GUARANTOR SECURITY AGREEMENT
AGREEMENT, made this 31st day of December, 1996, by and between:
________________________, a ______________ corporation, having an
office at Xxx Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 (hereinafter referred
to as the "DEBTOR"); and
KEY BANK OF NEW YORK, a New York banking corporation, having an office
at 0000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "BANK");
W I T N E S S E T H:
WHEREAS:
A. The Care Group, Inc., a Delaware corporation (the "BORROWER") has
entered into a certain Loan Agreement of even date herewith (hereinafter, as it
may from time to time be amended, modified and/or supplemented, referred to as
the "LOAN AGREEMENT") with the Bank pursuant to which the Bank has agreed to
lend to the Borrower up to the aggregate principal amount set forth therein,
upon and subject to the terms and conditions thereof;
B. The Debtor has guaranteed the full payment by the Borrower of the
Borrower's indebtedness to the Bank arising under the Loan Agreement and the
Note executed in connection therewith, pursuant to a Guaranty (the "GUARANTY")
of even date herewith executed by the Debtor in favor of the Bank;
C. It is a condition precedent to the obligation of the Bank to
make the loans provided for in the Loan Agreement that the Debtor shall execute
and deliver this Agreement; and
D. All capitalized terms used herein without definition, shall
have the respective meanings ascribed thereto in the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and in order to
induce the Bank to make the loans provided for in the Loan Agreement, the
Debtor agrees with the Bank as follows:
1. SECURITY INTEREST.
To secure the due payment and performance of all
Indebtedness, whether now existing or hereafter arising and whether or not
currently contemplated, of the Borrower and the Debtor to the Bank under,
arising out of or in any way connected with the Loan Agreement and the
Guaranty, and all instruments, agreements and documents executed, issued and
delivered pursuant thereto, including, without limitation, this Agreement and
the promissory note executed and delivered by the Borrower to the Bank in
connection therewith (hereinafter referred to, together with any and all
amendments, modifications, substitutions and/or replacements thereof and
thereto, as the "NOTE") (all of the foregoing is hereinafter referred to
collectively as the "OBLIGATIONS"), the Debtor hereby assigns, mortgages,
pledges, hypothecates, transfers and sets over to the Bank and grants to the
Bank a first lien on and security interest in all assets of the Debtor set
forth, referred to, or listed on Schedule I hereto and made a part hereof,
except those to the extent, if any, that the grant of a lien on or security
interest in, would cause an immediate, actual forfeiture of any of the
Debtor's rights thereunder or is prohibited by law (all hereinafter referred
to as the "COLLATERAL").
2. DEBTOR'S TITLE; LIENS AND ENCUMBRANCES.
The Debtor represents and warrants that it is, or to the
extent that this Agreement states that the Collateral is to be acquired after
the date hereof, will be, the owner of the Collateral, having good and
marketable title thereto, free from any and all liens, security interests,
encumbrances and claims. The Debtor will not create or assume or permit to
exist any such lien, security interest, encumbrance or claim on or against the
Collateral except as created by this Agreement and as permitted by the Loan
Agreement, and the Debtor will promptly notify the Bank of any such other
claim, lien, security interest or other encumbrance made or asserted against
the Collateral and will defend the Collateral against any such claim, lien,
security interest or other encumbrance.
3. REPRESENTATIONS AND WARRANTIES;
LOCATION OF COLLATERAL AND RECORDS;
BUSINESS AND TRADE NAMES OF DEBTOR.
(a) The Debtor represents and warrants that it has no place
of business, offices where the Debtor's books of account and records are kept,
or places where the Collateral is used, stored or located, except as set forth
on Schedule II hereto, and covenants that it will promptly notify the Bank of
any change in the foregoing representation. The Debtor shall at all times
maintain its records as to the Collateral at its chief place of business at the
address referred to on Schedule II and at none other. The Debtor further
covenants that except for Collateral delivered to the Bank or an agent for the
Bank, the Debtor will not store, use or locate any of the Collateral at any
place other than as listed on Schedule II hereto or such other locations with
respect to which the Bank has perfected its first, prior security interest in
such Collateral.
