GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT (this "Agreement") made as of this 26th
day of June 2002, between MEDICATION MANAGEMENT TECHNOLOGIES, INC., CLEARWATER
MEDICAL SERVICES, INC., MEDICAL TECHNOLOGY LABORATORIES, INC., MEDICATION
MANAGEMENT SYSTEMS, INC., SYSTEMS PROFESSIONALS, INC., CART-▇▇▇▇, INC., VANGARD
PHARMACEUTICAL PACKAGING, INC. LIFESERV TECHNOLOGIES, INC., PERFORMANCE PHARMACY
SYSTEMS, INC., AND MTS SALES & MARKETING, INC., each a Florida corporation
(collectively, the "Debtors" and each a "Debtor"), and LASALLE BUSINESS CREDIT,
INC., as Agent ("Agent").
WHEREAS, MEDICAL TECHNOLOGY SYSTEMS, INC. and MTS PACKAGING SYSTEMS, INC.
(collectively, the "Borrowers" and each a "Borrower") are indebted to Agent
and/or Lender pursuant to a Loan and Security Agreement dated of even date
herewith, among Agent, Lender, Borrowers and the Debtors, as guarantors (as
amended, modified or supplemented from time to time, the "Loan Agreement"); and
WHEREAS, Debtors have guaranteed all of Borrowers' Liabilities, including
but not limited to Borrowers' obligations to Agent and/or Lender under the Loan
Agreement pursuant to that certain Continuing Unconditional Guaranty of even
date herewith (the "Guaranty"); and
WHEREAS, the parties hereto wish to provide for the terms and conditions
upon which Debtors' obligations under the Guaranty shall be secured; and
WHEREAS, this Agreement is made to secure the obligations of each Debtor
under the Guaranty and in consideration of advances, credit or other financial
accommodations now or hereafter being afforded to the Borrowers by Agent or
Lender;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. SECURITY INTEREST.
▇. ▇▇▇▇▇ of Security Interest to Agent. As security for the payment of
all Loans now or in the future made by Agent or Lender to the Borrowers
hereunder and for the payment or other satisfaction of all other
Liabilities, each Debtor hereby grants and assigns to Agent for the benefit
of Agent and Lender a continuing lien and security interest in the
following property of each Debtor, whether now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located: (a)
all Accounts and all Goods whose sale, lease or other disposition by such
Borrower has given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, such Borrower; (b) all Chattel Paper,
Instruments, Documents and General Intangibles (including, without
limitation, all patents, patent applications, trademarks, trademark
applications, tradenames, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer
lists, tax refund claims, claims against carriers and shippers, guarantee
claims, contracts rights, payment intangibles, security interests, security
deposits and rights to indemnification); (c) all Inventory; (d) all Goods
(other than Inventory), including, without limitation, Equipment, vehicles
and Fixtures; (e) all Investment Property; (f) all Deposit Accounts, bank
accounts, deposits and cash; (g) all Letter of Credit Rights, (h) all
2
Commercial Tort Claims, (i) all ownership interests in the issued and
outstanding capital stock or other equity interests in each of its
Subsidiaries, (j) any other property of such Debtor now or hereafter in the
possession, custody or control of Agent or Lender or any agent or any
parent, affiliate or subsidiary of Agent or Lender or any participant with
Agent or Lender in the Loans, for any purpose (whether for safekeeping,
deposit, collection, custody, pledge, transmission or otherwise) and (k)
all additions and accessions to, substitutions for, and replacements,
products and all Proceeds of the foregoing property, including, without
limitation, proceeds of all insurance policies insuring the foregoing
property, and all of such Debtor's books and records relating to any of the
foregoing and to such Debtor's business (collectively, the "Collateral").
The capitalized terms "Account", "Account Debtor", "Chattel Paper",
"Commercial Tort Claims", "Deposit Accounts", "Documents", "Electronic
Chattel Paper", "Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter-of-Credit
Rights", "Proceeds" and "Tangible Chattel Paper" shall have the respective
meanings assigned to such terms, as of the date of this Agreement, in the
Pennsylvania Uniform Commercial Code, as the same may be in effect from
time to time. Capitalized terms not defined herein shall have the meaning
assigned such term in the Loan Agreement or in the Guaranty.
B. Possessory Collateral. Promptly after the receipt by any Debtor of
any portion of the Collateral evidenced by an agreement, Instrument or
Document, including, without limitation, any Tangible Chattel Paper or any
Investment Property consisting of certificated securities, such Debtor
shall deliver the original thereof to Agent together with an appropriate
endorsement or other specific evidence of assignment thereof to Agent (in
form and substance acceptable to Agent). If an endorsement or assignment of
any such items shall not be made for any reason, Agent is hereby
irrevocably authorized, as such Debtor's attorney and agent-in-fact, to
endorse or assign the same on such Debtor's behalf.
