensions thereof, (b) the full and prompt payment and
performance of any and all other indebtednesses and other obligations of
Borrower to Lender, direct or contingent (including but not limited to
obligations incurred as indorser, guarantor or surety), however evidenced or
denominated, and however and whenever incurred, including but not limited to
indebtednesses incurred pursuant to any present or future commitment of Lender
to Borrower and (c) all future advances made by Lender for taxes, levies,
insurance and preservation of the Collateral and all attorney's fees, court
costs and expenses of whatever kind incident to the collection of any of said
indebtedness or other obligations and the enforcement and protection of the
security interest created hereby.
3. Representations, Warranties and Agreements of Borrower. Borrower
represents, warrants and agrees as follows:
(a) Borrower will promptly notify Lender, in writing, of any new place
or places of business if the Collateral is used in business, or of any
change in Borrower's residence if the Collateral is not used in business,
and regardless of use, of any change in the location of the Collateral or
any records pertaining thereto.
(b) Except as set forth on Schedule 3(b) hereto, Borrower is the owner
of the Collateral free and clear of any liens and security interests.
Borrower will defend the Collateral against the claims and demands of all
persons.
(c) Borrower will pay to Lender all amounts secured hereby as and when
the same shall be due and payable, whether at maturity, by acceleration or
otherwise, and will promptly perform all terms of said indebtedness and
this or any other security or loan agreement between Borrower and Lender,
and will promptly discharge all said liabilities.
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(d) Borrower will at all times keep the Collateral insured against all
insurable hazards in amounts equal to the full cash value of the
Collateral. Such insurance shall be in such companies as may be acceptable
to Lender, with provisions satisfactory to Lender for payment of all losses
thereunder to Lender as its interests may appear. If required by Lender,
Borrower shall deposit the policies with Lender. Any money received by
Lender under said policies may be applied to the payment of any
indebtedness secured hereby, whether or not due and payable, or at Lender's
option may be delivered by Lender to Borrower for the purpose of repairing
or restoring the Collateral. Borrower assigns to Lender all right to
receive proceeds of insurance not exceeding the amounts secured hereby,
directs any insurer to pay all proceeds directly to Lender, and appoints
Lender Borrower's attorney in fact to endorse any draft or check made
payable to Borrower in order to collect the benefits of such insurance. If
Borrower fails to keep the Collateral insured as required by Lender, Lender
shall have the right to obtain such insurance at Borrower's expense and add
the cost thereof to the other amounts secured hereby.
(e) Borrower will pay all costs of filing of financing, continuation
and termination statements with respect to the security interests created
hereby, and Lender is authorized to do all things that it deems necessary
to perfect and continue perfection of the security interests created hereby
and to protect the Collateral.
(f) The address set forth after Borrower's signature on this Agreement
is Borrower's principal place of business and the location of all tangible
Collateral and the place where the records concerning all intangible
Collateral are kept and/or maintained, except for consignment inventory of
Borrower that was placed with the hospital customers of Borrower described
on Schedule 3(f) hereto.
4. Default. Borrower shall be in default upon failure to observe or
perform any of Borrower's agreements herein contained, or upon the occurrence of
a default or Event of Default under the Loan Agreement or any other Loan
Document (as defined in the Loan Agreement) that has not been cured during the
applicable grace period, or if any warranty or statement by Borrower herein or
furnished in connection herewith is false or misleading, or if Lender in good
faith believes its prospect of payment and performance is impaired.
5. Remedies Upon Default. Upon default hereunder, all sums secured hereby
shall immediately become due and payable at Lender's option without notice to
Borrower, and Lender may proceed to enforce payment of same and to exercise any
and all rights and remedies provided by the Uniform Commercial Code (Tennessee)
or other applicable law, as well as all other rights and remedies possessed by
Lender, all of which shall be cumulative. Whenever Borrower is in default
hereunder, and upon demand by Lender, Borrower shall assemble the Collateral and
make it available to Lender at a place reasonably convenient to Lender and
Borrower. Any notice of sale, lease or other intended disposition of the
Collateral by Lender sent to Borrower at the address hereinafter set forth, or
at such other address of Borrower as
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may be shown on Lender's records, at least five (5) days prior to such action,
shall constitute reasonable notice to Borrower.
Lender may waive any default before or after the same has been declared
without impairing its right to declare a subsequent default hereunder, this
right being a continuing one.
6. Severability. If any provision of this Agreement is held invalid, such
invalidity shall not affect the validity or enforceability of the remaining
provisions of this Agreement.
7. Binding Effect. This Agreement shall inure to the benefit of Lender's
successors and assigns and shall bind Borrower's heirs, representatives,
successors and assigns. If Borrower is composed of more than one person, firm
and/or entity, their obligations hereunder shall be joint and several.
8. Financial Reporting. Borrower has no undisclosed or contingent
liabilities that are not reflected in the financial statements on file with
Lender at the execution of this Agreement. Lender shall have the right, at any
time, by its own auditors, accountants or other agents, to examine or audit any
of the books and records of Borrower, or the Collateral, all of which will be
made available upon request. Such accountants or other representatives of Lender
will be permitted to make any verification of the existence of the Collateral or
accuracy of the records that Lender deems necessary or proper. Any reasonable
expenses incurred by Lender in making such examination, inspection, verification
or audit shall be paid by Lender.
9. Termination Statement. Borrower agrees that, notwithstanding the
payment in full of all indebtedness secured hereby and whether or not there is
any outstanding obligation of Lender to make future advances, Lender shall not
be required to send Borrower a termination statement with respect to any
financing statement filed to perfect Lender's security interest(s) in any of the
Collateral, unless and until Borrower shall have made written demand therefor.