(b) The Debtor represents and warrants that it currently uses
no business or trade names, except as set forth on Schedule II hereto, and
covenants that the Debtor will promptly notify the Bank, in sufficient detail,
of any changes in, additions to, or deletions from the business or trade names
used by the Debtor for billing purposes.
(c) The taxpayer identification number set forth opposite the
Debtor's name on the signature page of this Security Agreement and furnished to
the Bank for the purpose of filing all financing statements and continuation
statements covering all or any part of the Collateral is the Debtor's correct
taxpayer identification number.
4. PERFECTION OF SECURITY INTEREST.
The Debtor will join with the Bank in executing one or more
financing statements pursuant to the Uniform Commercial Code or other notices
appropriate under applicable law in form satisfactory to the Bank and will pay
all filing or recording costs with respect thereto, and all costs of filing or
recording this Agreement or any other instrument, agreement or document
executed and delivered pursuant hereto or to the Loan Agreement (including the
cost of all federal, state or local mortgage, documentary, stamp or other
taxes), in each case, in all public offices where filing or recording is
reasonably deemed by the Bank to be necessary or desirable. The Debtor hereby
authorizes the Bank to take all action (including, without limitation, the
filing of any Uniform Commercial Code Financing Statements or amendments
thereto without the signature of the Debtor) that the Bank may reasonably deem
necessary or desirable to perfect or otherwise protect the liens and security
interests created hereunder and to obtain the benefits of this Agreement in the
event the Debtor does not promptly comply with any request of the Bank in
connection with the foregoing. The Bank shall use its best efforts to notify
the Debtor of any action taken by the Bank under this paragraph 4.
5. GENERAL COVENANTS.
The Debtor shall:
(a) furnish the Bank from time to time at the Bank's request
written statements and schedules further identifying and describing the
Collateral in such detail as the Bank may reasonably require;
(b) advise the Bank promptly, in sufficient detail, of any
substantial change in the Collateral, and of the occurrence of any event that
would have a material adverse effect on the value of the Collateral or on the
Bank's security interest therein;
(c) comply in all material respects with all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official applicable to the Collateral or any part thereof or to the operation
of the Debtor's business, provided that the Debtor may contest any acts, rules,
regulations, orders and directions of such bodies or officials in any
reasonable manner that will not, in the Bank's reasonable opinion, materially
and adversely affect its rights or the priority of its security interest in the
Collateral;
(d) perform and observe all covenants, restrictions and
conditions contained in the Loan Agreement providing for payment of taxes,
maintenance of insurance and otherwise relating to the Collateral, as though
such covenants, restrictions and conditions were fully set forth in this
Agreement;
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(e) promptly notify the Bank of all disputes with
account debtors involving amounts in excess of $75,000; and
(f) promptly execute and deliver to the Bank such further
deeds, mortgages, assignments, security agreements or other instruments,
documents, certificates and assurances and take such further action as the Bank
may from time to time in its reasonable discretion deem necessary to perfect,
protect or enforce its security interest in the Collateral or otherwise to
effectuate the intent of this Agreement and the Loan Agreement.
6. ASSIGNMENT OF INSURANCE.
At or prior to the closing of the Loans, the Debtor shall
deliver to the Bank copies of, or certificates of the issuing companies with
respect to, endorsements of any and all policies of insurance owned by the
Debtor covering or in any manner relating to the Collateral, in form and
substance satisfactory to the Bank, naming the Bank as an additional insured
party as its interest may appear and indicating that the policy will not be
terminated, or reduced in coverage or amount, without at least ten (10) days'
prior written notice from the insurer to the Bank. As further security for the
due payment and performance of the Obligations, the Debtor hereby assigns to
the Bank all sums, including returned or unearned premiums, that may become
payable under or in respect of any policy of insurance owned by the Debtor
covering or in any manner relating to the Collateral, from and after the
occurrence of an Event of Default, and the Debtor hereby directs each insurance
company issuing any such policy to make payment of sums directly to the Bank.
