ASSIGNMENT AND SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made effective as of February 1, 2004, by
and between INMEDICA DEVELOPMENT CORPORATION, A UTAH CORPORATION ("DEBTOR"), and
WESCOR, INC., A UTAH CORPORATION, whose mailing address for purposes of this
Security Agreement is 000 Xxxxx Xxxx, Xxxxx, Xxxx 00000 ("SECURED PARTY").
RECITALS:
A. Secured Party and Debtor have entered into a Loan Agreement of even
date pursuant to which Secured Party has agreed to advance certain funds to
Debtor to be evidenced by separate promissory notes as described in the Loan
Agreement. Pursuant to the Loan Agreement, Debtor has executed and delivered to
Secured Party two secured promissory notes, captioned as the Technology
Modifications Note and the Accrued Expenses Note (collectively, the "Secured
Notes") pursuant to which Secured Party has agreed to extend certain credit to
Debtor.
B. It is a condition precedent to advancing any amounts to Debtor
pursuant to the Loan Agreement and the Secured Notes that Debtor shall have
entered into this Security Agreement ("AGREEMENT") granting Secured Party a
continuing security interest in the collateral described in this Agreement.
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
SECTION 1. DEFINITIONS.
All terms used herein which are defined in Article 1 or Article 9 of
the applicable Utah Uniform Commercial Code ("UCC") shall have the meanings
given therein, unless otherwise defined in this Agreement or in the Loan
Agreement. In the event of any inconsistency between the definitions herein and
the definitions for the same terms in the Loan Agreement, the Loan Agreement
shall control. All references to the plural herein shall also mean the singular.
Subject to the foregoing, as used herein, the following terms shall have the
meanings set forth below:
"COLLATERAL" shall mean an assignment and security interest granted to
Lender covering (1) 50% of all proceeds received by Borrower in the future from
any commercial use of the Hematocrit Technology; and (2) 20% of all new money
raised or borrowed by Debtor from third party sources;; provided however that
the sum of such proceeds Collateral and new money Collateral shall in no event
exceed the total amount owing to Lender pursuant to the secured Notes;.
"LIEN OR ENCUMBRANCE" AND "LIENS AND ENCUMBRANCES" mean, respectively,
each and all of the following: (i) any lease or other right to use; (ii) any
assignment as security, conditional sale or other title retention agreement or
arrangement, grant in trust, lien (statutory or other), mortgage, deed of trust,
pledge, security interest, hypothecation, preference, priority, or other
security agreement or preferential arrangement, charge, or encumbrance of any
kind or nature whatsoever and any other interest or right securing the payment
of money or the performance of any other liability or obligation, whether
voluntarily or involuntarily created and whether arising by agreement, document,
or instrument, under any law, ordinance, regulation, or rule (federal, state, or
local), or otherwise;
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(xxx) any option, right of first refusal, other right to acquire, or
other interest or right, and (iv) any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction to evidence any of
the foregoing.
"LOAN DOCUMENTS" means this Agreement, The Loan Agreement, and the
Secured Notes between Secured Party and Debtor, and any other agreements,
documents, or instruments from time to time and signed by the party against whom
the document or instrument is intended to be enforced, evidencing, guarantying,
securing, or otherwise relating to the same as they may be amended, modified,
extended, renewed, or supplemented from time to time.
"OBLIGATIONS" means any and all indebtedness, liabilities and
obligations of Debtor to Secured Party relating to or arising under the Loan
Documents, other than the Overhead Advance Note, and any and all extensions and
renewals thereof in whole or in part, whether as principal, guarantor or
otherwise, and or any supplement hereto or thereto, whether now existing or
hereafter arising, whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed or extended, and whether arising
directly or acquired from others (including, without limitation, participations
or interests in such obligations to others) and including, without limitation,
Secured Party's interest, and costs chargeable to Debtor in connection with all
of the foregoing.
"UCC" means the Uniform Commercial Code in effect in the state or
jurisdiction where any applicable portion of the Collateral is located, as the
same may be amended and modified from time to time.
SECTION 2. GRANT OF SECURITY INTEREST.
For value received, and as security for the prompt performance,
observance and payment in full of all Obligations, Debtor hereby assigns to
Secured Party the right to collect and hold payment of (1) fifty percent (50%)
of all proceeds received by Borrower in the future from any commercial use of
the Hematocrit Technology; and (2) twenty percent (20%) of all new money raised
or borrowed by Debtor from third party sources, the sum of the proceeds
Collateral and the new money Collateral not to exceed the total amounts owing
under the secured Notes, and grants to Secured Party, a continuing security
interest in, lien upon and right of setoff against the Collateral.
