SECURITY AGREEMENT [$10,700,000 loan]
EXHIBIT
99.5
[$10,700,000
loan]
This
SECURITY AGREEMENT (as the same may be amended, restated, supplemented or
otherwise modified from time to time, this "Security
Agreement"),
dated
as of December 12, 2005 (“Effective
Date”),
is
made by INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation
(“Borrower”),
and
MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation (“Lender”),
in
connection with that certain Credit Agreement dated as of the date hereof
among
the Borrower and Lender and certain other “Credit
Parties”
(as
defined therein), (as amended, restated, supplemented or otherwise modified
from
time to time, the "Credit
Agreement").
Initially capitalized terms used herein and not otherwise defined herein
shall
have the respective meanings ascribed to such terms in the Credit
Agreement.
RECITALS
A. Borrower
is in the business of delivering acute care services to the public through
four
(4) separate acute care hospital facilities located in Orange County, California
(“Hospital
Facilities”)
identified in Annex
D
to the
Credit Agreement; and, along with one or more of the Credit Parties, is also
in
the business of owning and operating certain medical office buildings and
other
healthcare businesses related thereto.
B. Pursuant
to that certain Credit Agreement dated as of March 3, 2005, as amended
(“Original
Credit Agreement”)
by and
between Borrower, the Credit Parties and Medical Provider Financial Corporation
II, a Nevada corporation, an affiliate of Lender (“Original
Lender”),
Original Lender loaned $50,000,000 to IHHI, WMC-SA, WMC-A, Xxxxxxx and Coastal
(the “Acquisition
Loan”)
for the
purpose of acquiring the Hospital Facilities, and made available to IHHI,
WMC-SA, WMC-A, Xxxxxxx and Coastal a $30,000,000 line of credit (the
“Line
of Credit Loan”)
for the
purpose of operating the Hospital Facilities (the Acquisition Loan and the
Line
of Credit Line are hereinafter referred to as the “Original
Loan”).
C. Borrower
under the Credit Agreement has requested that
Lender make a new loan in the amount of $10,700,000 (“New
Loan”)
for the
purpose of operating the Hospital Facilities. Lender has agreed, on the terms
and conditions set forth in this Agreement.
D. As
an
inducement to Lender to enter into the Credit Agreement and to make the New
Loan
to Borrower, Borrower has agreed to grant Lender a Lien on substantially
all of
the assets of Borrower, including without limitation a security interest
in that
number of fully-paid shares of Borrower’s common stock equal in value to the
amount of the New Loan not repaid at Maturity plus any due and owing interest,
Lender’s Costs and attorneys’ fees.
E. In
order
to secure the prompt and complete payment, observance and performance of
(i) all
of Borrower's Obligations under the Credit Agreement, and (ii) all of Borrower's
obligations and liabilities hereunder and in connection herewith (all such
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"),
the
Lender has required, as a condition, among others, to entering into the Credit
Agreement and the other Loan Documents, that Borrower execute and deliver
this
Security Agreement.
1
F. Unless
otherwise defined herein, capitalized terms used in this Agreement shall
have
the meanings ascribed to them in Annex
A
(Definitions) of the Credit Agreement. These Recitals shall be construed
as part
of the Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the covenants and conditions hereinafter
contained, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, Borrower and Lender agree as
follows:
Section
1. Defined
Terms: Construction.
(A) Certain
defined terms. As used herein, the following terms shall have the following
meanings:
LIEN:
any
mortgage, security deed or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, security title,
easement or encumbrance, or preference, priority or other security agreement
or
preferential arrangement of any kind or nature whatsoever (including any
lease
or title retention agreement, any financing lease having substantially the
same
economic effect as any of the foregoing, and the filing of, or agreement
to
give, any financing statement perfecting a security interest under the Uniform
Commercial Code or comparable law of any jurisdiction) (collectively, a
“Lien”).
LOAN:
The
New Loan and any other advance of monies made by Lender from time to time
under
the Credit Agreement or any of the other New Loan Documents (collectively,
a
“Loan”).
OBLIGATIONS:
all “Obligations” as defined in the Credit Agreement, and all loans, advances,
debts, expense reimbursement, fees, liabilities, and obligations for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or amounts
are
liquidated or determinable) owing by such Borrower or Credit Party to Lender,
of
any kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, whether arising under any of the New Loan
Documents or under any other agreement between Borrower and Lender, and all
covenants and duties regarding such amounts. This term includes all principal,
interest (including interest accruing at the then applicable rate provided
in
this Security Agreement after the maturity of the New Loan and interest accruing
at the then applicable rate provided in this Security Agreement after the
filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for post-filing
or
post-petition interest is allowed in such proceeding), expenses, attorneys’ fees
and any other sum chargeable to Borrower under any of the New Loan Documents,
and all principal and interest due in respect of the New Loan and all
obligations and liabilities of any Guarantor under any Guaranty (collectively,
“Obligations”).
2
PERSON:
any individual, sole proprietorship, partnership, limited liability partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity
or
government (whether Federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof),
and shall include such Person’s successors and assigns (collectively, a
“Person”).
REQUIREMENT
OF LAW: As to Borrower, the Articles of Incorporation and By-Laws or other
organizational or governing documents of Borrower, and any law, treaty, rule
or
regulation (including any federal and state health regulations) or determination
of an arbitrator or a court or other Governmental Authority, in each case
binding upon Borrower or any of its property or to which Borrower or any
of its
property is subject (collectively, “Requirement
of Law”).
(B) Unless
otherwise defined herein, all terms defined in Article 8 and Article 9 of
the
Nevada version of the Uniform Commercial Code (the “Uniform
Commercial Code”)
are
used herein as defined therein.
(C) The
words
"hereby," "hereof," "herein" and "hereunder" and words of like import when
used
in this Security Agreement shall refer to this Security Agreement as a whole
and
not to any particular provision of this Security Agreement. Section references
herein are to this Security Agreement unless otherwise specified.
(D) All
terms
defined in this Security Agreement in the singular shall have comparable
meanings when used in the plural, and vice versa, unless otherwise
specified.
(E) The
parties hereto have participated jointly in the negotiation and drafting
of this
Security Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Security Agreement shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall
arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Security Agreement.
