Wellstar International, Inc.
Security Agreement
This Security Agreement (the "Agreement") is made effective as of October 11,
2005 by Wellstar International Inc., and its wholly owned subsidiary,
Trillennium Medical Imaging, Inc. having a notice address of 0000 Xxxxxxx Xx.,
Xxxxxxx, Xxxxx Xxxxxx, Xxxx 00000, (the "Debtor") in favor of Xxxxxx X.
Xxxxxxxx, an individual having a notice address of 0000 Xxxxxx Xxxxx, Xxxx Xxxx,
Xxxxxxx 00000 (the "Secured Party"). Debtor and Secured Party hereby agree as
follows:
WITNESSETH:
WHEREAS, Debtor is indebted to Secured Party in the aggregate principal
amount of Four Hundred Thousand and 00/100 Dollars ($400,000.00) pursuant to the
Term Loan Agreement dated October 11, 2005 and accompanying Note(s), executed by
Debtor and made payable to the order of Secured Party, (the "Note"), and all
agreements, instruments and documents executed or delivered in connection with
the foregoing or otherwise related thereto (collectively, together with any
amendments, modifications, or restatements thereof, the "Loan Documents").
1. OBLIGATIONS. This assignment of collateral and grant of security
interest shall secure all loans, advances, indebtedness and each and every other
obligation or liability of Debtor owed to Secured Party, however created, of
every kind and description, whether now existing or hereafter arising and
whether direct or indirect, primary or as guarantor or surety, absolute or
contingent, due or to become due, liquidated or unliquidated, matured or
unmatured, participated in whole or in part, created by trust agreement, lease,
overdraft, agreement, or otherwise, whether or not secured by additional
collateral, whether originated with Secured Party or owed to others and acquired
by Secured Party by purchase, assignment or otherwise, and including, without
limitation, all loans, advances, indebtedness and each and every other
obligation or liability arising under the Loan Documents, Letters of credit now
or hereafter issued by Secured Party for the benefit of or at the request of
Debtor, all obligations to perform or forbear from performing acts, and all
agreements, instruments and documents evidencing, guarantying, securing or
otherwise executed in connection with any of the foregoing, together with any
amendments, modifications, and restatements thereof, and all expenses and
attorneys' fees incurred or other sums disbursed by Secured Party under this
Agreement or any other document, instrument or agreement related to any of the
foregoing (collectively, the "Obligations").
2. COLLATERAL. The Debtor hereby grants to Secured Party a security
interest in all right, title and interest of Debtor in the collateral now
existing and hereafter arising or acquired by Debtor, regardless of where it is
located, and defined as follows (together with all proceeds and products thereof
and all additions and accessions thereto, replacements thereof, supporting
obligations therefore, software related thereto, guaranties thereof, insurance
or condemnation proceeds thereof, documents related thereto, all sales of
accounts constituting a right to payment therefrom, all tort or other claims
against third parties arising out of damage thereto or destruction thereof, all
property received wholly or partly in trade or exchange therefore, all fixtures
attached or appurtenant thereto, all leases thereof, and 25% of all rents,
revenues, issues, profits and proceeds arising from the sale, lease, license,
encumbrance, collection, or any other temporary or permanent disposition
thereof, or any other interest therein generated on or after January 1, 2006,
collectively, the "Collateral"):
(a) All thermal imaging cameras and related equipment and software
purchased by Debtor pursuant to the terms of the Term Loan Agreement of
even date herewith.
3. DEFINITIONS. Capitalized terms not otherwise defined in this Agreement
shall have the meanings attributed thereto in the applicable version of the
Uniform Commercial Code adopted in the jurisdiction in which Debtor is organized
or, where appropriate, the jurisdiction in which the Collateral is located, as
such definitions may be enlarged or expanded from time to time by legislative
amendment thereto or judicial decision (the "Uniform Commercial Code").