C. Electronic Chattel Paper. To the extent that a Debtor obtains or
maintains any Electronic Chattel Paper, such Debtor shall create, store and
assign the record or records comprising the Electronic Chattel Paper in
such a manner that (i) a single authoritative copy of the record or records
exists which is unique, identifiable and, except as otherwise provided in
clauses (iv), (v) and (vi) below, unalterable, (ii) the authoritative copy
identifies Agent as the assignee of the record or records, (iii) the
authoritative copy is communicated to and maintained by Agent or its
designated custodian, (iv) copies or revisions that add or change an
identified assignee of the authoritative copy can only be made with the
participation of Agent, (v) each copy of the authoritative copy and any
copy of a copy is readily identifiable as a copy that is not the
authoritative copy and (vi) any revision of the authoritative copy is
readily identifiable as an authorized or unauthorized revision.
2. OBLIGATIONS DEFINED.
The term "Liability" or "Liabilities" shall mean and include without
limitation any and all of each Debtor's indebtedness and/or liabilities to Agent
and/or Lender of every kind, nature and description, direct or indirect, joint
or several, absolute or contingent, due or to become due, now existing or
hereafter arising including, without limitation, the indebtedness and
liabilities of each Debtor to Agent and/or Lender under the Guaranty and under
this Agreement, including but not limited to all obligations to perform acts or
refrain from taking any action and any obligations of Debtors owing to Agent
and/or Lender.
3
3. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until an Event of Default shall have occurred, each Debtor shall have the
right, except as otherwise provided in this Agreement, in the ordinary course of
Debtor's business, to (a) sell, lease or furnish under contracts of service any
of Debtor's inventory normally held by Debtor for any such purpose, and (b) use
and consume any raw materials, work in process or other materials normally held
by Debtor for such purpose; provided, however, that a sale in the ordinary
course of business shall not include any transfer or sale in satisfaction,
partial or complete, of a debt owed by Debtor. Agent through its officers,
employees or agents, shall have the right, at any time and from time to time in
Agent's name, in the name of a nominee of Agent or in any Debtor's name, after
the occurrence of an Event of Default, to verify the validity, amount or any
other matter relating to any Debtor's accounts, by mail, telephone, telegraph or
otherwise. Debtors shall reimburse Agent, on demand, for all costs, fees and
expenses incurred by Agent in this regard.
4. WARRANTIES AND COVENANTS.
Each Debtor warrants and agrees that:
A. All of the Collateral is and will at all times be owned by each
Debtor free and clear of all liens and security interests, except for (i)
the security interests granted hereunder, (ii) the liens granted in favor
of the Subordinated Lender, which shall at all times be junior and
subordinate to the liens created hereunder in favor of the Agent, and (iii)
Permitted Liens.
B. The office where each Debtor keeps its books, records and accounts
(or copies thereof) concerning the Collateral, such Debtor's principal
place of business and all of Debtor's other places of business, locations
of Collateral and post office boxes are as set forth in Exhibit A; each
Debtor shall promptly (but in no event less than ten (10) days prior
thereto) advise Agent in writing of the proposed opening of any new place
of business, the closing of any existing place of business, any change in
the location of such Debtor's books, records and accounts (or copies
thereof) or the opening or closing of any post office box of such Debtor.
C. The Collateral, including, without limitation, all equipment, is
and shall be kept only at the addresses set forth on the first page of this
Agreement or on Exhibit A, and at other locations within the continental
United States of which has been advised by each Debtor in writing. None of
the Collateral will be removed from such location without prior written
notice to Agent.
D. Each Debtor shall keep the Collateral properly housed and insure
the Collateral at all times against all hazards reasonably specified by
Agent, including but not limited to fire, theft and risks covered by
extended coverage insurance. Said policies of insurance shall be reasonably
satisfactory to Agent as to form, amount and insurer. All policies shall
provide for at least thirty (30) days prior written notice to Agent of
cancellation or non-renewal and shall contain an endorsement, in form and
substance acceptable to Agent, showing loss under such policies payable to
Agent and secondarily payable to the Subordinated Lender. Agent may act as
attorney-in-fact for each Debtor in making, adjusting and settling any
claims under any such insurance policies with respect to the Collateral.