Section
2. Grant
of Lien. To
secure
the prompt and complete payment, observance and performance of the Liabilities,
Borrower hereby assigns and pledges to the Lender, and hereby grants to the
Lender, a continuing Lien in all of Borrower's right, title and interest
in and
to all of its property and assets, whether real or personal, tangible or
intangible, and whether now owned or existing or hereafter arising or acquired,
or in which it now has or at any time in the future may acquire any right,
title, or interest, including all of the following property and interests
in
property in which it now has or at any time in the future may acquire any
right,
title or interest and wheresoever located (collectively, the "Collateral"):
ACCOUNTS:
All
“accounts,” as such term is defined in the Uniform Commercial Code, now owned or
hereafter acquired by Borrower, including: (i) all accounts receivable, other
receivables, book debts and other forms of obligations (other than forms
of
obligations evidenced by Chattel Paper or Instruments) (including any such
obligations that may be characterized as an account or contract right under
the
Uniform Commercial Code); (ii) all of Borrower’s rights in, to and under all
purchase orders or receipts for goods or services; (iii) all of Borrower’s
rights to any goods represented by any of the foregoing (including unpaid
sellers’ rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods); (iv) all rights to payment
due to Borrower for Goods or other property sold, leased, licensed, assigned
or
otherwise disposed of, for a policy of insurance issued or to be issued,
for a
secondary obligation incurred or to be incurred, for energy provided or to
be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by Borrower or in connection with any other transaction
(whether or not yet earned by performance on the part of Borrower); (v) all
health care insurance receivables; and (vi) all collateral security of any
kind
given by Borrower with respect to any of the foregoing (collectively,
"Accounts");
3
BOOKS
AND
RECORDS: All books and records of Borrower, including all books, records,
board
minutes, contracts, licenses, insurance policies, maintenance and warranty
records, environmental audits, business plans, files, ledgers, computer
programs, computer files, computer discs and other data and Software storage
and
media devices, computer runs, accounting books and records, financial statements
(actual and pro forma), filings with Governmental Authorities and any and
all
records and instruments relating to the Collateral or Borrower’s business
(collectively, "Books
and Records");
CHATTEL
PAPER, INSTRUMENTS AND DOCUMENTS: (i) All chattel paper (including tangible
chattel paper, intangible chattel paper and electronic chattel paper), rental
contracts, and leases (collectively, "Chattel
Paper");
(ii)
all instruments and all payments thereunder, including all certificated
securities and all promissory notes and other evidences of indebtedness,
other
than instruments that constitute, or are a part of a group of writings that
constitute Chattel Paper (collectively, "Instruments");
and
(iii) all bills of sale, bills of lading, warehouse receipts and other documents
of title, whether or not negotiable, including, without limitation, all other
documents which purport to be issued by a Bailee (as defined in Section
4(A)
below)
or agent and purport to cover goods in any Bailee's or agent's possession
which
are either identified or are fungible portions of an identified mass, and
all
documents of title made available to the Lender for the purpose of ultimate
sale
or exchange of goods or for the purpose of loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise dealing with
goods in a manner preliminary to their sale or exchange (collectively,
"Documents");
COMMERCIAL
TORT CLAIMS: All commercial tort claims set forth from time to time on
Schedule
1
hereto,
all other commercial tort claims pledged pursuant to a supplement to this
Security Agreement pursuant to Section
5
and all
payments due or made to Borrower in connection therewith (collectively,
“Commercial
Tort Claims”);
DEPOSIT
ACCOUNTS: All deposit accounts (whether general or special), and all funds
and
amounts therein, whether or not restricted or designated for a particular
purpose (collectively, "Deposit
Accounts");
EQUIPMENT:
All “equipment” as such term is defined in the Uniform Commercial Code, now
owned or hereafter acquired by Borrower, wherever located, including any
and all
machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles
and other tangible personal property and all other goods (including Software
embedded in such goods) (other than Inventory) of every kind and description
that may be now or hereafter used in Borrower’s operations or that are owned by
Borrower or in which Borrower may have an interest, and all parts, accessories
and accessions thereto and substitutions and replacements therefor
(collectively, the "Equipment");
4
GENERAL
INTANGIBLES: All general intangibles as defined in the Uniform Commercial
Code
and other intangible property of any kind (other than Accounts, Chattel Paper,
commercial tort claims, Deposit Accounts, Investment Property and Letter
of
Credit Rights), including, without limitation, (i) Payment Intangibles, (ii)
the
uniform resource locators set forth on Schedule
2
and the
internet websites associated therewith; (iii) all rights to payment for loans,
money or funds advanced or sold and other obligations receivable (other than
Accounts); (iv) customer lists, credit files, correspondence, and advertising
materials; (v) contracts and contract rights; (vi) all interests in corporations
(including but not limited to that number of fully-paid shares of Borrower’s
common stock equal in value to the amount of the New Loan not repaid at Maturity
plus any due and owing interest, Lender’s Costs and attorneys’ fees),
partnerships, limited liability companies, joint ventures and other
unincorporated Persons; (vii) all tax refunds and tax refund claims; (viii)
all
right, title and interest under leases, subleases, licenses and concessions
and
other agreements relating to real or personal property (but excluding any
interest in the underlying real property or personal property if such personal
property constitutes equipment or fixtures); (ix) all payments due or made
to
Borrower in connection with any requisition, confiscation, condemnation,
seizure
or forfeiture of any property by any person or governmental authority; (x)
all
choses in action, causes of action or other claims (other than Commercial
Tort
Claims), and all payments due or made to Borrower in connection therewith;
(xi)
all credits with and other claims against carriers and shippers; (xii) all
rights to indemnification; (xiii) all rights, priorities and privileges of
Borrower relating to intellectual property, whether arising under United
States,
multinational or foreign laws or otherwise, including (1) all copyrights
arising
under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether published
or
unpublished, all registrations and recordings thereof and all applications
in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any foreign counterparts thereof;
and the right to obtain all renewals thereof ("Copyrights");
(2)
any written agreement naming Borrower as licensor or licensee granting any
right
under any Copyright, including the grant of any right to copy, publicly perform,
create derivative works, manufacture, distribute, exploit or sell materials
derived from any Copyright; (3) all letters patent of the United States,
any
other country or any political subdivision thereof and all reissues and
extensions thereof, all applications for letters patent of the United States
or
any other country and all divisions, continuations and continuations-in-part
thereof and all rights to obtain any reissues or extensions of the foregoing
("Patents"),
(4)
all agreements, whether written or oral, providing for the grant by or to
Borrower of any right to manufacture, use, import, sell or offer for sale
any
invention covered in whole or in part by a Patent, (5) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, brand names, labels, service marks, logos and other
source
or business identifiers, and, in each case, all goodwill associated therewith,
all registrations and recordings thereof and all applications in connection