As used herein, the following capitalized terms shall have the following
meanings:
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(a) "Accounts" means all accounts, accounts receivable, health-care
insurance receivables, credit card receivables, contract rights,
instruments, documents, chattel paper, tax refunds from federal, state or
local governments and all obligations in any form including without
limitation those arising out of the sale or lease of the Collateral by
Debtor; and all "Accounts" as same is now or hereinafter defined in the
Uniform Commercial Code, provided such Accounts are limited to those
relating to the Collateral.
(b) "Equipment" means all cameras, equipment, fixtures, office
equipment, furniture, furnishings, motors, tools,, parts, jigs, goods
(including, without limitation, each of the items of equipment set forth on
any schedule which is either now or in the future attached to Secured
Party's copy of this Agreement), and all attachments, accessories,
accessions, replacements, substitutions, additions and improvements thereto
related to or comprising a part of the Collateral, all supplies used or
useful in connection therewith, and all "Equipment" as same is now or
hereinafter defined in the Uniform Commercial Code, provided such Equipment
is limited to those relating to the Collateral.
(c) "General Intangibles" means all general intangibles, choses in
action, causes of action, obligations or indebtedness owed to Debtor from
any source whatsoever, payment intangibles, software and all other
intangible personal property of every kind and nature (other than Accounts)
including without limitation patents, trademarks, trade names, service
marks, copyrights and applications for any of the above, and goodwill,
trade secrets, licenses, franchises, rights under agreements, tax refund
claims, and all books and records including all computer programs, disks,
tapes, printouts, customer lists, credit files and other business and
financial records, the equipment containing any such information, and all
"General intangibles" as same is now or hereinafter, all as relate solely
to the Collateral and as defined in the Uniform Commercial Code.
(d) "Inventory" means goods, supplies, wares, merchandises and other
tangible personal property, including raw materials, work in process,
supplies and components, and finished goods, whether held for sale or
lease, or furnished or to be furnished under any contract for service, or
used or consumed in business, and also including products of and accessions
to inventory, packing and shipping materials, all documents of title,
whether negotiable or non-negotiable, representing any of the foregoing
relating to the Collateral, and all "inventory" as same is now or
hereinafter defined in the Uniform Commercial Code, provided such Inventory
is limited to that relating to the Collateral.
4. WARRANTIES AS TO DEBTOR. Debtor hereby represents and warrants to
Secured Party as follows:
(a) Wellstar International, Inc. is a duly organized Nevada
corporation with a principal place of business located at the address
otherwise set forth herein.
(b) Debtor further warrants that its exact legal name is set forth in
the initial paragraph of this Agreement.
(c) Exhibit A, attached to this Agreement and incorporated herein by
reference, lists the location of any and all of the Collateral of Debtor.
Debtor shall supplement Exhibit A from time to time in the future to assure
Secured Party is at all times advised of the location of al the Collateral.
