SECURITY AGREEMENT BY AND BETWEEN AULT GLAZER BODNAR & COMPANY, INC. AND PATIENT SAFETY TECHNOLOGIES, INC.
BY
AND BETWEEN XXXX XXXXXX XXXXXX & COMPANY, INC.
XXXX
XXXXXX XXXXXX & COMPANY, INC. (“Secured Party”) and Patient Safety
Technologies, Inc., a Delaware corporation (“Debtor”) agree as follows on
February 2, 2006:
1.
GRANT
OF SECURITY INTEREST.
1.1
The
Debtor, jointly and severally, hereby grants to the Secured Party a security
interest in personal property and fixtures, inventory, products and proceeds
(including proceeds of proceeds, the “Collateral”) of Debtor, as security
for:
1.1.1
The
satisfaction and the prompt and full performance of all of Debtor’s obligations
under that certain Secured Promissory Note (the “Note”) dated February 2, 2006
in the principal amount of sixty five thousand dollars ($65,000.00) plus
interest at the rate of seven percent (7% ) per annum, as the Note may be
amended, modified, or extended from time to time (including, without limitation,
the obligation to make payments of principal and interest thereon);
and
1.1.2
The
full, faithful, true and exact performance and observance of all of the
obligations, covenants and duties of Debtor under this Security Agreement,
as
the same may be amended, modified, or extended from time to time.
2. DEFAULT.
Any of
the following events shall constitute an event of default
hereunder:
2.1
The
failure by Debtor to make full and timely payment when due of any sum as
required to be paid to Secured Party under the Note after any applicable notice
of non-payment provided for in the Note has been given, and any period within
which to cure the non-payment has elapsed, if applicable. A true and correct
copy of the Note is attached hereto as Exhibit “A” and incorporated herein by
this reference.
2.2
The
failure by Debtor to fully and timely perform any covenant, agreement,
obligation or duty imposed on Debtor by this Security Agreement or any other
agreement by and between Debtor and Secured Party now existing or hereinafter
made.
2.3
The
filing by Debtor of any petition, or commencement by Debtor of any proceeding,
under the Bankruptcy Act or any state insolvency law.
2.4
The
making by Debtor of any general assignment for the benefit of
creditors.
2.5
The
filing of any petition, or commencement of any proceeding, under the Bankruptcy
Act or any state insolvency law, against Debtor, or the appointment of any
receiver or trustee, which petition, proceeding or appointment is not fully
and
completely discharged, dismissed or vacated within sixty (60) days.
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2.6
Any
warranties made by Debtor are untrue in any material respect, or any schedule,
statement, report, notice, or writing furnished by Debtor to the Secured Party
are untrue in any material respect on the date as of which the facts set forth
are stated or certified.
3. INSPECTION
OF RECORDS.
Secured
Party shall have the right without
notice
to
inspect all financial books, records and reports of Debtor at Debtor’s premises
or wherever the same may be maintained during normal business
hours.
4.
REMEDIES
UPON DEFAULT.