therewith, in each case whether in the United States Patent and Trademark
Office
or in any similar office or agency of the United States, any State thereof
or
any other country or any political subdivision thereof, or otherwise, all
common-law rights related thereto, and the right to obtain all renewals thereof
("Trademarks"),
(6)
any agreement, whether written or oral, providing for the grant by or to
Borrower of any right to use any Trademark (collectively, "Intellectual
Property”),
trade
secrets, and all rights to xxx at law or in equity for any infringement or
other
impairment thereof, including the right to receive all proceeds and damages
therefrom, advertising materials, slogans, and all goodwill associated with
the
foregoing; (xiv) all licenses and permits from any Governmental Authority;
(xv)
all license agreements and franchise agreements, (xvi) all reversionary
interests in pension and profit sharing plans and reversionary, beneficial
and
residual interest in trusts; (xvii) all proceeds of insurance of which Borrower
is beneficiary; and (xviii) all letters of credit, guaranties, liens, security
interests and other supporting obligations held by or granted to Borrower
(collectively, "General
Intangibles”);
5
INVENTORY:
All inventory as defined in the Uniform Commercial Code, including, without
limitation, all goods, including Software embedded in such goods, wherever
located, whether in the possession of Borrower or of a Bailee and whether
consisting of whole goods, spare parts, components, supplies, materials,
or
returned or repossessed goods), which are held for sale or lease, which are
to
be furnished (or have been furnished) under any contract of service or which
are
raw materials, work in process, finished goods or materials used or consumed
in
such Borrower's business (collectively, "Inventory");
INVESTMENT
PROPERTY: All of Borrower's investment property, as defined in the Uniform
Commercial Code (collectively, "Investment
Property");
LETTER
OF
CREDIT RIGHTS: All of Borrower's letters of credit and letter of-credit rights,
as defined in the Uniform Commercial Code, now owned or hereafter acquired,
including rights to payment or performance under a letter of credit, whether
or
not Borrower, as beneficiary, has demanded or is entitled to demand payment
or
performance (collectively, "Letter
of Credit Rights");
PAYMENT
INTANGIBLES: All “payment intangibles” as such term is defined in the Uniform
Commercial Code, now owned or hereafter acquired by Borrower (collectively,
“Payment
Intangibles”).
OTHER
PROPERTY: All money, cash and cash equivalents; all property or interests
in
property now owned or hereafter acquired by Borrower (but only to the extent
not
excluded from the Collateral elsewhere in this Security Agreement) which
now may
be owned or hereafter may come into the possession, custody or control of
the
Lender in any way and for any purpose (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise); and all proceeds
of
loans, including, without limitation, the New Loan made under the Credit
Agreement (“Other
Property”);
PROCEEDS:
All “proceeds,” as such term is defined in the Uniform Commercial Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower from time to time with respect to
any
Collateral; (ii) any and all payments (in any form whatsoever) made or due
and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under
color
of governmental authority); (iii) any claim of Borrower against third parties
(a) for past, present or future infringement of any Intellectual Property
or (b)
for past, present or future infringement or dilution of any Trademark or
Trademark license or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark license;
(iv)
any recoveries by Borrower against third parties with respect to any litigation
or dispute concerning any Collateral, including claims arising out of the
loss
or nonconformity of, interference with the use of, defects in, or infringement
of rights in, or damage to, Collateral; (v) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Equity Interests; and (vi) any and all other amounts , rights to payment
or
other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral
(collectively, “Proceeds”).
6
SOFTWARE:
All “software” as such term is defined in the Uniform Commercial Code, now owned
or hereafter acquired by Borrower, including all computer programs and all
supporting information provided in connection with a transaction related
to any
program (collectively, “Software”).
SUPPORTING
OBLIGATIONS: All of Borrower's presently existing and hereafter acquired
supporting obligations, as defined in the Uniform Commercial Code (collectively,
“Supporting
Obligations”);
and
together,
for each component of the Collateral, with all Proceeds thereof, including
without limitation accessions and additions thereto, substitutions therefore,
and replacements, products thereof and any other property receivable or received
from or upon the sale, lease, license, collection, use, exchange or other
disposition, whether voluntary or involuntary, of any of the foregoing,
including "proceeds" as defined in the Uniform Commercial Code, any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to or
for the
account of any Borrower from time to time with respect to any of the of the
foregoing, any and all payments (in any form whatsoever) made or due and
payable
to Borrower from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral
by any
Governmental Authority (or any Person acting under color of Governmental
Authority), any and all other amounts from time to time paid or payable under
or
in connection with any of the foregoing or for or on account of any damage
or
injury to or conversion of any of the foregoing by any Person, any and all
tangible or intangible property received upon the sale or disposition of
the
foregoing and all proceeds of proceeds.
Section
3. Borrower
Remains Liable.
Anything herein to the contrary notwithstanding, (A) Borrower shall remain
solely 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 Security Agreement and the other
New
Loan Documents had not been executed, (B) the exercise by the Lender of any
of
its rights hereunder or under the New Loan Documents shall not release any
Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (C) the Lender shall not have any
responsibility, obligation or liability under the contracts and agreements
included in the Collateral by reason of this Security Agreement or the other
New
Loan Documents, nor shall the Lender be required or obligated, in any manner,
to
(i) perform or fulfill any of the obligations or duties of any Borrower
thereunder, (ii) make any payment, or make any inquiry as to the nature or
sufficiency of any payment received by any Borrower or the sufficiency of
any
performance by any party under any such contract or agreement or (iii) present
or file any claim, or take any action to collect or enforce any claim for
payment assigned hereunder.
7
Section
4. Representations
and Warranties.
Borrower represents and warrants, as of the date of this Security Agreement,
and
as of each date on which representation and warranties under the Credit
Agreement shall be made (except for changes permitted or contemplated by
this
Security Agreement or the other New Loan Documents) until termination of
this
Security Agreement pursuant to Section 20:
(A) The
exact
legal name, jurisdiction of incorporation, type of entity and organizational
identification number for Borrower is set forth on Schedule
3
hereto.
The locations listed for Borrower on Schedule
4
constitute all locations at which Equipment and/or Inventory of Borrower
is
located and Borrower has exclusive possession and control of such Equipment
and
Inventory, except for such Equipment and Inventory which is (i) temporarily
in
transit between such locations, or (ii) temporarily stored with third parties
or
held by third parties for processing, storage, engineering, evaluation, repairs
or sale (each, a "Bailee"),
as to
which all actions required by the Credit Agreement, if any, have been taken.
The
proper corporate names of such third parties, the location of such Equipment
and
Inventory, the nature of the relationship between Borrower and such Bailee,
and
the maximum value of Equipment and Inventory held by such Bailee, if greater
than $50,000, are set forth in Schedule
5.