Each Debtor hereby assigns to Agent, for its benefit and for the benefit of
Lender, all of such Debtor's right, title and interest to any insurance
4
policies insuring the Collateral, including all rights to receive the
proceeds of insurance, and directs all insurers to pay all such proceeds
directly to Agent and authorizes Agent to endorse such Debtor's name on any
instrument for such payment. In addition, each Debtor will maintain at such
Debtor's expense, such public liability and third party property damage
insurance as shall be acceptable to Agent. Each such policy shall contain
an endorsement showing Agent as an additional insured thereunder and
providing that the insurance company shall give Agent at least 30 days
prior written notice before any such policy shall be altered or cancelled.
Each Debtor shall furnish certificates, policies or endorsements to Agent
as proof of all such insurance described above, together with evidence of
payment of premiums, and if such Debtor fails to do so, Agent, upon prior
notice to such Debtor, is authorized but not required to obtain such
insurance at such Debtor's expense.
E. No Debtor will sell, lease, transfer, assign or otherwise dispose
of any of the Collateral or any interest therein without the prior written
consent of Agent in each instance or as otherwise permitted in this
Agreement or the Loan Agreement.
F. Each Debtor will notify Agent of any destruction of, or any
substantial damage to, any portion of the Collateral material to the
operations of such Debtor.
G. Each Debtor will not permit any liens or security interests to
attach to any of the Collateral, except those specified in Section 4.A
hereof.
H. Each Debtor will pay when due all taxes, license fees and
assessments relating to the Collateral which, if unpaid, could result in a
lien on the Collateral, subject to the terms of the Loan Agreement.
I. Each Debtor shall be liable to Agent and/or Lender for any
expenditures by Agent and/or Lender for the maintenance and preservation of
the Collateral, including but not limited to taxes, levies, insurance and
repairs, and for the repossession, holding, preparation for sale, and the
sale or other disposition, of the Collateral (including reasonable
attorneys' and accountants' fees and expenses actually incurred), as well
as all damages for breach of warranty, misrepresentation, or breach of
covenant by such Debtor, and all such liabilities shall be included in the
definition of Liabilities herein, shall be secured by the security interest
granted herein, and shall be payable upon demand.
J. Each Debtor will execute financing statements and any other
documents required by Agent (and pay the cost of filing or recording the
same in all public offices deemed necessary or desirable by Agent) and do
such other acts and things as Agent may deem necessary in its reasonable
discretion, to perfect or maintain the security interest granted herein and
the priority thereof or to effectuate the purposes of this Agreement. Each
Debtor irrevocably hereby makes, constitutes and appoints Agent (and all
person designated by Agent for that purpose) as such Debtor's true and
lawful attorney and agent-in-fact to execute such financing statements,
documents and other agreements and instruments and do such other acts and
things as may be necessary to preserve and perfect Agent's and Lender's
security interest in the Collateral.
K. Each Debtor will upon reasonable advance notice (and at all times
following the occurrence of an Event of Default without notice of any kind)
allow Agent or its agents during normal business hours to examine and
inspect the Collateral as well as such Debtor's books and records, and to
make extracts and copies of them, such Debtor shall pay to Agent, on
demand, all customary fees and out-of-pocket expenses incurred by Agent in
connection with the foregoing.
5
L. Each Debtor will keep Debtor's equipment in good condition and
repair, reasonable wear and tear excepted.
M. Each Debtor will report, in form satisfactory to Agent, such
information as Agent may reasonably request regarding the Collateral in a
manner consistent with the terms of the Loan Agreement regarding the
Collateral; such reports shall be for such periods, shall reflect such
Debtor's records as at such time and shall be rendered with such frequency
as Agent may reasonably designate. All information heretofore or hereafter
furnished by each Debtor to Agent is or will be true and correct in all
material respects as of the date with respect to which such information is
or will be furnished.
N. Each Debtor's name is as set forth on the signature page of this
Agreement, and Debtor uses no other tradename or division name in the
operation of Debtor's business. Debtor will give prior notice to Agent of
any intended change of Debtor's name, or the use of any tradename or trade
style, and will notify Agent when such change or use becomes effective.
O. Each Debtor has the right and power and is duly authorized to enter
into and perform Debtor's Liabilities hereunder, and Debtor's execution,
performance and delivery of this Agreement does not and will not conflict
with the provisions of any statute, regulation, ordinance or rule of law,
or with the provisions of any agreement, contract or other document which
may now or hereafter be binding on Debtor.
P. Each Debtor shall, at the request of Agent, indicate on its records
concerning the Collateral a notation, in form reasonably satisfactory to
Agent, of the security interest of Agent hereunder, and such Debtor shall
not maintain duplicates or copies of such records at any address any other
than such Debtor's principal place of business;
5. EVENTS OF DEFAULT.
All Liabilities shall become immediately due and payable without notice or
demand during the continuance of any Event of Default under the Loan Agreement.