The Debtor hereby appoints the Bank as the Debtor's attorney-in-fact and
authorizes the Bank upon the occurrence and during the continuance of any Event
of Default in the Debtor's or in the Bank's name to endorse any check or draft
representing any such payment and to execute any proof of claim, subrogation
receipt and any other document required by such insurance company as a
condition to or otherwise in connection with such payment, and, to cancel,
assign or surrender any such policies. All such sums received by the Bank shall
be applied promptly by the Bank to satisfaction of the Obligations or, to the
extent that such sums represent unearned premiums in respect of any policy of
insurance on the Collateral refunded by reason of cancellation, toward payment
for similar insurance protecting the respective interests of the Debtor and the
Bank, or as otherwise required by applicable law and to the extent not so
applied shall be paid over to the Debtor.
7. FIXTURES.
It is the intent of the Debtor and the Bank that none of the
Collateral is or shall be regarded as fixtures, as that term is used or defined
in Article 9 of the Uniform Commercial Code, and the Debtor represents and
warrants that it has not made and is not bound by any lease or other agreement
that is inconsistent with such intent. Nevertheless, if the Collateral or any
part thereof is or is to become attached or affixed to any real estate, the
Debtor will, promptly, upon request, exercise its best efforts to furnish the
Bank with a disclaimer or subordination in form satisfactory to the Bank of
their interests in the Collateral from all persons having an interest in the
real estate to which the Collateral is attached or affixed, together with the
names and addresses of the record owners of, and all other persons having
interest in, and a general description of, such real estate.
8. COLLECTIONS.
(a) The Debtor may collect all checks, drafts, cash or other
remittances (i) in payment of any of its accounts, contract rights or general
intangibles constituting part of the Collateral, (ii) in payment of any
Collateral sold, transferred, leased or otherwise disposed of, if permitted by
the Loan Agreement, or (iii) in payment of or in account of its accounts,
contracts, contract rights, notes, drafts, acceptances, general intangibles,
choses in action and all other forms of obligations relating to any of the
Collateral so sold, transferred, or leased or otherwise disposed of, and all of
the foregoing amounts so collected shall be applied to its normal operating
expenses in the ordinary course of its business with any excess held in trust
by the Debtor for, and as the property of, the Bank.
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(b) After the occurrence and during the continuance of an
Event of Default, and upon the written request of the Bank, the Debtor will
immediately upon receipt of all such checks, drafts, cash or other remittances
in payment of any of its accounts, contract rights or general intangibles
constituting part of the Collateral, deliver any such items to the Bank
accompanied by a remittance report in form supplied or approved by the Bank,
such items to be delivered to the Bank in the same form received, endorsed or
otherwise assigned by the Debtor where necessary to permit collection of such
items and, regardless of the form of such endorsement, the Debtor hereby waives
presentment, demand, notice of dishonor, protest, notice of protest and all
other notices with respect thereto.
(c) After the occurrence and during the continuance of an
Event of Default, and upon the written request of the Bank, the Debtor will
promptly upon receipt of all such checks, drafts, cash or other remittances in
payment for any Collateral sold, transferred, leased or otherwise disposed of,
as permitted by Section 7.6 of the Loan Agreement, or in payment or on account
of its accounts, contracts, contract rights, notes, drafts, acceptances,
general intangibles, choses in action and all other forms of obligations
relating to any of the Collateral so sold, transferred, leased or otherwise
disposed of, deliver any such items to the Bank accompanied by a remittance
report in form supplied or approved by the Bank, such items to be delivered to
the Bank in the same form received, endorsed or otherwise assigned by the
Debtor where necessary to permit collection of such items and, regardless of
the form of such endorsement, the Debtor hereby waives presentment, demand,
notice of dishonor, protest, notice of protest and all other notices with
respect hereto.
