EXHIBIT IV
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 19, 1997, made
by Complete Wellness Medical Center of _______, Inc., Inc., a
Florida corporation (the "Grantor"), in favor of Imprimis
Investors LLC ("Imprimis") and any subsequent holders (together
with Imprimis Investors LLC, the "Investors") of Notes (as
defined below).
W I T N E S S E T H:
WHEREAS, Complete Wellness Centers, Inc., a Delaware
corporation (the "Parent"), Imprimis and Wexford Spectrum
Investors LLC are parties to that certain Investment Agreement,
dated as of the date hereof (such agreement, as amended,
restated, supplemented or otherwise modified from time to time,
being hereafter referred to as the "Investment Agreement");
WHEREAS, pursuant to the Investment Agreement, Imprimis
has agreed to purchase certain debt securities (the "Notes") from
the Parent, the proceeds of which shall be used solely (i) to pay
the transaction costs and expenses incurred in connection with
the sale of the Notes, (ii) to complete the Parent's pending
acquisition of the assets of Nutri/System, L.P. (the
"Acquisition") through Complete Weight Management, Inc. (the
"Subsidiary"), a Delaware corporation, which will hold such
assets, (iii) for working capital purposes of the Subsidiary and
(iv) for general and administrative purposes of the Parent.
WHEREAS, it is a condition precedent to the
effectiveness of the Investment Agreement and Imprimis'
purchasing the Notes from the Parent that the Grantor shall have
executed and delivered to the Investors a security agreement
providing for the grant to the Investors of a security interest
in certain property of the Grantor;
NOW, THEREFORE, in consideration of the premises and
the agreements herein and in order to induce Imprimis to purchase
the Notes from the Parent pursuant to the Investment Agreement,
the Grantor hereby agrees with Imprimis as follows:
SECTION 1. Definitions. Reference is hereby made to
the Investment Agreement for a statement of the terms thereof.
All terms used in this Agreement which are defined in the
Investment Agreement or in Article 9 of the Uniform Commercial
Code (the "Code") currently in effect in the State of New York,
and which are not otherwise defined herein, shall have the same
meanings herein as set forth therein.
SECTION 2. Grant of Security Interest. As collateral
security for all of the Obligations (as defined in Section 3
hereof), the Grantor hereby pledges and assigns to the Investors,
and grants to the Investors, a continuing security interest in
the collateral set forth below (the "Collateral"):
(a) any and all accounts, contract rights,
chattel paper, instruments, documents, deposit accounts,
general intangibles and other obligations of any kind,
whether now or hereafter existing and whether now or
hereafter acquired, arising out of or in connection with the
sale or lease of goods or the rendering of services or
otherwise, including, without limitation all rights relating
to the performance by or for the Grantors of management,
advisory, medical, consulting or other similar services, and
(ii) all rights now or hereafter existing in and to all
insurance policies, including any interest or claim in or
under any insurance policy or any issuer of the same or
claim to insurance coverage or rights to reimbursement for
advisory, medical, consulting or other similar services from
any private or governmental entity, rights to workers
compensation and personal injury or litigation settlements,
credit insurance, guaranties, letters of credit, security
agreements, leases and other contracts now or hereafter
existing and securing or otherwise relating to any such
accounts, contract rights, chattel paper, instruments,
general intangibles or obligations (including, without
limitation, the contracts described in Schedule I hereto)
(any and all such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles and
obligations being hereinafter referred to collectively as
the "Receivables," and any and all such insurance policies,
including any interest or claim in or under any insurance
policy or any issuer of the same or claim to insurance
coverage or rights to reimbursement for advisory, medical,
consulting or other similar services from any private or
governmental entity, rights to workers compensation and
personal injury or litigation settlements, credit insurance,
guaranties, letters of credit, security agreements, leases
and other contracts being hereinafter referred to
collectively as the "Related Contracts");
(b) all cash and noncash proceeds of any and all
of the foregoing Collateral.