Schedules
4
and
5
shall be
amended to reflect (1) additional locations acquired or utilized from time
to
time or (2) new arrangements with third parties for manufacturing, processing,
engineering, evaluation, repairs, storage, bailment or consignment, provided,
that, in each case Borrower is in full compliance with the Credit Agreement
and
Sections
5
and
8
below in
connection with such locations. The chief place of business and chief executive
office of Borrower is located at the address of Borrower designated as such
on
Schedule
4.
All
Books and Records concerning any Collateral are located at the addresses
listed
on Schedule
4.
(B) This
Security Agreement creates in favor of the Lender a legal, valid and enforceable
security interest in the Collateral. When financing statements have been
filed
in the appropriate offices against Borrower in the locations listed for Borrower
on Schedule
6,
the
Lender will have a fully perfected Lien on the Collateral in which a security
interest may be perfected by such filing, subject only to Liens permitted
by the
definition of “Permitted Encumbrances” in the Credit Agreement and to the Lien
in favor of the Original Lender. All other actions to perfect the security
interests in Collateral of a type which cannot be perfected by filing have
been
taken.
(C) Borrower
is the legal and beneficial owner of its the Collateral free and clear of
all
Liens except for Liens permitted by the definition of “Permitted Encumbrances”
in the Credit Agreement and to the Lien in favor of the Original Lender.
Borrower currently conducts business under its legal name and, in certain
areas
and for certain operations, the additional trade names listed on Schedule
7.
Borrower has not used any trade names or fictitious names in the past five
years, except as set forth on Schedule
7.
(D) The
amount represented by Borrower from time to time to the Lender as the amount
owing by each account debtor or by all account debtors in respect of any
Accounts will, at such time, be the correct amount actually and unconditionally
owing by such account debtor(s) thereunder to the best of Borrower's
knowledge.
8
(E) In
the
event that any of Borrower's Equipment and/or Inventory is in the possession
of
a Bailee, none of the receipts, Instruments or documents received and to
be
received by Borrower from such Bailee state that the Equipment and/or Inventory
covered thereby is to be delivered to bearer or to the order of a named person
or to a named person and such named person's assigns.
(F) Schedule
8
lists
(i) all registered Copyrights, all Trademarks, and all Patents and (ii) all
other Intellectual Property of Borrower which is material individually or
in the
aggregate to the operation of the business of Borrower or the Borrower as
a
whole, in each case separately identifying that owned by Borrower and that
licensed to Borrower (collectively, the "Material
Intellectual Property").
The
Material Intellectual Property owned by Borrower is valid, subsisting, unexpired
and enforceable, has not been adjudged invalid and has not been abandoned
and
the use thereof in the business of Borrower does not infringe the intellectual
property rights of any other Person. Except as set forth in Schedule
8,
none of
the Material Intellectual Property owned by Borrower is the subject of any
licensing agreement, dealer agreement or franchise agreement pursuant to
which
Borrower is the licensor or franchisor. No holding, decision or judgment
has
been rendered by any Governmental Authority that would limit, cancel or question
the validity of, or Borrower's rights in, any Material Intellectual Property.
No
action or proceeding seeking to limit, cancel or question the validity of
any
Material Intellectual Property owned by Borrower or Borrower's ownership
interest therein, is on the date hereof, pending or, to the knowledge of
Borrower, threatened. There are no claims or judgments against, or settlements
by, to be paid by Borrower relating to the Material Intellectual Property.
Schedule
8
shall be
updated from time to time, and no less frequently than quarterly, to reflect
additional Material Intellectual Property created, acquired or utilized from
time to time.
(G) Schedule
1
lists
all Commercial Tort Claims of Borrower in existence as of the date
hereof.
(H) Schedule
2
lists
all uniform resource locators owned by Borrower.
Section
5. Perfection
and Maintenance of Security Interests and Liens.
Borrower agrees that until termination of this Security Agreement pursuant
to
Section
20,
the
Lender's Liens on and against, the Collateral shall continue in full force
and
effect. Borrower shall perform any and all steps reasonably requested by
the
Lender to ensure the attachment, perfection and priority of, and to maintain
and
protect, the Lender's security interests in and Liens on and against the
Collateral granted or purported to be granted hereby or to enable the Lender
to
exercise its rights and remedies hereunder with respect to any Collateral,
including, without limitation:
(A) executing,
filing and authorizing the Lender to file any financing or continuation
statements, or amendments thereof; in form and substance reasonably satisfactory
to the Lender;
(B) unless
otherwise held by the Original Lender, delivering to the Lender all
certificates, notes, and other instruments representing or evidencing
Collateral, which certificates, notes and other instruments have been duly
endorsed in blank, including, but not limited to, note powers, all in form
and
substance satisfactory to the Lender;
9
(C) unless
otherwise held by the Original Lender, if required by the Lender, delivering
to
the Lender warehouse receipts or negotiable Documents covering that portion
of
the Collateral, if any, located with a Bailee for such receipts or Documents
are
issued;
(D) after
the
occurrence and during the continuance of an “Event of Default” (as defined in
the Credit Agreement) and subject to the rights of the Original Lender,
transferring Equipment and Inventory to warehouses designated by the Lender
or
taking such other steps as are deemed necessary by the Lender to maintain
the
Lender's control of the Equipment and Inventory;
(E) at
the
reasonable request of the Lender, appearing in and defending any action or
proceeding which may affect adversely Borrower's title to, or the security
interest of the Lender in, any of the Collateral;
(F) notifying
the Lender in accordance with the Credit Agreement of any action concerning
a
Commercial Tort Claim acquired by Borrower and, unless the Lender otherwise
consents, entering promptly into a supplement to this Security Agreement
pledging such Commercial Tort Claim to the Lender;
(G) causing
the Lender's name to be noted as secured party on any certificate of title
for a
titled Inventory or Equipment if such notation is a condition to attachment,
perfection or priority of, or the ability of the Lender to enforce the Lien
in
such Collateral;
(H) (i)
entering into supplemental agreements with respect to Intellectual Property,
in
form and substance satisfactory to the Lender, for filing with the United
States
Patent and Trademark Office, United States Copyright Office, or any foreign
office serving substantially the same function; (ii) complying with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727) (or any similar
Requirement of Law with respect to claims owing from Governmental Authorities);
and (iii) complying with any Requirement of Law as to any Collateral if
compliance therewith is a condition to attachment, perfection or priority
of, or
the ability of the Lender to enforce, the Lender's Lien in such Collateral
or
exercise any rights and remedies hereunder; and
(I) executing
and delivering all further instruments and documents, and taking all further
action, as the Lender may reasonably request.