4.1
Upon
the occurrence of an event of default, in addition to any and all other remedies
at law or in equity available to Secured Party, Debtors hereby authorize and
empower Secured Party, at Secured Party’s option and without notice to Debtor,
except as specifically provided herein (and, to the extent necessary, hereby
irrevocably appoint Secured Party as Debtor’s attorney-in-fact for such
purposes):
4.1.1
To
require Debtor to assemble any and all of the Collateral and make the same
available to Secured Party at the premises wherein the same is located, or
any
other place designated by Secured Party; Secured Party may enter upon any
premises where any of the Collateral is located and may take possession of
the
same without judicial process and without the need to post any bond or security
as an incident thereto; and
4.1.2
To
sell, assign, transfer and deliver the whole or any part of the Collateral
at
public or private sale, for cash, upon credit, or for future delivery, in bulk
or item by item, at such prices and upon such terms as are commercially
reasonable, given the nature of the Collateral and the market therefor, with
or
without warranties, without the necessity of the Collateral being present at
any
such sale or in view of the prospective purchasers thereof, and without any
presentment, demand for performance, protest, notice of protest, or notice
of
dishonor except as set forth herein, any other such advertisement, presentment,
demand or notice being expressly waived by Debtors to the extent permitted
by
law. At any public sale or sales of the Collateral, Secured Party or Secured
Party’s assigns may bid for and purchase all or any part of the Collateral
offered for sale and upon compliance with the terms of such sale, may hold,
exploit and dispose of such Collateral discharged from all claims of Debtor,
except to the extent that Debtor has rights in the proceeds of such sale or
sales, and free from any right or redemption, all of which are hereby expressly
waived and released, and may in paying the purchase price thereof, in lieu
of
cash assignment at the face amount thereof, together with any interest accrued
thereon, all or any part of unpaid principal or interest or both, payable under
the Note. Secured Party may also purchase all or any part of the Collateral
at
any private sale thereof to the extent that such Collateral is customarily
sold
in a recognized market or is the subject of a widely or regularly distributed
standard price quotation. Upon conclusion of any such public or private sale,
Secured Party may execute and deliver a xxxx of sale to the assets so sold,
in
the name of Debtor. Secured Party may use Debtor’s premises for the purpose of
conducting of any such sale. Secured Party shall give Debtor seven (7) days’
notice, in writing, of the time and place thereof, and in the case of a public
sale, the date thereof and the name of the purchaser. Notice shall be deemed
given when deposited in the United States mail, postage prepaid, certified
or
registered, and addressed to Debtor at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000. Secured Party shall only be required to publish an
advertisement of a public sale, which advertisement may be published in a
newspaper of general circulation no later than seven (7) days prior to the
date
of sale, and an advertisement so published shall be deemed commercially
reasonable if it merely gives the place, time, and date of sale, merely
identifies the Collateral by classification without describing quantity or
quality; provided, however that such advertisement may, at Secured Party’s
option, contain additional information. Debtor acknowledges that Secured Party
may accept any offer received, provided it is commercially reasonable, that
Secured Party, at Secured Party’s option, need not approach more than one
possible purchaser, and that Secured Party shall, to the fullest extent
permitted by law, be relieved from all liability or claim for inadequacy of
price if the manner and terms of sale comply with the terms of this Security
Agreement.
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4.2
In
the event of any such sale by Secured Party of all or any of said Collateral
on
credit, or for future delivery, such property so sold may be retained by Secured
Party until the selling price is paid by the purchaser. Secured Party shall
incur no liability in case of the failure of the purchaser to take up and pay
for the property so sold. In case of any such failure, said Collateral may
be
again, and from time to time, sold.
4.3
In
the event of any such sale or disposition, the proceeds thereof shall be applied
first to the payment of the expenses of the sale, commissions, actual attorneys’
fees, and all other charges paid or incurred by Secured Party in taking,
holding, selling , advertising, or otherwise preparing such Collateral for
sale
or otherwise in connection with maintaining the security of such Collateral,
including any taxes or other charges imposed by law upon the Collateral and/or
the ownership, holding or transfer thereof; secondly, to pay, satisfy and
discharge all indebtedness of Debtor to Secured Party secured hereby then due
and payable pursuant to the Note; thirdly, to the extent that Debtor may still
have monetary obligations to Secured Party not yet due and payable, Secured
Party may retain any surplus as collateral for the payment of such sums when
due; and fourthly, if all of the secured obligations are then discharged and
satisfied, to pay the surplus, if any, to Debtor. Secured Party shall look
only
to the assets of the business then operated and/or owned by Debtor to satisfy
any and all claims, defaults or breaches regarding the Note and shall not in
any
event, look to any other assets of Debtor to satisfy same.