SECTION 3. Security for Obligations. The security
interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, whether
now existing or hereafter incurred (the "Obligations"):
(a) the payment by the Parent, as and when due
and payable, of all amounts from time to time owing by the
Parent to the Investors in respect of the Investment
Agreement, the Notes and the other Note Documents,
including, without limitation, principal of and interest on
the Notes (including, without limitation, all interest that
accrues after the commencement of any case, proceeding or
other action relating to bankruptcy, insolvency or
reorganization of the Parent whether or not the payment of
such interest is unenforceable or is not allowable due to
the existence of such case, proceeding or other action), all
fees, commissions, expense reimbursements, indemnifications
and all other amounts due or to become due under the
Investment Agreement, the Notes and any other Note Document;
and
(b) the due performance and observance by the
Parent and the Grantor of all obligations from time to time
existing in respect of the Investment Agreement and all
other Note Documents.
SECTION 4. Grantor Remains Liable. Anything herein to
the contrary notwithstanding, (a) the Grantor shall remain liable
under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Investors of any
of the rights hereunder shall not release the Grantor from any of
its duties or obligations under the contracts and agreements
included in the Collateral, and (c) the Investors shall not have
any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement, nor shall
the Investors be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties. The Grantor
represents and warrants as follows:
(a) There is no pending or threatened action,
suit, proceeding or claim before any court or other
Governmental Authority or any arbitrator, or any order,
judgment or award by any court or other Governmental
Authority or arbitrator, that may adversely affect the
grants by the Grantor, or the perfection or priority, of the
security interest purported to be created hereby in the
Collateral, or the exercise by the Investors of any of their
rights or remedies hereunder.
(b) All taxes, assessments and other governmental
charges imposed upon the Grantor or any property of the
Grantor (including, without limitation, all federal income
and social security taxes on employees' wages) and which
have become due and payable on or prior to the date hereof
have been paid, except to the extent contested in good faith
by proper proceedings which stay the imposition of any
penalty, fine or lien resulting from the non-payment thereof
and with respect to which adequate reserves in accordance
with GAAP, have been established for the payment thereof.
(c) The chief place of business and chief
executive office of the Grantor, the place where the Grantor
keeps its records concerning Receivables, and the all
originals of all chattel paper and other documents which
constitute Receivables, are located at the addresses
specified therefor in Schedule II hereto. None of the
Receivables is evidenced by a promissory note or other
instrument.
(d) The Grantor has delivered to the Investors
complete and correct copies of each Related Contract
described in Schedule I hereto, including all schedules and
exhibits thereto. Each such Related Contract sets forth the
entire agreement and understanding of the parties thereto
relating to the subject matter thereof, and there are no
other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby or the rights
of the Grantor in respect thereof. Each Related Contract now
existing is, and each other Related Contract will be, the
legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its
terms. No default thereunder by any such party has occurred,
nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.
(e) The Grantor is and will be at all times the
sole and exclusive owner of the Collateral free and clear of
any Lien, claim, security interest, charge or other
encumbrance of any kind with full authority to sell,
transfer and grant a security interest in, each item of
Collateral, except for Liens permitted pursuant to the
Investment Agreement. No effective financing statement or
other instrument similar in effect covering all or any part
of the Collateral is on file in any recording or filing
office except such as may have been filed with respect to
the Liens permitted pursuant to the Investment Agreement.
(f) The exercise by the Investors of any of their
rights and remedies hereunder will not contravene law or any
contractual restriction binding on or otherwise affecting
the Grantor or any of its properties and will not result in
or require the creation of any Lien, claim, security
interest, charge or other encumbrance upon or with respect
to any of its properties.