Section
6. Financing
Statements.
Borrower hereby irrevocably authorizes the Lender to file one or more financing
or continuation statements and amendments thereto, disclosing the security
interest granted to the Lender under this Security Agreement without Borrower's
signature appearing thereon, and the Lender agrees to notify Borrower when
such
a filing has been made. Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Security Agreement or of a financing
statement is sufficient as a financing statement.
10
Section
7. (Reserved)
Section
8. Equipment
and Inventory.
Borrower covenants and agrees with the Lender that from the date of this
Security Agreement and until termination of this Security Agreement pursuant
to
Section
20,
Borrower shall:
(A) Keep
its
Equipment and inventory (other than Equipment and Inventory sold or disposed
of
as permitted by the Credit Agreement) at the locations permitted under
Section
4(A)
(other
than such locations where such Collateral was required to be removed pursuant
to
the provisions of Section
5),
and
deliver written notice to the Lender at least thirty (30) days prior to
establishing any other location at which it reasonably expects to maintain
Equipment and/or Inventory; and
(B) If
any
Equipment and/or Inventory of Borrower is in the possession or control of
any
Bailee or any of Borrower's agents, Borrower shall, upon the Lender's request,
notify such Bailee or agent of the Lender's Lien on such Equipment and/or
Inventory and, upon the Lender's request, direct such Bailee or agent to
hold
all such Equipment and/or Inventory for the Lender's account and subject
to the
Lender's instructions.
Section
9. Accounts,
Chattel Paper and General Intangibles.
Borrower covenants and agrees with the Lender that from and after the date
of
this Security Agreement and until termination of this Security Agreement
pursuant to Section
20,
Borrower shall:
(A) Keep
its
jurisdiction of incorporation, chief place of business and chief executive
office and the office where it keeps its Books and Records at its address
set
forth on Schedule
4,
and
keep the offices where it keeps all originals of all Chattel Paper which
evidence Accounts at the locations therefore specified in Section
4(A)
or, upon
thirty (30) days' prior written notice to the Lender, at such other locations
within the United States in a jurisdiction where all actions required by
Section
5
shall
have been taken with respect to the Accounts, Chattel Paper and General
Intangibles. Borrower will hold and preserve such Books and Records (in
accordance with Borrower's usual document retention practices) and Chattel
Paper
and will permit representatives of the Lender at any time during normal business
hours to inspect and make abstracts from such Books and Records and Chattel
Paper; and
(B) In
any
suit, proceeding or action brought by the Lender under any Account, Chattel
Paper or General Intangible comprising part of the Collateral, Borrower will
save, indemnify and keep Lender harmless from and against all expenses, loss
or
damage suffered by reason of any defense, setoff, counterclaim, recoupment
or
reduction of liability whatsoever of the obligor thereunder, arising out
of a
breach by Borrower of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of Lender from
Borrower and all such obligations of Borrower shall be and shall remain
enforceable against and only against Borrower and shall not be enforceable
against Lender.
Section
10. Leased
Real Property. Borrower
covenants and agrees with the Lender that from and after the date of this
Security Agreement and until termination of this Security Agreement pursuant
to
Section
20,
that:
11
(A) Borrower
agrees that, from and after the occurrence and during the continuance of
an
Event of Default, the Lender may, but need not, make any payment or perform
any
act hereinbefore required of Borrower with respect to Borrower's leased premises
in any form and manner deemed expedient. All money paid for any of the purposes
herein authorized and all other moneys advanced by the Lender to protect
the
lien hereof shall be additional Liabilities secured hereby and shall become
immediately due and payable without notice and shall bear interest thereon
at
the default interest rate, determined as provided in Section 1.4(d) of the
Credit Agreement until paid to the Lender in full; and
(B) Borrower
agrees that it will not amend any lease in respect of leased property at
which
Borrower shall maintain Inventory and/or Equipment owned by Borrower having
an
individual book value in excess of $100,000 in a manner that adversely affects
the interests of Lender, without the Lender's prior written
consent.
Section
12. General
Covenants. Borrower
covenants and agrees with the Lender that from and after the date of this
Security Agreement and until termination of this Security Agreement pursuant
to
Section
20,
Borrower shall:
(A) Keep
and
maintain at Borrower's own cost and expense satisfactory and complete records
of
Borrower's Collateral in a manner consistent with Borrower's current business
practice and, where applicable, GAAP, including, without limitation, a record
of
all payments received and all credits granted with respect to such Collateral.
Borrower shall, for the Lender's further security, deliver and turn over
to the
Lender or the Lender's designated representatives (unless otherwise required
by
the Original Lender) at any time following the occurrence and during the
continuation of an Event of Default, any such Books and Records;
(B) Borrower
shall, at its expense, perform and observe all of the material terms and
provisions of the Accounts, General Intangibles, Instruments, Chattel Paper
and
insurance pertaining to any Collateral to be performed or observed by it,
and
maintain such Collateral in full force and effect and enforce Accounts, General
Intangibles, Instruments and Chattel Paper in accordance with their terms;
and
(C) Borrower
will not (i) sell or otherwise dispose of, or grant any option with respect
to,
any of the Collateral without the prior written consent of the Lender, other
than as permitted by the Credit Agreement or the Original Credit Agreement,
(ii)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for the security interest under this Security Agreement,
Liens in favor of the Original Lender, and Liens permitted by the Credit
Agreement, and will defend the Collateral against, and take such other action
as
is necessary to remove, any Lien on such Collateral which is not so permitted,
(iii) other than the Original Loan Documents, enter into any agreement or
understanding that purports to or may restrict or inhibit the Lender's rights
or
remedies hereunder, including, without limitation, the Lender's right to
sell or
otherwise dispose of the Collateral, or (iv) use or permit any Collateral
to be
used unlawfully or in violation of any provision of this Security Agreement,
any
other Loan Document, any Requirement of Law or any policy of insurance covering
the Collateral.
Section
13. Lender
Appointed Attorney-in-Fact.