5. WARRANTIES AS TO THE COLLATERAL. Debtor hereby represents and warrants
to Secured Party that:
(a) Except for the security interest hereby granted, Debtor is, and as
to any property which at any time forms a part of the Collateral, shall be,
the sole owner of, with good and marketable title in, each and every item
of the Collateral, or otherwise shall have the full right and power to
grant a security interest in the Collateral, free from any lien, security
interest or encumbrance whatsoever;
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(b) Each item of Collateral is, and shall be, valid, and all
information furnished to Secured Party with regard thereto is, and shall
be, accurate and correct in all respects when furnished;
(c) None of the Collateral shall be sold, assigned, transferred,
discounted, hypothecated or otherwise subjected to any lien, encumbrance or
security interest, and Debtor shall defend such Collateral and each and
every part thereof against all claims of all persons at any time claiming
such Collateral or claiming any interest therein adverse to Secured Party;
(d) The provisions of this Agreement are sufficient to create in favor
of Secured Party a valid and continuing lien on, and security interest in,
the types of Collateral in which a security interest may be perfected by
the filing of UCC Financing Statements, and when such UCC Financing
Statements are filed in the appropriate filing offices, and the requisite
filing fees are paid, such filings shall be sufficient to perfect such
security interests (other than Equipment affixed to real property so as to
become fixtures);
(e) If any of the Collateral is or will be attached to real estate in
such a manner as to become a fixture under applicable state law, that said
real estate is not encumbered in any way, or if said real estate is
encumbered, Debtor will secure from the lien holder or the party in whose
favor it is or will become so encumbered a written acknowledgment and
subordination to the security interest hereby granted in such form as is
acceptable to Secured Party;
6. DEBTOR'S RESPONSIBILITIES. Debtor covenants with, and warrants to,
Secured Party that Debtor shall:
(a) Furnish to Secured Party, in writing, a current list of all
Collateral for the purpose of identifying the Collateral and, further,
execute and deliver such supplemental instruments, documents, agreements
and chattel paper, in the form of assignments or otherwise, as Secured
Party shall require for the purpose of confirming and perfecting, and
continuing the perfection of, Secured Party's security interest in any or
all of such Collateral, or as is necessary to provide Secured Party with
control over the Collateral or any portion thereof;
(b) At its expense and upon request of Secured Party, furnish copies
of invoices issued by Debtor in connection with the Collateral, furnish
certificates of insurance evidencing insurance on Collateral, furnish proof
of payment of taxes and assessments on Collateral, make available to
Secured Party, any and all of Debtor's books, records, written memoranda,
correspondence, purchase orders, invoices and other instruments or writings
that in any way evidence or relate to the Collateral;
(c) Keep the Collateral insured at ail times against risks of loss or
damage by fire (including so-called extended coverage), theft and such
other casualties including collision in the case of any motor vehicle, all
in such amounts, under such forms of policies, upon such terms, for such
periods and written by such companies or underwriters as is satisfactory to
Secured Party, in all cases losses shall be payable to Secured Party and
any surplusage shall be paid to Debtor. All policies of insurance shall
provide for at least thirty (30) days prior written notice of cancellation
to Secured Party. Should Debtor at any time fail to purchase or maintain
insurance, pay taxes, or pay for any expense, incident or such insurance,
pay such taxes, order and pay for such necessary items of preservation,
maintenance or protection, and Debtor agrees to reimburse Secured Party for
all expenses incurred under this paragraph;
(d) Pay all taxes or assessments imposed on or with respect to the
Collateral;
(e) Keep all of the Collateral in good condition and repair,
protecting it from weather and other contingencies which might adversely
affect it as secured hereunder;
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(f) Notify Secured Party immediately in writing of any information
which Debtor has or may receive which might in any way adversely affect the
value of the Collateral or the rights of Secured Party with respect
thereto;
(g) Notify Secured Party promptly, in writing, of any change in the
location of the Collateral or of any place of business or mailing addresses
or the establishment of any new place of business or mailing address;
(h) Pay all costs of filing any financing, continuation or termination
statements with respect to the security interest created hereby;
(i) Upon the occurrence of an Event of Default or breach of any
provision of this Security Agreement, pay all expenses and reasonable
attorneys' fees of Secured Party; and Debtor agrees that said expenses and
fees shall be secured under this Agreement;
(j) Maintain possession of all collateral, subject to the terms of all
relevant License Agreements relating thereto at the location disclosed to
Secured Party and not to remove the Collateral from that location;
(k) Not sell, contract to sell, encumber, or otherwise transfer the
Collateral (other than as contemplated in the License Agreements for use of
the Collateral by third parties) until the Obligations have been paid and
performed, Debtor acknowledging nonetheless that Secured Party has a
security interest in the proceeds of such Collateral;
(l) Take any other and further action necessary or desirable as
requested by Secured Party to grant Secured Party control over the
Collateral, as "control" is defined in the applicable version of the
Uniform Commercial Code, including without limitation (i) executing and/or
authenticating any assignments or third party agreements; (ii) delivering,
or causing the delivery of, any of the Collateral to the possession of
Secured Party; or (iii) obtaining written acknowledgements of the lien of
Secured Party and agreements of subordination to such lien from third
parties in possession of the Collateral in a form acceptable to Secured
Party. Debtor consents to and hereby authorizes any third party in an
authenticated record or agreement between Debtor, Secured Party, and the
third party, including but not limited to depository institutions,
securities intermediaries, and issuers of letters of credit or other
support obligations, to accept direction from Secured Party regarding the
maintenance and disposition of the Collateral and the products and proceeds
thereof, and to enter into agreements with Secured Party regarding same,
without further consent of the Debtor.