(g) No authorization or approval or other action
by, and no notice to or filing with, any Governmental
Authority or other regulatory body, or any other Person, is
required for (i) the grant by the Grantor, or the
perfection, of the security interest purported to be created
hereby in the Collateral or (ii) the exercise by the
Investors of any of the rights and remedies hereunder,
except the filing under the Uniform Commercial Code as in
effect in the applicable jurisdiction of the financing
statements described in Schedule III hereto, all of which
financing statements have been or will be duly filed and are
or upon filing will be in full force and effect.
(h) This Agreement creates valid liens on, and
security interests in, the Collateral, in favor of the
Investors as security for the Obligations, subject only to
the Liens permitted pursuant to the Investment Agreement.
The Investors' having possession of all instruments and cash
constituting Collateral from time to time, and the filing of
the financing statements described in Schedule III hereto
result in the perfection of such pledges and security
interests. Such security interests are, or in the case of
Collateral in which the Grantor obtains rights after the
date hereof, will be, perfected, first priority security
interests, subject only to (i) the security interests and
other encumbrances permitted pursuant to the terms of the
Investment Agreement, and (ii) the recording of such
instruments of assignment. Such recordings and filings and
all other action necessary or desirable to perfect and
protect such pledge or security interest have been duly
taken, except for the Investors having possession of
instruments and cash constituting Collateral after the date
hereof and the other filings and recordations described in
Section 5(g) hereof.
(i) There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied
or waived.
SECTION 6. Covenants as to the Collateral. So long as
any of the Obligations shall remain outstanding, unless the
Investors shall otherwise consent in writing:
(a) The Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all
further instruments and documents and take all further
action that may be necessary or desirable or that the
Investors may request in order (i) to perfect and protect
the security interest purported to be created hereby; (ii)
to enable the Investors to exercise and enforce their rights
and remedies hereunder in respect of the Collateral; or
(iii) otherwise to effect the purposes of this Agreement,
including, without limitation: (A) marking conspicuously
each chattel paper included in the Receivables and each
Related Contract and, at the request of the Investors, each
of its records pertaining to the Collateral with a legend,
in form and substance satisfactory to the Investors,
indicating that such chattel paper, Related Contract or
Collateral is subject to the pledge and security interest
created hereby, (B) if any Receivable shall be evidenced by
a promissory note or other instrument or chattel paper,
delivering and pledging to the Investors hereunder such
note, instrument or chattel paper duly endorsed and
accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the
Investors, (C) executing and filing such financing or
continuation statements, or amendments thereto, as may be
necessary or desirable or that the Investors may request in
order to perfect and preserve the security interest
purported to be created hereby, and (D) furnishing to the
Investors from time to time statements and schedules further
identifying and describing the Collateral and such other
reports in connection with the Collateral as the Investors
may reasonably request, all in reasonable detail.
(b) Unless the Grantor shall have given the
Investors not less than 30 days' prior notice thereof, the
Grantor will not change (i) its name, identity or corporate
structure in any manner or (ii) the location of its chief
executive office.
(c) Transfers and Other Liens.
(i) The Grantor will not sell, assign (by
operation of law or otherwise), lease, exchange or
otherwise transfer or dispose of any of the Collateral
except as provided in Section VIII (F) of the
Investment Agreement.
(ii) The Grantor will not create or suffer to
exist any Lien, claim, security interest, charge or
other encumbrance upon or with respect to any
Collateral except for the security interests permitted
pursuant to the terms of the Investment Agreement.
(d) The Grantor shall permit the Investors, or
any agents or representatives of the Investors or such
professionals or other Persons as the Investors may
designate (i) to examine and inspect the books and records
of the Grantor and take copies and extracts therefrom, and
(ii) to discuss the affairs, finances and accounts of the
Grantor, with, and be advised as to the same by, their
officers, directors and independent accountants (and, by
this subsection (d), the Grantor authorize each such
officer, director and independent accountant to discuss the
affairs, finances and accounts of the Grantor with such
Person), provided that, in the absence of a continuing Event
of Default, all such actions described in clauses (i) and
(ii) above shall be conducted at reasonable times and during
normal business hours. In addition, the Grantor shall
forward to the Investors copies of any notices or
communications received or made by the Grantor with respect
to the Collateral, all in such manner as the Investors may
reasonably require.