Borrower hereby irrevocably appoints the Lender as Borrower's attorney-in-fact,
coupled with an interest, with full authority in the place and stead of Borrower
and in the name of Borrower or otherwise, from time to time in the Lender's
discretion, to take any action and to execute any instrument which the Lender
may deem necessary or advisable to accomplish the purposes of this Security
Agreement, including, without limitation:
12
(A) obtain
access to records maintained for Borrower by computer services companies
and
other service companies or bureaus;
(B) send
requests under Borrower's, the Lender's or a fictitious name to Borrower's
customers or account debtors for verification of Accounts;
(C) (i)
record evidence of the Lender's security interest, (ii) following notice
to the
relevant Borrower (which notice shall not be required following the occurrence
and during the continuation of an Event of Default), give notices of the
Lender's security interest to any of Borrower's customers, account debtors
or
suppliers, or (iii) give other notices of the Lender's security interest;
and
(D) do
all
other things reasonably necessary to carry out this Security Agreement;
provided, that the Lender may only take the following actions following the
occurrence and during the continuance of an Event of Default:
(i) obtain
and adjust insurance required to be paid to the Lender pursuant to the Credit
Agreement;
(ii) ask,
demand, collect, xxx for, recover, compromise, receive and give acquaintance
and
receipts for claims and moneys due and to become due under or in respect
of any
of the Collateral;
(iii) receive,
take, endorse, collect, assign and deliver any drafts or other Instruments,
Documents and Chattel Paper, in connection with clause
(i)
or
(ii)
above;
(iv) file
any
claims or take any action or institute any proceedings which the Lender may
deem
necessary or desirable for the collection of any of the Collateral, or otherwise
to enforce the rights of the Lender with respect to any of the Collateral;
and
(v) sell,
transfer, assign or otherwise deal in or with the Collateral or any part
thereof.
Borrower
agrees that neither the Lender, nor any of its designees or attorneys-in-fact,
will be liable for any act of commission or omission, or for any error of
judgment or mistake of fact or law with respect to the exercise of the power
of
attorney granted under this Section
13,
other
than as a result of its or their gross negligence or willful
misconduct.
Section
14. Lender
May Perform: Collection of Accounts.
If
Borrower fails to perform any agreement contained herein, the Lender may
perform, or cause performance of, such agreement, and the expenses of the
Lender
incurred in connection therewith shall constitute Liabilities. Following
the
occurrence and during the continuance of an Event of Default, the Lender
shall
have the right (A) to notify all account debtors to make payments directly
to
the Lender for application to the Liabilities and (B) to enforce Borrower's
rights against the applicable account debtors. Any payment or performance
of
Borrower’s obligations or liabilities hereunder shall bear interest at the
Default Rate from the date incurred until the date repaid in full.
13
Section
15. Lender’s
Duties.
The
powers conferred on the Lender 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 monies actually received by it hereunder, the Lender shall
not
have any duty as to any Collateral. The Lender 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 the Lender accords its own property, it being understood that the Lender
shall be under no obligation to take any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral, but
may
do so at its option, and all reasonable expenses incurred in connection
therewith shall be for the sole account of such Borrower and shall be added
to
the Liabilities and bear interest at the Default Rate from the date incurred
until the date repaid in full. Borrower bear all risk of loss or damage of
any
of the Collateral, except to the extent such loss or damage shall arise solely
from the gross negligence or willful misconduct of the Lender.
Section
16. Remedies.
(A) In
addition to all other rights and remedies granted to it under this Security
Agreement, the Credit Agreement, the other Loan Documents and under any other
instrument or agreement securing, evidencing or relating to any of the
Liabilities, if any Event of Default shall have occurred and be continuing,
the
Lender may exercise all rights and remedies of a secured party under the
Uniform
Commercial Code (whether or not the Uniform Commercial Code applies to the
affected Collateral). Without limiting the generality of the foregoing, Borrower
expressly agrees that in any such event the Lender, without demand of
performance or other demand, advertisement or notice of any kind (except
the
notice specified below of time and place of public or private sale) to or
upon
Borrower or any other Person (all and each of which demands, advertisements
and
notices are hereby expressly waived to the maximum extent permitted by the
Uniform Commercial Code and other applicable law), may forthwith enter upon
the
premises of Borrower where any Collateral is located through self-help, without
judicial process, without first obtaining a final judgment or giving Borrower
or
any other Person notice and opportunity for a hearing on the Lender's claim
or
action and may collect, receive, assemble, process, appropriate and realize
upon
the Collateral, or any part thereof, and may forthwith sell, lease, license,
assign, give an option or options to purchase, or sell or otherwise dispose
of
and deliver said Collateral (or contract to do so), or any part thereof,
in one
or more parcels at a public or private sale or sales, at any exchange at
such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. The Lender shall have the right upon
any
such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of the Lender, the whole
or
any part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption each Borrower hereby releases. Such sales may
be
adjourned and continued from time to time with or without notice. At any
such
sale or other disposition, the Lender reserves the right to sell for cash,
on
credit (whether secured or unsecured), or a combination of both, and not
to
credit the Liabilities unless and until any deferred portion of the purchase
has
actually been paid to Lender in good funds. The Lender shall have the right
to
conduct such sales on Borrower's premises or elsewhere and shall have the
right
to use Borrower's premises without charge for such time or times as the Lender
deems necessary or advisable.
14
If
any
Event of Default shall have occurred and be continuing, Borrower further
agrees,
at the Lender's request, to assemble the Collateral and make it available
to the
Lender at a place or places designated by the Lender which are reasonably
convenient to the Lender and Borrower, whether at Borrower's premises or
elsewhere. Until the Lender is able to effect a sale, lease, or other
disposition of Collateral, the Lender shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate
for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Lender. The Lender may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce any
of
the Lender's remedies (for the benefit of the Lender), with respect to such
appointment without prior notice or hearing as to such appointment.
(B) Except
as
otherwise specifically provided herein, Borrower hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law
and unless notice is expressly required in the Credit Agreement) of any kind
in
connection with this Security Agreement or any Collateral.
(C) To
the
extent that applicable law imposes duties on the Lender to exercise remedies
in
a commercially reasonable manner, Borrower acknowledges and agrees that it
is
not commercially unreasonable for the Lender (i) to fail to incur expenses
reasonably deemed significant by the Lender to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or
to
obtain or, if not required by other law, to fail to obtain governmental or
third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against account
debtors or other Persons obligated on Collateral or to remove Liens on or
any
adverse claims against Collateral, (iv) to exercise collection remedies against
account debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi)
to
contact other Persons, whether or not in the same business as the Borrower,
for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature,
(viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Lender against
risks of loss, collection or disposition of Collateral or to provide to the
Lender a guaranteed return from the collection or disposition of Collateral,
or
(xii) to the extent deemed appropriate by the Lender, to obtain the services
of
brokers, investment bankers, consultants and other professionals to assist
the
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section
16(C)
is to
provide non-exhaustive indications of what actions or omissions by the Lender
would not be commercially unreasonable in the Lender's exercise of remedies
against the Collateral and that other actions or omissions by the Lender
shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section
16(C).