SECTION 3. DEBTOR'S REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS.
3.1 Debtor represents, warrants and agrees (which shall survive the
execution and delivery of this Agreement), the truth and accuracy of which, and
compliance with, being a continuing condition of the making of advances of Loan
proceeds by Secured Party under the Loan Agreement:
(a) Debtor is and shall be, with respect to the Collateral,
the owner of such Collateral free from any Lien or Encumbrance except
in Secured Party's favor. Debtor will defend its title to the
Collateral against the claims of all persons. There are no Form UCC-1
financing statements now filed or recorded covering any of the
Collateral or in which Debtor is named or has signed as Debtor, except
financing statements related to this Agreement.
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(b) Debtor will not directly or indirectly sell, lease,
transfer, abandon or otherwise dispose of all or any substantial
portion of Debtor's property or assets, without prior written notice to
Lender.
(c) Debtor shall promptly notify Secured Party in writing of
the details of any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or which would result in
any material adverse change in Debtor's business, properties, assets,
goodwill or condition, financial or otherwise.
(d) At Secured Party's option, upon the occurrence of an Event
of Default hereunder, Secured Party shall apply any insurance monies
received at any time to the cost of repairs to or replacement for the
Collateral and/or to payment of any of the Obligations, whether or not
due, in any order and in such manner as Secured Party, in Secured
Party's sole discretion, may determine.
(e) Debtor shall not waste or destroy the Collateral or any
part thereof or any document or record evidencing the same. In
addition, Debtor shall not misuse, cancel or in any way use or dispose
of any of the Collateral unlawfully or contrary to the provisions of
this Agreement.
(f) Debtor shall, at Debtor's own expense, protect the
Collateral and maintain it at all times for the benefit of Secured
Party. Debtor shall use the Collateral for lawful purposes only and in
conformity with applicable laws, ordinances and regulations.
(g) The Collateral is and shall be used in Debtor's business
and not for personal, family, or household use.
(h) The security interest granted in the Collateral is in good
faith believed to be (i) legal, valid, binding, and enforceable, (ii)
once filed, a perfected security interest in the Collateral, and (iii)
a first priority security interest.
3.2 Except as otherwise provided in this Agreement, Debtor will not
permit the Collateral to be removed from Debtor's possession, will not permit
the Collateral to be attached or other process to be levied thereon nor create
nor permit to be created any lien or encumbrance or adverse claim of any
character whatsoever in Collateral, whether justified or unjustified, and will
not sell, transfer, assign or attempt to assign Debtor's right, title or
interest in the Collateral or this Agreement in contravention of the security
interests granted herewith.
3.3 Debtor shall duly execute and deliver, or shall cause to be duly
executed and delivered, such further agreements, instruments and documents,
including, without limitation, additional security agreements, collateral
assignments, Form UCC-1 financing statements or amendments or continuations
thereof, consents to the exercise by Secured Party of all Secured Party's rights
and remedies hereunder, under any supplement hereto or applicable law with
respect to the Collateral, and do or cause to be done such further acts as may
be necessary or proper in Secured Party's opinion to evidence, perfect, maintain
and enforce Secured Party's security interest and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any supplement hereto. Where authorized by law, Debtor hereby
authorizes Secured Party to execute and file one or more Form UCC-1 financing
statements signed only by Secured Party. Debtor hereby authorizes Secured Party,
upon the occurrence of an Event of Default
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hereunder, at Secured Party's option to send written notice to any and all
customers of Borrower or other parties who may be obligated to pay Borrower any
consideration for the commercial use of the Hematocrit Technology, to advise
such parties that Lender claims a security interest in such proceeds.
3.4 Debtor assumes all responsibility and liability arising from or
relating to Debtor' use, sale or other disposition of the Collateral.
SECTION 4. SECURED PARTY'S RIGHT TO PROTECT COLLATERAL.
Secured Party may, in the Event of Default by Debtor, pay taxes,
assessments, liens, fees, charges or encumbrances, or spend any amounts
necessary to maintain the Collateral in Debtor's exclusive possession and in
good condition and repair, and all amounts expended by Secured Party shall, with
interest thereon at the Default Interest Rate, constitute an Obligation of
Debtor to Secured Party secured by the Collateral and by the terms of this
Agreement and shall be immediately due and payable, but no such act or
expenditure by Secured Party shall relieve Debtor from the consequences of such
default.