(e) The Grantor will (i) keep its chief place of
business and chief executive office and all originals of all
chattel paper which constitute its Receivables at the
location(s) specified therefor in Schedule II hereto, and
(ii) keep adequate records concerning the Receivables and
such chattel paper and permit representatives of the
Investors at reasonable times and during normal business
hours to inspect and make abstracts from such records and
chattel paper in accordance with Section VII (G) of the
Investment Agreement.
(f) The Grantor will duly perform and observe all
of its obligations under each Related Contract and, except
as otherwise provided in this subsection (f), continue to
collect, at its own expense, all amounts due or to become
due under the Receivables. In connection with such
collections, the Grantor may (and, at the Investors'
direction, will) take such action as the Grantor or the
Investors may reasonably deem necessary or advisable to
enforce collection or performance of the Receivables;
provided, however, that the Investors shall have the right
at any time, upon the occurrence and during the continuance
of an Event of Default to notify the account debtors or
obligors under any such Receivables of the assignment of
such Receivables to the Investors and to direct such account
debtors or obligors to make payment of all amounts due or to
become due to the Grantor thereunder directly to the
Investors or its designated agent and, upon such
notification and at the expense of the Grantor and to the
extent permitted by law, to enforce collection of any such
Receivables and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the
Grantor of a notice from the Investors that the Investors
have notified or intend to notify the account debtors or
obligors under any Receivables as referred to in the proviso
to the immediately preceding sentence, then (i) all amounts
and proceeds (including instruments) received by the Grantor
in respect of any Receivables shall be received in trust for
the benefit of the Investors hereunder, shall be segregated
from other funds of the Grantor and shall be forthwith paid
over to the Investors in the same form as so received (with
any necessary endorsement) to be applied to the Obligations,
and (ii) the Grantor will not adjust, settle or compromise
the amount or payment of any Receivable or release in whole
or in part any account debtor or obligor thereof or allow
any credit or discount thereon. In addition, upon the
occurrence and during the continuance of an Event of
Default, the Investors shall have the right to notify the
United States Postal Service authorities to change the
address for delivery of mail addressed to the Grantor at
such addresses as the Investors may designate and to do all
other acts and things necessary or desirable to effect the
purposes of this Agreement.
(g) Upon the occurrence and during the
continuance of any breach or default under any Related
Contract referred to in Schedule I hereto by any party
thereto other than the Grantor, the Grantor (i) will,
promptly after obtaining knowledge of such breach or
default, give the Investors written notice of the nature and
duration of such breach or default, specifying what action,
if any, it has taken and proposes to take with respect
thereto, (ii) will not, without the prior written consent of
the Investors, declare or waive any such breach or default
or affirmatively consent to the cure thereof or exercise any
of its remedies in respect thereof, and (iii) will, upon
written instructions from the Investors and at the Grantor's
expense, take such action as the Investors may deem
necessary or advisable in respect thereof.
(h) The Grantor will, at its expense, promptly
deliver to the Investors a copy of each notice or other
communication received by it by which any other party to any
Related Contract referred to in Schedule I hereto purports
to exercise any of its rights or affect any of its
obligations thereunder, together with a copy of any reply by
the Grantor thereto.
(i) The Grantor will not, without the prior
written consent of the Investors, cancel, terminate, amend
or otherwise modify in any respect, or waive any provision
of, any Related Contract referred to in Schedule I hereto.