Without
limitation upon the foregoing, nothing contained in this Section
16(C)
shall be
construed to grant any rights to Borrower or to impose any duties on the
Lender
that would not have been granted or imposed by this Security Agreement or
by
applicable law in the absence of this Section
16(C).
15
(D) The
Lender shall not be required to make any demand upon, or pursue or exhaust
any
of their rights or remedies against, Borrower, any other obligor, guarantor,
pledgor or any other Person with respect to the payment of the Liabilities
or to
pursue or exhaust any of their rights or remedies with respect to any Collateral
therefore or any direct or indirect guarantee thereof. The Lender shall not
be
required to marshal the Collateral or any guarantee of the Liabilities or
to
resort to the Collateral or any such guarantee in any particular order, and
all
of its and their rights hereunder or under any other New Loan Document shall
be
cumulative. To the extent it may lawfully do so, Borrower absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and covenants
not to assert against the Lender, any valuation, stay, appraisement, extension,
redemption or similar laws and any and all rights or defenses it may have
as a
surety now or hereafter existing which, but for this provision, might be
applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.
(E) Borrower
agrees that ten (10) days’ prior notice by Lender to Borrower of the time and
place of any public sale or of the time after which a private sale may take
place is reasonable notification of such matters. Borrower and each Guarantor
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which
Lender is entitled.
(F) The
Lender may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral, and the Lender's compliance
therewith will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(G) Upon
the
exercise by the Lender of any power, right, privilege, or remedy pursuant
to
this Security Agreement which requires any consent, approval, registration,
qualification, or authorization of any Governmental Authority or any third
party, Borrower agrees to execute and deliver, or will cause the execution
and
delivery of, all applications, certificates, instruments, assignments, and
other
documents and papers that the Lender or any purchaser of the Collateral may
be
required to obtain for such consent, approval, registration, qualification,
or
authorization. To the maximum extent permitted by applicable law, Borrower
waives all claims, damages, and demands against Lender, its Affiliates, agents,
and the officers and employees of any of them arising out of the repossession,
retention or sale of any Collateral except such as are determined in a final
judgment by a court of competent jurisdiction to have arisen solely out of
the
gross negligence or willful misconduct of such Person.
(H) The
rights and remedies provided under this Security Agreement are cumulative
and
may be exercised singly or concurrently and are not exclusive of any rights
and
remedies provided by applicable law or equity.
16
Section
17. Exercise
of Remedies.
In
connection with the exercise of its remedies pursuant to Section
16,
the
Lender may, but shall have no obligation to: (A) exchange, enforce, waive
or
release any portion of the Collateral and any other security for the
Liabilities; (B) subject to the Credit Agreement, apply such Collateral or
security and direct the order or manner of sale thereof as the Lender may,
from
time to time, determine; and (C) settle, compromise, collect or otherwise
liquidate any such Collateral or security in any manner following the occurrence
of an Event of Default, without affecting or impairing the Lender's right
to
take any other further action with respect to any Collateral or security
or any
part thereof. Borrower waives any right it may have to require Lender to
pursue
any third Person for any of the Liabilities.
Section
19. Injunctive
Relief.
Borrower recognizes that upon the occurrence of an Event of Default, any
remedy
of law may prove to be inadequate relief to Lender; therefore, Borrower agrees
that Lender shall be entitled to temporary and permanent injunctive relief
in
any such case without the necessity of proving actual damages.
Section
20. Termination
of this Security Agreement: Release of Collateral.
(A) The
security interest granted by Borrower under this Security Agreement shall
terminate against all the Collateral when all of the Liabilities have been
fully
paid and satisfied. Upon such termination and at the written request of Borrower
or its successors or assigns, and at the cost and expense of Borrower or
its
successors or assigns, the Lender shall execute in a timely manner such
instruments, documents or agreements as are reasonably necessary or reasonably
desirable to terminate the Lender's security interest in the Collateral,
subject
to any disposition made by the Lender pursuant to this Security
Agreement.
(B) Borrower
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of the Lender and agrees that it will not
do
so without the prior written consent of the Lender, subject to Borrower's
rights
under Section 9-509(d)(2) of the Uniform Commercial Code. Any such filing
made
by Borrower without Lender’s prior written consent shall constitute an immediate
Event of Default under the Credit Agreement, this Security Agreement and
all of
the other New Loan Documents for which there shall be no grace nor cure
period.
Section
21. Successors
and Assigns.
This
Security Agreement shall be binding upon Borrower and its successors and
assigns
, and shall inure to the benefit of Lender and their respective successors
and
permitted assigns. Nothing set forth herein or in any other New Loan Document
is
intended or shall be construed to give any other Person any right, remedy
or
claim under, to or in respect of this Security Agreement, the Credit Agreement
or any other New Loan Document or any Collateral. Borrower's successors shall
include, without limitation, a receiver, trustee or debtor-in-possession
of or
for Borrower.
Section
22. APPLICABLE
LAW. THIS
SECURITY AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF
THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEVADA.
17
Section
23. Consent
to Jurisdiction and Service of Process.
Borrower agrees that the terms of the Credit Agreement and any Guaranty to
which
Borrower is a party with respect to consent to jurisdiction and service of
process shall apply equally to this Security Agreement.
Section
24. WAIVER
OF JURY TRIAL.
BORROWER AND LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE,
BETWEEN
THE LENDER AND ANY BORROWER ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS
CONTEMPLATED BY THIS SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. ANY OF BORROWER OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO
THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section
25. Waiver
of Bond.
Borrower waives the posting of any bond otherwise required of the Lender
in
connection with any judicial process or proceeding to realize on the Collateral
or any other security for the Liabilities, to enforce any judgment or other
court order entered in favor of the Lender, or to enforce by specific
performance, temporary restraining order, or preliminary or permanent
injunction, this Security Agreement or any other agreement or document between
the Lender and Borrower.
Section
26. Advice
of Counsel.
Borrower and Lender understands that the Lender's counsel represents only
the
Lender's and its Affiliates' interests and that Borrower is advised to obtain
its own counsel. Borrower represents and warrants to Lender that it has
discussed this Security Agreement and, specifically, the provisions of
Sections
22
through
25
hereof,
with Borrower's attorneys.