4.4
Secured Party shall not be liable or responsible for safeguarding the
Collateral, or any portion thereof, or maintaining the condition thereof, or
for
any loss or damage thereto and diminution in value of the Collateral either
through loss or non-collection. Secured Party shall not be liable or responsible
for any act or default of any carrier or warehouseman or of any other person,
other than that occasioned by the gross negligence and willful misconduct of
Secured Party.
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5.
REPRESENTATIONS
AND WARRANTIES.
Debtor
represents and warrants that
this
Security Agreement has been duly and validly authorized, executed and delivered
by Debtor and constitutes a valid and binding agreement, enforceable in
accordance with its terms, and the execution and delivery of this Security
Agreement do not violate, or constitute a default (with or without the
giving of
notice, the passage of time, or both) under any order, judgment, agreement,
contract, or instrument to which Debtor is a party or by which Debtor is
affected or may be bound. Debtor represents that Debtor will at all times
maintain the Collateral in good state of repair and condition consistent
with
good business practice, including replacement of damaged, destroyed, or
obsolete
parts thereof, will pay any and all taxes thereon or applicable thereto
prior to
delinquency, and shall maintain at all times insurance thereon against
risk of
fire and other such risks as are covered by “extended coverage”, theft, burglary
and vandalism. Such policy or policies shall provide that any loss thereunder
and proceeds payable thereunder shall be payable to Secured Party as Secured
Party’s interest may appear.
6.
INDEMNITY.
In the
case of any adverse claim with respect to the Collateral or any
portion thereof arising out of any act done, or permitted or acquiesced
in by
Debtor, Debtor indemnifies and agrees to hold Secured Party harmless from
and
against any and all claims, losses, liabilities, damages, expenses, costs
and
actual attorneys’ fees incurred by Secured Party in or by virtue of exercising
any right, power or remedy of Secured Party hereunder or defending, protecting,
enforcing or prosecuting the security interest hereby created. Any such
loss,
cost, liability, damage or expense so incurred shall be repaid upon demand
by
Secured Party and until so paid shall be deemed a secured obligation
hereunder.
7.
NO
WAIVER BY SECURED PARTY.
Any
forbearance, failure, or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed
to
be a waiver of such right, power, or remedy, and any single or partial
exercise
of any right, power, or remedy of Secured Party shall not preclude the
later
exercise of any other right, power, or remedy, each of which shall continue
in
full force and effect until such right, power, or remedy is specifically
waived
by an instrument in writing, executed by Secured Party.
8.
EFFECTIVENESS
OF AGREEMENT.
This
Security Agreement and Debtors’ duties
and obligations and Secured Party’s powers to dispose of the Collateral, and all
other rights, powers and remedies granted to Secured Party hereunder shall
remain in full force and effect until Debtor has satisfied and discharged
all of
Debtor’s obligations to Secured Party secured thereby.
9.
WAIVER
BY DEBTOR.
All
provisions of law, in equity and by statute providing
for, relating to, or pertaining to pledges or security interests and the
sale of
pledged property or property in which a security interest is granted, or
which
prescribe, prohibit, limit or restrict the right to, or conditions, notice
or
manner of sale, together with all limitations of law, in equity, or by
statute,
on the right of attachment in the case of secured obligations, are hereby
expressly waived by Debtor to the fullest extent Debtor may lawfully waive
same.
10.
RELEASE
OF COLLATERAL.
Upon
payment in full by Debtor, in lawful money
of
the United States of America, to Secured Party at the address set forth
in the
Note of all amounts secured hereby, and performance of all other obligations
of
Debtor under this Security Agreement, together with any interest thereon
and any
costs and expenses incurred by Secured Party in the enforcement of this
Security
Agreement or of any of Secured Party’s rights hereunder, or in the enforcement
of any other agreements (whether heretofore or hereafter entered into)
between
Debtor and Secured Party, or any of the rights of Secured Party thereunder,
and
upon the request of Debtor therefore, Secured Party will deliver to Debtor,
at
Debtor’s sole cost and expense, such termination statements and such other
documents of release, reconveyance and reassignments as shall be sufficient
to
discharge Debtor of the liabilities secured hereby and to terminate and
release
the security interest in the Collateral created hereby.