(j) If any Receivable includes a charge for any
tax payable to any Governmental Authority, the Investors are
hereby authorized (but in no event obligated) in its
discretion to pay the amount thereof to the proper taxing
authority for the account of the Grantor and to charge the
Grantor therefor. The Grantor shall notify the Investors if
any Receivable includes any taxes due to any Governmental
Authority and, in the absence of such notice, the Investors
shall have the right to retain any proceeds of such
Receivable that the Investors receive and shall not be
liable for any taxes that may be due from the Grantor by
reason of the sale and delivery creating such Receivable.
SECTION 7. Additional Provisions Concerning the
Collateral.
(a) The Grantor hereby authorizes the Investors
to file, without the signature of the Grantor where
permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the
Collateral.
(b) The Grantor hereby irrevocably appoints the
Investors or their designee on behalf of the Investors the
Grantor's attorney-in-fact and proxy, with full authority in
the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Investors'
discretion, to take any action and to execute any instrument
which the Investors may deem necessary or advisable to
accomplish the purposes of this Agreement including, without
limitation, (i) upon the occurrence of an Event of Default,
to ask, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for moneys due and to
become due under or in respect of any Collateral, and (ii)
to receive, endorse, assign and collect any drafts or other
instruments, documents and chattel paper in connection with
clause (i) above, and (iii) to file any claims or take any
action or institute any proceedings which the Investors may
deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of the
Investors with respect to any Collateral. 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 omission or commission (other than acts or omissions
constituting gross negligence or willful misconduct as
determined by a final judgment or a court of competent
jurisdiction), nor for any error of judgment or mistake of
fact or law. This power is coupled with an interest and is
irrevocable until all of the Obligations are paid in full
and the Investment Agreement is terminated.
(c) If the Grantor fails to perform any agreement
contained herein, the Investors may themselves perform, or
cause performance of, such agreement or obligation, in the
name of the Grantor or the Investors, and the expenses of
the Investors incurred in connection therewith shall be
payable by the Grantor pursuant to Sections 8 and 9.
(d) The powers conferred on the Investors
hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Investors shall have
no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
(e) Anything herein to the contrary
notwithstanding (i) the Grantor shall remain liable under
the Related Contracts and otherwise with respect to any of
the Collateral to the extent set forth therein to perform
all of its obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by
the Investors of any of their rights hereunder shall not
release the Grantor from their obligations under the Related
Contracts or otherwise in respect of the Collateral, and
(iii) the Investors shall not have any obligation or
liability by reason of this Agreement under the Related
Contracts or with respect to any of the other Collateral,
nor shall the Investors be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take
any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 8. Remedies Upon Default. If any Event of
Default shall have occurred and be continuing:
(a) The Investors may exercise in respect of the
Collateral, or any part thereof, in addition to other rights
and remedies provided for herein, in the Investment
Agreement, the Notes or in the Note Documents or otherwise
available to it, all of the rights and remedies of a secured
party in default under the Code (whether or not the Code
applies to the affected Collateral), and also may (i) take
absolute control of the Collateral, including without
limitation transfer into the Investors' names or into the
names of their nominee or nominees (to the extent the
Investors have not theretofore done so) and thereafter
receive, for the benefit of the Investors, all payments made
thereon, give all consents, waivers and ratifications in
respect thereof and otherwise act with respect thereto as
though it were the outright owner thereof, (ii) require the
Grantor to, and the Grantor hereby agrees that it will at
its expense and upon request of the Investors forthwith,
assemble all or part of the Collateral as directed by the
Investors and make it available to the Investors at a place
or places to be designated by the Investors which is
reasonably convenient to all parties, and the Investors may
enter into and occupy any premises owned or leased by the
Grantor where the Collateral of any part thereof is located
or assembled for a reasonable period in order to effectuate
the Investors' rights and remedies hereunder or under law,
without obligation to the Grantor in respect of such
occupation, and (iii) without notice, except as specified
below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the
Investors' offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such
other terms as the Investors may deem commercially
reasonable. The Grantor agrees that, to the extent notice of
sale shall be required by law, at least 10 days' notice to
the Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall
constitute reasonable notification. The Investors shall not
be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Investors may adjourn
any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to
which it was so adjourned. The Grantor hereby waives any
claims against the Investors arising by reason of the fact
that the price at which the Collateral may have been sold at
a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Investors accepts the
first offer received and does not offer the Collateral to
more than one offeree and waives all rights which the
Grantor may have to require that all or any part of the
Collateral be marshalled upon any sale (public or private)
thereof.