SECTION 5. EVENTS OF DEFAULT.
Any one of the following shall constitute an "Event of Default":
(a) Debtor fails to pay any monetary amount when due under any
Loan Document, and fail to cure such default within thirty (30) days
after written notice from Secured Party.
(b) Debtor fails to perform any obligation not involving the
payment of money, or to comply with any other term or condition
applicable to Debtor under any Loan Document, and fail to cure such
default within thirty (30) days after written notice from Secured
Party.
(c) Debtor makes a representation or warranty in any Loan
Document that is materially false, incorrect, or misleading as of the
date made.
(d) Debtor (i) fails to pay when due any monetary obligation,
whether such obligation be direct or contingent, to any person in
excess of One Hundred Thousand and No/100 Dollars ($100,000), (ii)
makes a general assignment for the benefit of creditors, or (iii)
applies for, consents to, or acquiesces in, the appointment of a
trustee, receiver, or other custodian for Debtor or the property of
Debtor or any part thereof, or in the absence of such application,
consent, or acquiescence, a trustee, receiver, or other custodian is
appointed for Debtor or the property of such Debtor or any part
thereof.
(e) Commencement of any case under the Bankruptcy Code, Title
11 of the United States Code, or commencement of any other bankruptcy
arrangement, reorganization, receivership, custodianship, or similar
proceeding under any federal, state, or foreign law by or against any
of the Debtor.
(f) All or any part of the Collateral is attached, levied
upon, or otherwise seized by legal process, and such attachment, levy,
or seizure is not quashed, stayed, or released within twenty (20) days
of the date thereof.
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(g) The occurrence of any Event of Default under any other
Loan Document.
(h) Debtor abandons any material portion of the Collateral; or
(i) Any material portion of the Collateral is lost, stolen,
suffers substantial damage or destruction, or declines materially in
value.
SECTION 6. RIGHTS AND REMEDIES.
6.1 Upon the happening of any Event of Default, and after any
applicable cure period, Secured Party shall have (in addition to any other
rights Secured Party may have under this Agreement, any supplement hereto or
otherwise) the rights, options, duties and remedies of a secured party, and
Debtor shall have the rights and duties of a debtor, under the UCC; and without
limitation thereto, Secured Party shall have the following specific rights:
(a) To declare any or all of the Obligations to be immediately
due and payable, whereupon such Obligations shall be immediately due
and payable;
(b) As a matter of right and without notice to Debtor or
anyone claiming under Debtor, Secured Party shall be entitled to orders
of replevin by a court of any or all Collateral from time to time;
(e) At its option, Secured Party may send written notice to
any and all customers of Borrower or other parties who may be obligated
to pay Borrower any consideration for the commercial use of the
Hematocrit Technology, to advise such parties that Lender claims a
security interest in such proceeds and demand that they pay any such
amounts owing Debtor directly to Secured Party.
(f) At its sole option, to retain the Collateral in
satisfaction of the obligations secured hereunder by sending written
notice of such election to Debtor; but, unless such written notice is
sent by Secured Party as aforesaid, retention of said Collateral shall
not be in satisfaction of any obligation hereunder;
(g) To apply the proceeds realized from disposition of the
Collateral according to law;
(h) To exercise any and all other rights and remedies of a
secured party.
6.2 The enumeration of the foregoing rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies Secured Party may have
under the UCC or other applicable law. Secured Party shall have the right, in
Secured Party's sole discretion, to determine which rights and remedies, and in
which order any of the same, are to be exercised, and in which order, and the
exercise of any right or remedy shall not preclude the exercise of any others,
all of which shall be cumulative.
6.5 No act, failure or delay by Secured Party shall constitute a waiver
of any of Secured Party's rights and remedies. No single or partial waiver by
Secured Party of any provision of this Agreement or any supplement hereto, or
breach or default thereunder, or of any right or remedy
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which Secured Party may have shall operate as a waiver of any other provision,
breach, default, right or remedy or of the same provision, breach, default,
right or remedy on a future occasion.
6.6 Debtor waives presentment, notice of dishonor, protest and notice
of protest of all instruments included in or evidencing any of the Obligations
or the Collateral and any and all notices or demands whatsoever (except as
expressly provided herein).