Upon receipt of proper written demand, Lender may at its option, in lieu of
sending a termination statement to Borrower, cause said termination statement to
be filed with the appropriate filing officer(s).
10. Protection of Collateral. Except as provided in Section 7.17 of the
Loan Agreement, Borrower will not permit any liens or security interests other
than those created by this Agreement to attach to any of the Collateral, nor
permit any of the Collateral to be levied upon under any legal process, nor
permit anything to be done that may impair the security intended to be afforded
by this Agreement, nor permit any tangible Collateral to become attached to or
commingled with other goods without the prior written consent of Lender.
11. Special Agreements With Respect to Certain Tangible Collateral.
Borrower additionally agrees and warrants as follows:
(a) Borrower will not permit any of the Collateral to be removed from
the location specified herein, except for temporary periods in the normal
and customary use
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thereof and consignment inventory placed with Borrower's customers in the
ordinary course of business, without the prior written consent of Lender,
and will permit Lender to inspect the Collateral at any time.
(b) If any of the Collateral is equipment or goods of a type normally
used in more than one state (whether or not actually so used), Borrower
will contemporaneously herewith furnish Lender a list of the states wherein
such equipment or goods are or will be used, and hereafter will notify
Lender in writing (i) of any other states in which such equipment or goods
are so used, and (ii) of any change in the location of Borrower's chief
place of business.
(c) Except in the ordinary course of business, Borrower will not sell,
exchange, lease or otherwise dispose of any of the Collateral or any
interest therein without the prior written consent of Lender.
(d) Borrower will keep the Collateral in good condition and repair and
will pay and discharge all taxes, levies and other impositions levied
thereon as well as the cost of repairs to or maintenance of same, and will
not permit anything to be done that may impair the value of any of the
Collateral. If Borrower fails to pay such sums, Lender may do so for
Borrower's account and add the amount thereof to the other amounts secured
hereby.
(e) Until default in any of the terms hereof, or the terms of any
indebtedness secured hereby, Borrower shall be entitled to possession of
the Collateral and to use the same in any lawful manner, provided that such
use does not cause excessive wear and tear to the Collateral, cause it to
decline in value at an excessive rate, or violate the terms of any policy
of insurance thereon.
(f) Borrower will not allow the Collateral to be attached to real
estate in such manner as to become a fixture or a part of any real estate.
12. Special Agreements With Respect to Intangible and Certain Tangible
Collateral. Borrower additionally warrants and agrees as follows:
(a) So long as Borrower is not in default hereunder, Borrower shall
have the right to process and sell Borrower's inventory in the regular
course of business. Lender's security interest hereunder shall attach to
all proceeds of all sales or other dispositions of the Collateral. If at
any time any such proceeds shall be represented by any instruments, chattel
paper or documents of title, then such instruments, chattel paper or
documents of title shall be promptly delivered to Lender and subject to the
security interest granted hereby. If at any time any of Borrower's
inventory is represented by any document of title, such document of title
will be delivered promptly to Lender and subject to the security interest
granted hereby.
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(b) By the execution of this Agreement, Lender shall be obligated to do
or perform any of the acts or things provided in any contracts covered
hereby that are to be done or performed by Borrower, but if there is a
default by Borrower in the payment of any amount due in respect of any
indebtedness secured hereby, then Lender may, at its election, perform some
or all of the obligations provided in said contracts to be performed by
Borrower, and if Lender incurs any liability or expenses by reason thereof,
the same shall be payable by Borrower upon demand and shall also be secured
by this Agreement.
(c) At any time after Borrower is in default hereunder or under the
Loan Agreement, Lender shall have the right to notify the account debtors
obligated on any or all of Borrower's accounts receivable to make payment
thereof directly to Lender, and to take control of all proceeds of any such
accounts receivable. Until such time as Lender elects to exercise such
right by mailing to Borrower written notice thereof, Borrower is
authorized, as agent of the Lender, to collect and enforce said accounts
receivable.
13. Power of Attorney. Borrower hereby constitutes the Lender or its
designee, as Borrower's attorney-in-fact with power, upon the occurrence and
during the continuance of an Event of Default, to endorse Borrower name upon any
notes, acceptances, checks, drafts, money orders, or other evidences of payment
or Collateral that may come into either its or the Lender's possession; to sign
the name of Borrower on any invoice or xxxx of lading relating to any of the
accounts receivable, drafts against customers, assignments and verifications of
accounts receivable and notices to customers; to send verifications of accounts
receivable; to notify the Post Office authorities to change the address for
delivery of mail addressed to Borrower to such address as the Lender may
designate; to execute any of the documents referred to in Section 3(e) hereof in
order to perfect and/or maintain the security interests and liens granted herein
by Borrower to the Lender; to do all other acts and things necessary to carry
out this Security Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of commission or omission (other than acts of gross negligence or willful
misconduct), nor for any error of judgment or mistake of fact or law; this power
being coupled with an interest is irrevocable until all of the obligations
secured hereby are paid in full and any and all promissory notes executed in
connection therewith are terminated and satisfied.
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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement, or
have caused this Agreement to be executed as of the date first above written.
BORROWER:
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HORIZON MEDICAL PRODUCTS, INC.
By: /s/
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Title: CEO
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Addresses: Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Five North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, XX
Xxxxxxx, XX 00000
LENDER:
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SIRROM CAPITAL CORPORATION
By: /s/
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Title:
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