(b) Any cash held by the Investors as Collateral
and all proceeds received by the Investors in respect of any
sale or collection from, or other realization upon, all or
any part of the Collateral, after payment from such proceeds
of the Investors's out-of-pocket costs and expenses in
connection with such sale, including, without limitation
reasonable attorneys' fees and expenses, may, in the
discretion of the Investors, be held by the Investors as
collateral for, and/or then or at any time thereafter
applied in whole or in part by the Investors against, all or
any part of the Obligations in such manner as the Investors
may elect in its sole discretion.
(c) Other than the exercise of reasonable care in
the custody and preservation of the Collateral, the
Investors shall have no duty with respect thereto. the
Investors shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment
substantially equal to that which it accords its own
property, and shall not be liable or responsible for any
loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or
omission of any agent or bailee selected by the Investors in
good faith.
(d) In the event that the proceeds of any such
sale, collection or realization are insufficient to pay all
amounts to which the Investors is legally entitled, the
Grantor shall be liable for the deficiency, together with
interest thereon at the Default Rate or such other rate as
shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and
other client charges of any attorneys employed by the
Investors to collect such deficiency.
(e) The Investors may employ and maintain in the
premises of the Grantor one or more custodians selected by
the Investors who shall have full authority to do all acts
necessary or desirable to protect the Investors's interests
hereunder. The Grantor hereby agree to cooperate with any
such custodian and to do whatever the Investors may
reasonably request to preserve the Collateral. All costs and
expenses incurred by the Investors, by reason of the
employment of the custodian, shall be payable the Grantor
pursuant to Section 9.
SECTION 9. Indemnity and Expenses.
(a) The Grantor agrees to indemnify and hold the
Investors, its Affiliates and each officer, director and
agent of the Investors or any of its Affiliates (the
"Indemnitees") harmless from and against any and all claims,
damages, losses, liabilities, obligations, penalties, costs
or expenses (including, without limitation, reasonable legal
fees, costs, expenses and other client charges) to the
extent that they arise out of or otherwise result from this
Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities
resulting solely and directly from an Indemnitee's gross
negligence or willful misconduct as determined by a final
determination of a court of competent jurisdiction.
(b) Without limiting the generality of the
foregoing, the Grantor will upon demand pay to each
Indemnitee (i) the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and other
client charges of counsel for such Indemnitee and of any
experts and agents (including, without limitation, any
Person which may act as agent of such Indemnitee), which
such Indemnitee may incur in connection with (A) the
preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or
termination of this Agreement, or (B) the custody,
preservation, use or operation of the Collateral and (ii)
the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and other client charges of
counsel for such Indemnitee and of any experts and agents
(including, without limitation, any Person which may act as
agent of such Indemnitee), which such Indemnitee may incur
in connection with (A) the sale of, collection from, or
other realization upon, any Collateral, (B) the exercise or
enforcement of any of the rights of such Indemnitee
hereunder, or (C) the failure by the Grantor to perform or
observe any of the provisions hereof.
SECTION 10. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and
shall be mailed, telecopied or delivered, if to the Grantor, to
them at the addresses specified in the Investment Agreement; and
if to the Investors, to it at its address specified in the
Investment Agreement; or as to any such Person at such other
address as shall be designated by such Person in a written notice
to such other person complying as to delivery with the terms of
this Section 11. All such notices and other communications shall
be effective (i) if mailed, when received or three Business Days
after deposited in the mail, whichever first occurs (ii) if
telecopied, when transmitted and a confirmation is received, or
(iii) if delivered, upon delivery.