(d) At the request of the Bank at any time after the
occurrence and during the continuance of an Event of Default, the Debtor shall
direct all account debtors who are obligated to the Debtor under or on account
of any account receivable, to make all payments due from them to the Debtor
directly to the Bank (to the extent permitted by applicable law). The Debtor
hereby authorizes the Bank (to the extent permitted by applicable law),
effective upon the occurrence and continuance of an Event of Default to: (A)
verify by mail, telephone, telegraph and otherwise, any and all amounts due to
the Debtor from account debtors, and open the Debtor's mail and collect any and
all amounts due to the Debtor from account debtors, (B) notify any or all
Account Debtors that the accounts have been assigned to the Bank and that the
Bank has a security interest therein and direct that all payments thereof be
made directly to the Bank, and (C) assert and xxx on any cause of action that
the Debtor may have or assert against any account debtor, in the Debtor's name,
or in the Bank's own name, without naming the Debtor as a party. The Debtor
hereby agrees that any such notice, in the Bank's sole discretion, may be sent
on the Debtor's stationary, in which event, if required by the Bank, the Debtor
shall co-sign such notice with the Bank.
(e) All of the foregoing remittances shall be applied and
credited by the Bank first to satisfaction of the Obligations or as otherwise
required by applicable law, and to the extent not so credited or applied, shall
be paid over to the Debtor.
9. RIGHTS AND REMEDIES ON EVENT OF DEFAULT.
In the event of the occurrence and continuance of an Event of
Default, the Bank shall at any time thereafter have the right, with or without
notice to the Debtor, as to any or all of the Collateral, by any available
judicial procedure or without judicial process, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral, and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, the Debtor agrees that the
Bank shall have the right to sell, lease, or otherwise dispose of all or any
part of the Collateral, whether in its then condition or after further
preparation or processing, either at public or private sale or at any broker's
board, in lots or in bulk, for cash or for credit, with or without warranties
or representations, and upon such terms and conditions, all as the Bank in its
sole discretion may deem advisable, and it shall have the right to purchase at
any such sale; and, if any Collateral shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, the Bank
shall have the right, at its option, to do such rebuilding, repairing,
preparation, processing or completion of manufacturing, for the purpose of
putting the Collateral in such saleable or disposable form as it shall deem
reasonably appropriate. At the Bank's request upon the occurrence of an Event
of Default, the Debtor shall assemble the Collateral and make it available to
the Bank at places that the Bank shall select, whether at the Debtor's premises
or elsewhere, and make available to the Bank, without rent, all of the Debtor's
premises and facilities
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for the purpose of the Bank's taking possession of, removing or putting the
Collateral in saleable or disposable form. The proceeds of any such sale, lease
or other disposition of the Collateral shall be applied first, to the
reasonable expenses of retaking, holding, storing, processing and preparing for
sale, selling, and the like, and to the reasonable attorneys' fees and legal
expenses incurred by the Bank, and then to satisfaction of the Obligations, and
to the payment of any other amounts required by applicable law, after which the
Bank shall account to the Debtor for any surplus proceeds. If, upon the sale,
lease or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Bank is legally entitled, the
Debtor will be liable for the deficiency, together with interest thereon, at
the Event of Default rate prescribed in the Loan Agreement, and the reasonable
fees of any attorneys employed by the Bank to collect such deficiency. To the
extent permitted by applicable law and subject to subparagraph 15(a) hereof,
the Debtor waives all claims, damages and demands against the Bank arising out
of the repossession, removal, retention or sale of the Collateral.
10. COSTS AND EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever
kind or nature, including the reasonable attorneys' fees and legal expenses
incurred by the Bank, in connection with the preparation of this Agreement and
all other documents relating hereto and the consummation of this transaction,
the filing or recording of financing statements and other documents (including
all taxes in connection therewith) in public offices, the payment or discharge
of any taxes, insurance premiums, encumbrances or otherwise protecting,
maintaining or preserving the Collateral, or the enforcing, foreclosing,
retaking, holding, storing, processing, selling or otherwise realizing upon the
Collateral and the Bank's security interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions or
proceedings arising out of or related to the transaction to which this
Agreement relates, shall be borne and paid by the Debtor on demand by the Bank
and until so paid shall be added to the principal amount of the Obligations and
shall bear interest at the Post-Default Rate.