6. RIGHTS AND REMEDIES.
During the continuance of any of the above-described Events of Default,
Agent shall have all rights and remedies provided by law, including but not
limited to those of a secured party under the Uniform Commercial Code as adopted
in the Commonwealth of Pennsylvania, in addition to the rights and remedies
provided herein. Agent may require each Debtor to assemble the Collateral and
make it available to Agent at a place to be designated by Agent and permit Agent
to enter each Debtor's places of business and conduct a sale of the Collateral
at such location. If notice to any Debtor of intended disposition of Collateral
is required by law, ten (10) days notice shall constitute reasonable
notification. In the event Agent institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy in an action
6
against any Debtor, each Debtor waives the posting of any bond which might
otherwise be required. All Agent's rights and remedies shall be cumulative and
none are exclusive. While an Event of Default is continuing, all payments made
by or on behalf of any Debtor and all credits due any Debtor under this
Agreement and under any other agreement between any Debtor and Agent and/or
Lender may be applied to the Obligations in whatever order and amounts Agent
chooses.
7. FEES, COSTS AND CHARGES.
Each Debtor shall be obligated to reimburse Agent, as part of the
Liabilities, for all fees, costs or charges of any kind actually incurred by
Agent in connection with the Guaranty and this Agreement, including without
limitation, any reasonable fees, costs or charges incurred by Agent in enforcing
its rights and remedies under the Guaranty and this Agreement.
8. MISCELLANEOUS.
A. Any failure or delay by Agent or Lender to require strict
performance by any Debtor of any of the provisions, warranties, terms and
conditions contained herein, in the Guaranty or in any other agreement,
document or instrument, shall not affect Agent's or Lender's right to
demand strict compliance and performance therewith, and any waiver of any
Event of Default shall not waive or affect any other Event of Default,
whether prior or subsequent thereto, and whether of the same or of a
different type. None of the warranties, conditions, provisions and terms
contained herein, or in the Guaranty or in any other agreement, document or
instrument shall be deemed to have been waived by any act or knowledge of
Agent or Lender, their agents, officers or employees, other than pursuant
to an instrument in writing, signed by an officer of Agent or Lender,
directed to Debtors and specifying such waiver.
B. Any notice under this Agreement shall be addressed to the parties
at their respective addresses set below, or to such other address as either
party designates to the other in the manner herein described.
C. In the event that any provision hereof shall be deemed to be
invalid by any court, such invalidity shall not affect the remainder of
this Agreement.
D. This Agreement shall be binding upon and for the benefit of the
parties hereto and their respective successors and assigns.
E. THE VALIDITY, INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. EACH DEBTOR
HEREBY CONSENTS TO THE JURISDICTION OF ALL COURTS IN PHILADELPHIA COUNTY,
PENNSYLVANIA.
F. EACH DEBTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY
OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED
TORTIOUS CONDUCT BY DEBTOR, AGENT OR LENDER OR WHICH, IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN DEBTOR,
AGENT OR LENDER. IN NO EVENT SHALL SECURED PARTY BE LIABLE FOR LOST PROFITS
OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
7
G. EACH DEBTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY AGENT OF ITS RIGHTS TO REPOSSESS THE
COLLATERAL OF DEBTOR WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR HEARING (EXCEPT FOR NOTICES
REQUIRED BY LAW).
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on this ____ day of June 2002.
LASALLE BUSINESS CREDIT, INC., as
Agent
By _______________________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MEDICATION MANAGEMENT TECHNOLOGIES, INC. CLEARWATER MEDICAL SERVICE, INC.
By: ___________________________ By: ___________________________
Name/Title: _____________________ Name/Title: _____________________
MEDICAL TECHNOLOGY LABORATORIES, INC. MEDICATION MANAGEMENT SYSTEMS, INC.
By: ___________________________ By: ___________________________
Name/Title: _____________________ Name/Title: _____________________
SYSTEMS PROFESSIONALS, INC. CART-▇▇▇▇, INC.
By: ___________________________ By: ___________________________
Name/Title: _____________________ Name/Title: _____________________
VANGARD PHARMACEUTICAL LIFESERV TECHNOLOGIES, INC.
PACKAGING, INC.
By: ___________________________ By: ___________________________
Name/Title: _____________________ Name/Title: _____________________
8
PERFORMANCE PHARMACY SYSTEMS, INC. MTS SALES & MARKETING, INC.
By: ___________________________ By: ___________________________
Name/Title: _____________________ Name/Title: _____________________
EXHIBIT A
Locations