SECTION 11. Miscellaneous.
(a) No amendment of any provision of this
Agreement shall be effective unless it is in writing and
signed by the Grantor and the Investors, and no waiver of
any provision of this Agreement, and no consent to any
departure by the Grantor therefrom, shall be effective
unless it is in writing and signed by the Investors, and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Investors to
exercise, and no delay in exercising, any right hereunder or
under any other Note Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of
the Investors provided herein and in the other Note
Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The
rights of the Investors under any Note Document against any
party thereto are not conditional or contingent on any
attempt by the Investors to exercise any of its rights under
any other Note Document against such party or against any
other Person.
(c) Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
(d) This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in
full force and effect until the payment in full or release
of the Obligations and the termination of the Investment
Agreement; and (ii) be binding on the Grantor, their
successors and assigns, except that the Grantor may not
assign or transfer any of their rights hereunder without the
prior written consent of the Investors, and shall inure,
together with all rights and remedies of the Investors
hereunder, to the benefit of the Investors and its permitted
successors, transferees and assigns. Without limiting the
generality of clause (ii) of the immediately preceding
sentence, without notice to the Grantor, the Investors may
assign or otherwise transfer its rights under this Agreement
and any other Note Document, to any other Person pursuant to
the terms of the Investment Agreement and such other Person
shall thereupon become vested with all of the benefits in
respect thereof granted to the Investors herein or
otherwise. Upon any such assignment or transfer, all
references in this Agreement to the Investors shall mean the
assignee of the Investors. None of the rights or obligations
of the Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the
Investors, and any such assignment or transfer shall be null
and void.
(e) Upon the satisfaction in full of the
Obligations and the termination of the Investment Agreement,
(i) this Agreement and the security interests created hereby
shall terminate and all rights to the Collateral shall
revert to the Grantor and (ii) the Investors will, upon the
Grantor's request and at the requesting Grantor's cost and
expense, (A) return to the Grantor(s) such of the Collateral
as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and (B) execute and
deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination, all without
any representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by and
construed in accordance with the law of the State of New
York, except to the extent that the validity and perfection
or the perfection and the effect of perfection or
non-perfection of the security interest created hereby, or
remedies hereunder, in respect of any particular Collateral
are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement supersedes all prior
understandings and agreements, whether written or oral,
among the parties hereto relating to the transactions
provided for herein.
(h) All representations and warranties of the
Grantor contained herein or made in connection herewith
shall survive the making of and shall not be waived by the
execution and delivery of this Agreement, the Investment
Agreement, the Notes or any other Note Document, any
investigation by the Investors or the purchasing of the
Notes. All covenants and agreements of the Grantor contained
herein shall continue in full force and effect from and
after the date hereof until the indefeasible payment in full
of the Obligations.
(i) Section headings in this Agreement are
included herein for the convenience of reference only and
shall not constitute a part of this Agreement for any other
purpose.
(j) BY ITS EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS EITHER OF THEM MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT,
THE INVESTMENT AGREEMENT, THE NOTES OR ANY OTHER NOTE
DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
INVESTORS OR THE GRANTOR IN CONNECTION HEREWITH OR
THEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
INVESTORS TO ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the Grantor has caused this
Agreement to be executed and delivered by its officer thereunto
duly authorized as of the date first above written.
COMPLETE WELLNESS MEDICAL CENTER
OF ______________, INC.
By: --------------------------------
Name:
Title:
Accepted and Agreed:
IMPRIMIS INVESTORS LLC
By:____________________________
Name:
Title:
Schedule I
RELATED CONTRACTS
Schedule II
ADDRESS OF GRANTOR
Chief Place of Business, 000 Xxxxxxxxxxxx Xxxxxx, X.X.
Chief Executive Office Washington, D.C. 20003
and Location of Records
Schedule III
UCC-1 FINANCING STATEMENTS