11. POWER OF ATTORNEY.
The Debtor authorizes the Bank and does hereby make,
constitute and appoint the Bank, and any officer or agent of the Bank, with
full power of substitution, effective upon the occurrence and continuance of an
Event of Default, as the Debtor's true and lawful attorney-in-fact, with power,
in its own name or in the name of the Debtor: (a) to endorse any notes, checks,
drafts, money orders, or other instruments of payment (including payments
payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Bank; (b) to sign and endorse
any invoice, freight or express xxxx, xxxx of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to Collateral; (c) to
pay or discharge any taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Collateral; (d) to
demand, collect, receipt for, compromise, settle and xxx for monies due in
respect of the Collateral; and (e) generally, to do, at the Bank's option and
at the Debtor's expense, at any time, or from time to time, all acts and things
that the Bank deems reasonably necessary to protect, preserve and realize upon
the Collateral and the Bank's security interest therein in order to effect the
intent of this Agreement and the Loan Agreement all as fully and effectually
as the Debtor might or could do; and the Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Obligations shall be outstanding.
12. NOTICES.
All notices and other communications pursuant to this
Agreement shall be in writing, either by letter (delivered by hand or
commercial messenger service or sent by registered or certified mail, return
receipt requested) or telegram or telecopy, addressed as follows:
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(a) If to the Debtor:
c/o The Care Group, Inc.
Xxx Xxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to the Bank:
Key Bank of New York
0000 Xxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Vice President
Telecopier No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
13. OTHER SECURITY.
To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee, endorsement
or property of any other Person then the Bank shall have the right in its sole
discretion to pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any of the
Bank's rights and remedies hereunder.
14. DEPOSITS.
Any and all deposits or other sums at any time credited by or
due from the Bank to the Debtor, whether in regular or special depository
accounts or otherwise, shall at all times constitute additional collateral for
the Obligations, and may after the occurrence of a Event of Default be set-off
by the Bank against any Obligations at any time whether or not they are then
due and whether or not other collateral held by the Bank is considered to be
adequate.
15. MISCELLANEOUS.
(a) Beyond exercising reasonable care in the custody and
preservation of any Collateral in its possession, the Bank shall have no duty
as to the collection of any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Bank, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.
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(b) No course of dealing between the Debtor and the Bank, nor
any failure to exercise, nor any delay in exercising, on the part of the Bank,
any right, power or privilege hereunder or under the Loan Agreement or the
Note or the Guaranty shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(c) All of the Bank's rights and remedies with respect to the
Collateral, whether established hereby or by the Loan Agreement or the
Guaranty, or by any other agreements, instruments or documents or by law, shall
be cumulative and may be exercised singly or concurrently.
(d) The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Agreement in any jurisdiction.
(e) This Agreement is subject to modification only by a
writing signed by the parties.
(f) The benefits and burdens of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
parties; provided, however, that the rights and obligations of the Debtor under
this Agreement shall not be assigned or delegated without the prior written
consent of the Bank, and any purported assignment or delegation without such
consent shall be void.
16. TERM OF AGREEMENT.
The term of this Agreement shall commence on the date hereof
and this Agreement shall continue in full force and effect, and be binding upon
the Debtor, until all of the Obligations have been fully paid and performed and
the Bank shall release its lien on the Collateral (at the expense of the
Debtor), whereupon this Agreement shall terminate.
WITNESS the execution hereof as of the day and year first above
written.
Federal Employer [GUARANTOR]
Identification Number:
By__________________________
Title
KEY BANK OF NEW YORK
By__________________________
Title
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