7. RIGHTS UPON DEFAULT. In the event the obligations is matured and Debtor
not is current in payment according to the tenor of the Obligations, Secured
Party shall have the absolute right to take any one or all of the following
actions:
(a) Secured Party may serve written notice on Debtor instructing
Debtor to deliver to Secured Party all subsequent payments on accounts
receivable relative to the Collateral which Debtor shall do until notified
otherwise;
(b) Secured Party may notify the account debtor(s) of its security
interest and instruct such account debtor(s) to make further payments on
such accounts to Secured Party instead of to Debtor; and,
(c) Secured Party may serve written notice upon Debtor that all
subsequent xxxxxxxx or statements of account rendered to any account debtor
shall bear a notation directing the account debtor(s) to make payment
directly to Secured Party. Any payment received by Secured Party pursuant
to this paragraph shall be retained in a separate non-interest bearing
account as security for the payment and performance of all Obligations of
Debtor.
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8. POWER OF ATTORNEY. Debtor hereby makes, constitutes and appoints Secured
Party its true and lawful attorney in fact to act, with full power of
substitution, with respect to the Collateral in any transaction, legal
proceeding, or other matter in which Secured Party is acting pursuant to this
Agreement, including but not limited to executing, authenticating and/or filing
on its behalf: (i) UCC Financing Statements reflecting the lien of Secured Party
upon the Collateral and any other documents necessary or desirable to perfect or
otherwise continue the security interest granted herein; and (ii) any third
party agreements or assignments to grant Secured Party control over the
Collateral, including but not limited to third party agreements between Debtor,
Secured Party, and depository institutions, securities intermediaries, and
issuers of letters of credit or other support obligations, which third party
agreements direct the third party to accept direction from Secured Party
regarding the maintenance and disposition of the Collateral and the products and
proceeds thereof.
9. EVENTS OF DEFAULT. Any of the following events shall be an "Event of
Default" hereunder:
(a) An event of default occurs under any agreement, instrument or
document evidencing, guarantying, securing or otherwise executed or
delivered in connection with any of the Obligations, as "Event of Default"
shall be defined therein.
(b) Any representation or warranty of Debtor set forth in this
Agreement or in any agreement, instrument, document, certificate or
financial statement evidencing, guarantying, securing or otherwise related
to, this Agreement or any other Obligation shall be materially inaccurate
or misleading.
(c) Debtor shall fail to maintain in force the insurance required in
this Agreement or in any agreement, instrument, document, certificate or
financial statement evidencing, guarantying, securing or otherwise related
to, this Agreement or any other Obligation, or Debtor shall otherwise
default in the observance or performance of any covenant or agreement set
forth in any of the foregoing for a period of 30 days.