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11.
MISCELLANEOUS.
11.1
This
Security Agreement and all of the rights and duties in connection herewith
shall
be governed by and construed in accordance with the laws of the State of
California thereof without giving effect to principles governing conflicts
of
law.
11.2
This
Security Agreement and all of its terms and provisions shall be binding upon
the
heirs, successors, transferees and assigns of each of the parties
hereto.
11.3
In
the event any portion of this Security Agreement is held invalid, the remaining
portions shall remain in full force and effect as if that invalid portion had
never been a part hereof.
11.4
In
the event litigation is commenced to enforce or interpret this Security
Agreement, or any provision hereof, the prevailing party shall be entitled
to
recover its actual costs and attorneys’ fees.
11.5
This
Security Agreement may be amended only by written consent of each of the parties
hereto.
11.6
Any
and all notices, demands, requests, or other communications required or
permitted by this Security Agreement or by law to be served on, given to, or
delivered to any party hereto by any other party to this Security Agreement
shall be in writing and shall be deemed duly served, given, or delivered when
personally delivered to the party, or in lieu of such personal delivery, when
deposited in the United States mail, first-class postage prepaid addressed
to
the party at the address herein appearing.
11.7
This
Security Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained herein and supercedes all prior
and
contemporaneous agreements, representations and understandings of the parties.
No waiver of any of the provisions of this Security Agreement shall be deemed,
or shall constitute a waiver of any other provision, whether or not similar,
nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
11.8
This
Security Agreement may be executed simultaneously in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The exhibits attached hereto are made
a
part hereof and incorporated herein.
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11.9
Nothing in this Security Agreement, whether express or implied, is intended
to
confer any rights or remedies under or by reason of this Security Agreement
on
any persons other than the parties to it and their respective successors and
assigns, nor is anything in this Security Agreement intended to relieve or
discharge the obligations or liability of any third persons to any party to
this
Security Agreement, nor shall any provision give any third person any right
of
subrogation or action against any party to this Security Agreement.
11.10
Each party’s obligations under this Security Agreement is unique. If any party
should default in its obligations under this Security Agreement, the parties
each acknowledge that it would be extremely impracticable to measure the
resulting damages; accordingly, the non-defaulting party, in addition any other
available rights or remedies, may xxx in equity for specific performance without
the necessity of posting a bond or other security, and the parties each
expressly waive the defense that a remedy in damages will be adequate.
11.11
All
representations, warranties and agreements of the parties contained in this
Security Agreement, or in any instrument, certificate, opinion or other writing
provided for in it, shall survive the completion of all acts contemplated
herein.
11.12
Whenever the context of this Security Agreement requires, the masculine gender
includes the feminine or neuter gender, and the singular number includes the
plural.
11.13
As
used herein, the word “days” shall refer to calendar day, including holidays,
weekends, non-business days, etc.
11.14
The
captions contained herein do not constitute part of this Security Agreement
and
are used solely for convenience and shall in no way be used to construe, modify,
limit or otherwise affect this Security Agreement.
[REMAINDER
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IN
WITNESS WHEREOF, this Security Agreement is executed on the date first set
forth
above at Los Angeles County, California.
| DEBTOR | SECURED PARTY | ||
| PATIENT SAFETY TECHNOLOGIES, INC. | XXXX XXXXXX XXXXXX & COMPANY, INC. | ||
| /s/ Xxxxx Xxxxxx M.D. | /s/ Xxxxxx Xxxx | ||
|
BY: Xx. Xxxxx Xxxxxx |
BY: Xxxxxx “Xxxx” Xxxx III |
||
| TITLE: Chairman and Chief Executive Officer | TITLE: Chief Executive Officer, President and Chairman |
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