SECURITY AGREEMENT
AGREEMENT, dated the 30th day of June, 1996, by and between Lexington
House, Inc., a Connecticut Corporation, having an office in New Britain,
Connecticut (the "Maker"), and Lexington Health Care Group LLC, a Connecticut
Limited Liability Company, having an office at 35 Park Place, New Britain,
Connecticut 06052 (the "Secured Party"), the holder of a 5% Promissory Note
issued by the Maker to the Secured Party in the amount of $393,672.74, or so
much thereof as may be advanced from time to time (the "Note").
WHEREAS, The Maker has executed the Note in favor of the Secured Party; and
NOW, THEREFORE, in order to induce the Secured Party to make the loan
(represented by the Note) to the Maker, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Security Interest.
To secure the due payment and performance of all indebtedness and other
liabilities and obligations of the Maker to the Secured Party under the Note,
the Maker hereby grants to the Secured Party for the benefit of the Secured
Party, security interests in and liens, first in priority, with respect to the
premises located at 35 Park Place, New Britain, Connecticut 06052 (the
"Collateral").
2. Perfection of Security Interest.
The Maker shall join the Secured Party in executing one or more financing
statements and all necessary continuation statements thereto pursuant to the
Uniform Commercial Code as in effect in the State of Connecticut as are
necessary to perfect the Secured Party's liens or other notices appropriate
under applicable law in form satisfactory to the Secured Party and its counsel
and will pay all reasonable filing or recording costs with respect thereto in
all public offices where filing or recording is reasonably deemed by the Secured
Party and its counsel to be necessary or desirable to perfect the liens hereby
created under said Uniform Commercial Code.
3. Maker's Warranties and Representations.
Maker warrants, represents, covenants and agrees as follows:
a. To pay and perform all of the obligations secured by this Agreement
according to their terms.
b. To defend the title to the Collateral against all persons and
against all claims and demands whatsoever, which Collateral is lawfully owned
by the Maker and is now free and clear of any and all liens and security
interests, claims, charges, encumbrances, taxes and assessments.
c. On demand of the Secured Party, the Maker shall furnish further
assurance of title, execute any written agreement or do any other acts necessary
to effectuate the purposes and provisions of this Agreement, execute any
instrument or statement required by law or otherwise in order to perfect,
continue or terminate the security interest of the Secured Party in the
Collateral and pay all filing fees in connection therewith. The Maker hereby
agrees that the Secured Party may unilaterally file any statement necessary to
continue the security interest in the Collateral during the term of this
Agreement.
d. Not to (i) grant any additional security interests in the
Collateral without the prior written consent of the Secured Party, or (ii)
transfer title to any of the Collateral without the prior written consent of the
Secured Party.
e. The Maker hereby constitutes and appoints the Secured Party its
true and lawful attorney, irrevocably, with full power after the occurrence of
and during the continuance of an Event of Default (as defined in the Note) (in
the name of the Secured Party or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
or to become due to the Secured Party under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Secured Party may deem to be necessary or advisable to protect the interests of
the Secured Party, which appointment as attorney is coupled with an interest.
4. Rights and Remedies on Default.
a. In case an Event of Default shall occur and be continuing, the
Secured Party shall have the right, without further notice to the Maker, by any
available judicial procedure, to exercise any and all rights afforded to a
secured party upon default under the Uniform Commercial Code or other applicable
law. The Maker agrees to execute and deliver all such instruments of assignment
and conveyance and other documentation as may be reasonably requested by the
Secured Party to vest title in and to the Collateral in the Secured Party, or,
if such Collateral is sold or transferred as contemplated by the immediately
preceding sentence, in the purchaser or purchasers thereof.
b. Upon an Event of Default, the Secured Party's reasonable attorneys
fees and the legal and other expenses for pursuing, searching for, receiving and
taking, the Collateral shall be chargeable to the Maker.
c. If the Maker shall default in the performance of any of the
provisions of this Agreement on the Maker's part to be performed, the Secured
Party may perform same for the Maker's account and any amounts expended in so
doing shall be chargeable with interest to the Maker and added to the debt
secured hereby.
d. Upon an Event of Default, the Maker, upon reasonable request of the
Secured Party, shall remit all Collateral secured hereby directly to the Secured
Party or, at the Secured Party's direction, shall have all account debtors make
payment directly to a bank account maintained for the benefit of the Secured
Party, designated by the Secured Party and acceptable to the Maker.
5. Term of Security Agreement.
The term of this Security Agreement shall commence as of the date
hereof and this Security Agreement shall continue in full force and effect and
be binding upon the Maker until all of the obligations represented by the Note
have been fully and indefeasibly paid and performed, whereupon this Security
Agreement shall terminate and the Secured Party shall deliver to the Maker at
such time all appropriate termination statements, in recordable form with
respect to the liens as may be reasonably required by the Maker, including,
filing a UCC-3 statement with the Connecticut Secretary of State and any other
applicable states to extinguish the Secured Party's security interest and lien
with respect to the Collateral.
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6. Miscellaneous.
a. Amendments, Etc. No amendment of any provision of this Agreement
shall in any event be effective unless the amendment shall be in writing and
signed by the Maker and the Secured Party, and no waiver of any provision of
this Agreement, nor consent to any departure by any party therefrom shall be
effective unless such waiver or consent shall be in writing and signed by the
party waiving or consenting to such provision, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
b. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, facsimile, telex or cable
communication) and mailed, telegraphed, telecopied, telexed, cabled or
delivered:
(1) if to the Maker,
Lexington House, Inc.
35 Park Place
New Britain, Connecticut 06052
Attn: Jack Friedler
and
(2) if to the Secured Party,
Lexington Health Care Group LLC
35 Park Place
New Britain, Connecticut 06052
Attn: Harry Dermer
with copies to
GERSTEN, SAVAGE, KAPLOWITZ & CURTIN, LLP
575 Lexington Avenue
New York, New York 10022
Attn: Wesley C. Fredericks, Jr., Esq.
or, as to any such party, at such other address as shall be designated by such
party in a written notice to the other parties.
c. No Waiver; Remedies. No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
d. Severability of Provisions. Any provision of this Agreement or of
the Note which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
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e. Integration. This Agreement and the other documents set forth the
entire understanding of the parties hereto with respect to all matters
contemplated hereby and thereby and supersede all previous agreements and
understandings among them concerning such matters. No statements or agreements,
oral or written, made prior to or at the signing hereof, shall vary, waive or
modify the written terms hereof.
f. Binding Effect; Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Maker and the Secured Party and their respective
successors and assigns, except that neither the Maker nor the Secured Party may
transfer or assign this Agreement or any of its rights or obligations hereunder
to a party other than an affiliate without the prior written consent of the
other party. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Connecticut applicable to agreements and
instruments executed and performed in the State of Connecticut.
g. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
MAKER
LEXINGTON HOUSE, INC.
/s/ Jack Friedler, Pres.
-------------------------------
By: Jack Friedler
Title: President
SECURED PARTY
LEXINGTON HEALTH CARE GROUP LLC
/s/ Harry Dermer
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By: Harry Dermer
Title: President
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