6.7 Anything in this Agreement, the Loan Agreement or the Notes to the
contrary notwithstanding, the Secured Party may not proceed directly against
Debtor to enforce payment of the Obligations and shall be required to proceed
solely against the Collateral.
SECTION 7. SETOFF.
Upon the occurrence of an Event of Default, or, if in the commercially
reasonable judgment of Secured Party, Secured Party deems itself insecure, any
indebtedness owing from Secured Party to Debtor may be set off and applied by
Secured Party on any indebtedness or liability, secured or unsecured, of Debtor
to Secured Party at any time and from time to time, either before or after
maturity, and without demand upon or notice to anyone.
SECTION 8. APPLICATION OF PROCEEDS.
All Collateral and all proceeds of Collateral received by Secured
Party, before or after an Event of Default, will be applied by Secured Party to
the Obligations, whether or not due, in the order set forth in the Loan
Documents, subject to any requirements of law. Any Collateral and any balance of
such proceeds remaining after payment of the Obligations in full will be paid to
Debtor, its successors or assigns, or as the law or a court of competent
jurisdiction may direct. Any proceeds of Collateral in the form of a check shall
be credited against the Obligations only upon the expiration of such period of
time after receipt thereof by Secured Party as Secured Party determines is
reasonably sufficient to allow for clearance or payment thereof. Any other
proceeds of Collateral will be credited against the Obligations only upon
conversion into cash and receipt of such cash by Secured Party. Each such credit
shall, however, be conditional upon final payment to Secured Party of the item
giving rise to such credit.
SECTION 9. EXPENSES.
Upon Secured Party's request, Debtor shall pay to Secured Party, or
reimburse Secured Party for, all sums, costs and expenses which Secured Party
may pay or incur in connection with or related to the enforcement of the Loan
Documents, and the transactions contemplated thereunder, and all efforts made to
defend, protect or enforce the security interest granted therein or in enforcing
payment of the Obligations, including without limitation, appraisal fees, filing
fees and title insurance premiums, recording tax, expenses for searches, wire
transfer fees, check dishonor fees, the fees and disbursements of counsel to
Secured Party, all fees and expenses for the service and filing of papers,
premiums on bonds and undertakings, fees of marshals, sheriffs, custodians,
auctioneers and others, travel expenses and all court costs and collection
charges, all of which shall be part of the Obligations and shall accrue interest
after demand thereof at a rate equal to the highest rate then payable on any of
the Obligations.
SECTION 10. LOAN DOCUMENTS.
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This Agreement is subject to certain terms and provisions in the other
Loan Documents, to which reference is made for a statement of such terms and
provisions.
SECTION 11. CHOICE OF LAW/SEVERABILITY.
This Agreement and all transactions hereunder shall be deemed to be
consummated in the State of Utah and shall be governed by, and interpreted in
accordance with the laws of that State. If any part or provision of this
Agreement is invalid or in contravention of any applicable law or regulation,
such part or provision shall be severable without affecting the validity of any
other part or provision of this Agreement.
SECTION 12. GENERAL.
12.1 Time is of the essence of this Agreement. The acceptance by
Secured Party of partial payments shall not in any manner modify the terms of
this Agreement, and such acceptance shall not be construed as a waiver of any
subsequent defaults on Debtor' part nor shall it waive the "time is of the
essence" provision.
12.2 Waiver of any default shall not constitute waiver of any
subsequent default.
12.3 If this instrument is signed by more than one debtor, the singular
word "Debtor" shall include the plural, and the obligations of all such Debtor
shall be joint and several. All words used herein shall be construed to be of
such gender and number as the circumstances require and all references herein to
Debtor shall include all other persons primarily or secondarily liable.
12.4 Any true and correct carbon, photographic or other reproductive
copy of this Agreement may be filed or recorded as a Financing Statement.
12.5 This Agreement and all obligations of Debtor hereunder shall be
binding upon the successors and assigns of Debtor and Secured Party, and shall,
together with the rights and remedies of Debtor and Secured Party hereunder,
inure to the benefit of Debtor and Secured Party, respectively and each party's
respective successors and assigns.
12.6 THIS AGREEMENT CONSTITUTES THE ENTIRE SECURITY AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE ALTERED OR AMENDED EXCEPT BY A WRITING SIGNED BY ALL
PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SECURED PARTY: DEBTOR:
WESCOR, INC., a Utah Corporation INMEDICA DEVELOPMENT CORPORATION,
By: s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxx
President/CEO President
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