Section
27. Expenses.
Borrower agrees to pay or reimburse Lender for all costs and expenses (including
the reasonable fees and expenses of all counsel, advisors, consultants
(including environmental and management consultants) and auditors retained
in
connection therewith), incurred in connection with: (a) the preparation,
negotiation, execution, delivery, performance and enforcement of the Loan
Documents and the preservation of any rights thereunder; (b) collection,
including deficiency collections; (c) any amendment, waiver or other
modification with respect to any Loan Document or advice in connection with
the
administration of the Loans or the rights thereunder; (d) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by or between
any combination of Lender, Borrower or any other Credit Party or other Person),
and an appeal or review thereof, in any way relating to the Collateral, any
New
Loan Document, or any action taken or any other agreements to be executed
or
delivered in connection therewith, whether as a party, witness or otherwise;
and
(e) any effort (i) to monitor the Loan, (ii) to evaluate,
observe
or assess Borrower or any other Credit Party or the affairs of such Person,
and
(iii) to verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of the Collateral.
Section
28. Severability.
Whenever possible, each provision of this Security Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law,
but, if any provision of this Security Agreement shall be held to be prohibited
or invalid under applicable law, such provision shall be ineffective only
to the
extent of such prohibition or invalidity, without invalidating the remainder
of
such provision or the remaining provisions of this Security
Agreement.
18
Section
29. Notices.
All
notices and other communications required or desired to be served, given
or
delivered hereunder shall be in writing and shall be served, given or delivered
as provided with respect to the Borrower in the Credit Agreement.
Section
30. Amendments,
Waivers and Consents.
None of
the terms or provisions of this Security Agreement may be waived, altered,
modified or amended, and no consent to any departure by Borrower herefrom
shall
be effective, except by or pursuant to an instrument in writing which (A)
is
duly executed by Borrower and the Lender and (B) complies with the requirements
of the Credit Agreement. Any such waiver shall be valid only to the extent
set
forth therein. A waiver by the Lender of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right
or
remedy which the Lender would otherwise have on any future occasion. No failure
to exercise or delay in exercising any right, power or privilege under this
Security Agreement on the part of the Lender shall operate as a waiver thereof;
and no single or partial exercise of any right, power or privilege under
this
Security Agreement shall preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege.
Section
31. Section
Titles.
The
section titles herein are for convenience of reference only, and shall not
affect in any way the interpretation of any of the provisions
hereof.
Section
32. Execution
in Counterparts.
This
Security Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall
constitute one and the same agreement.
Section
33. (Reserved)
Section
34. (Reserved)
Section
35. Time
of the Essence.
Time is
of the essence for the payment and performance of the Liabilities
hereunder.
Section
36. Reinstatement.
This
Security Agreement shall continue to be effective, or be reinstated, as the
case
may be, if at any time payment of all or any part of the Liabilities are
rescinded or must otherwise be returned or restored by Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower
or any other Credit Party, or otherwise, all as though such payments had
not
been made.
Section
37. Entire
Agreement.
This
Security Agreement represents the final agreement of Borrower with respect
to
the matters contained herein and may not be contradicted by evidence of prior
or
contemporaneous agreements, or subsequent oral agreements, between Borrower
and
Lender.
Section
38. Compliance
With Original Loan Documents.
Lender
agrees that Borrower shall not be deemed to be in breach of any provisions
of
this Security Agreement based on Borrower’s compliance with the terms of the
Original Loan Documents or requests of the Original Lender pursuant
thereto.
19
IN
WITNESS WHEREOF, Borrower and Lender have executed this Security Agreement
as of
the date set forth above.
| BORROWER: | ||
|
INTEGRATED
HEALTHCARE HOLDINGS, INC., a Nevada corporation,
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxxx | |
|
Xxxxx X. Xxxxxxxx, President |
||
| LENDER: | ||
| MEDICAL PROVIDER FINANCIAL CORPORATION III, a Nevada corporation, | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxxxxx | |
|
Xxxxxx
X. Xxxxxxxxxxx, President and COO
|
||
20
List
of Schedules To Be Attached
|
Schedule
No.
|
Information
on Schedule
|
|
1.
|
Schedule
of Commercial Tort Claims
|
|
2.
|
Schedule
of Uniform Resource Locators
|
|
3.
|
Schedule
of Borrower Organizational Information
|
|
4.
|
Schedule
of Borrower Location
|
|
5.
|
Schedule
of Equipment and Inventory Information
|
|
6.
|
Schedule
of Filing Offices for Borrower
|
|
7.
|
Schedule
of Trade Names
|
|
8.
|
Schedule
of Intellectual Property
|
21
SCHEDULE
1
Schedule
of Commercial Tort Claims
1. Integrated
Healthcare Holdings, Inc. v. Xxxxxxx Xxxxxxxxxxx, M.D., and Does 1-50,
inclusive.
SCHEDULE
2
UNIFORM
RESOURCE LOCATORS
xxx.xxxxxxxxxxxxxxxxxxxx.xxx
xxx.xxxxxxxxxxxxxxxxxxx.xxx
xxx.xxxxxxxxxxxxxxxxxxxx.xxx
xxx.xxxxxxxxxxxxxxxxx.xxx
xxx.xxxxxx.xxx
SCHEDULE
3
BORROWER
ORGANIZATION INFORMATION
|
Legal
Name
|
Type
of Entity
|
State
of Incorporation
|
Organizational
Identification Number
|
|
Integrated
Healthcare Holdings, Inc.
|
Corporation
|
C10133-1988
|
BORROWER
LOCATION
|
Borrower
|
Chief
Place of Business
|
Chief
Executive Office
|
Other
Locations
|
|
Integrated
Healthcare Holdings, Inc.
|
0000
X. Xxxxxx Xxxxxx
Xxxxx
Xxx, XX 00000
|
0000
X. Xxxxxx Xxxxxx
Xxxxx
Xxx, XX 00000
|
None
|
SCHEDULE
5
EQUIPMENT
AND INVENTORY INFORMATION
None.
SCHEDULE
6
FILING
OFFICES FOR BORROWER
IHHI:
Main
Office - Capital Building
000
Xxxxx
Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx
Xxxx
Xxxxxx
00000-0000
SCHEDULE
7
TRADE
NAMES
See
Section 1.9(m) and Schedule 1.9(m) of that certain Asset Sales Agreement,
dated
September 29, 2004, as amended by and among certain subsidiaries of
Xxxxx
Healthcare Corporation and Integrated Healthcare Holdings, Inc.
SCHEDULE
8
INTELLECTUAL
PROPERTY
See
Sections 1.9(m) and 1.9(n) as well as Schedule 1.9(m) of that certain Asset
Sales Agreement, dated September 29, 2004, as amended by and among certain
subsidiaries of Xxxxx Healthcare Corporation and Integrated Healthcare Holdings,
Inc.