10. REMEDIES. Upon the occurrence and until the waiver of an Event of
Default, Secured Party may, without further notice to Debtor, and in
addition to any other remedies available to Secured party hereunder, at
Secured Party's option, declare any note and all of the Obligations to
become due and payable in its aggregate amount; provided that the
Obligations shall be accelerated automatically and immediately if the Event
of Default is a filing under the Bankruptcy Code. Secured Party may resort
to the rights and remedies of a secured party under the Uniform Commercial
Code, including but not limited to the right of a secured party to (a)
enter any premises of Debtor, with or without legal process and take
possession of the Collateral and remove it and any records pertaining
thereto and/or remain on such premises and use it for the purpose of
collecting, preparing and disposing of the Collateral; (b) ship, reclaim,
recover, store, finish, maintain and repair the Collateral; and (c) sell
the Collateral at public or private sale. Debtor will be credited with the
net proceeds of any such sale only when they are actually received by
Secured Party, and any requirement of reasonable notice of any disposition
of the Collateral will be satisfied without notice to Debtor if the
Collateral is of a type customarily sold on a recognized market or
otherwise if such notice is sent to Debtor 10 days prior to such
disposition. Debtor will, upon request, assemble the Collateral and any
records pertaining thereto and make them available at a place designated by
Secured Party. Secured Party may use, in connection with any assembly or
disposition of the Collateral, any trademark, trade name, trade style,
copyright, patent right, trade secret or technical process used or utilized
by Debtor. No remedy set forth herein is exclusive of any other available
remedy or remedies, but each is cumulative and in addition to every other
remedy given under this Agreement, any of the Obligations, or now or
hereafter existing at law or in equity or by statute. Secured Party may
proceed to protect and enforce its rights by an action at law, in equity or
by any other appropriate proceedings. No failure on the part of Secured
Party to enforce any of the rights hereunder shall be deemed a waiver of
such rights or of any Event of Default and no waiver of any Event of
Default shall be deemed to be a waiver of any subsequent Event of Default.
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11. MISCELLANEOUS PROVISIONS
(a) All rights of Secured Party shall inure to the benefit of its
successors and assigns and all obligations of Debtor shall bind the heirs,
executors, administrators, successors and assigns of Debtor.
(b) Debtor acknowledges and agrees that, in addition to the security
interests granted herein, Secured Party has a banker's lien and common law
right of set-off in and to Debtor's deposits, accounts and credits held by
Secured Party and Secured Party may apply or set-off such deposits or other
sums against the Obligations upon the occurrence of an Event of Default as
set forth in this Agreement.
(c) This Agreement contains the entire Agreement of the parties and no
oral Agreement whatsoever, whether made contemporaneously herewith or
hereafter shall amend, modify or otherwise affect the terms of this
Agreement.
(d) All rights and liabilities hereunder shall be governed and limited
by, and construed in accordance with, the laws of the State of Ohio.
(e) Any provision herein which may prove limited or unenforceable
under any law or judicial ruing shall not affect the validity or
enforceability of the remainder of this Agreement.
(f) Debtor hereby authorizes Secured Party to file a copy of this
Agreement as a Financing Statement with appropriate county and state
government authorities necessary to perfect Secured Party's security
interest in the Collateral as set forth herein. Debtor hereby further
authorizes Secured Party to file UCC Financing Statements on behalf of
Debtor and Secured Party with respect to the Collateral.
SECURED PARTY: DEBTOR:
Xxxxxx X. Xxxxxxxx Wellstar International Inc., and its
wholly owned subsidiary, Trillennium
Medical Imaging, Inc.
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------- -------------------
Xxxx X. Antonio, President
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SCHEDULE A
Principal Place of Business of the Company:
-------------------------------------------
Principal Place
0000 Xxxxxxx Xxxx
Xxxxxxx XX 00000
419.865.0069
Locations Where Collateral is Located or Stored:
------------------------------------------------
Locations where collateral is held
Same as above, until we open the clinics.
List of Subsidiaries of the Company:
------------------------------------
Subsidiaries
Trillennium Medical Imaging Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx XX 00000
419.865.0069
SCHEDULE B
Jurisdictions:
--------------
Nevada
SCHEDULE C
Pursuant to the $400,0000 note due April 2006, we have granted a security
interest to Xxxxxx X. Xxxxxxxx on the first 10 thermal imaging cameras to
the extent such funds are used to purchase such cameras. As of date, no
thermal imaging cameras have been purchased.
