ASSIGNMENT AND PLEDGE OF DEPOSIT ACCOUNT
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THIS ASSIGNMENT AND PLEDGE OF DEPOSIT ACCOUNT, dated as of the 18th day of
September, 2002, from WORLDWIDE MEDICAL CORPOATION., a Delaware (the "PLEDGOR"),
in favor of ZIEGLER HEALTHCARE FUND I, L.P., a Delaware limited partnership
("LENDER").
R E C I T A L S:
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A. Pledgor has requested a loan from the Lender in the principal amount
of One Million Six Hundred Fifty Thousand and No/100 Dollars ($1,650,000.00)
(the "LOAN"). The Loan is evidenced by, among other things, a Loan Agreement
between Lender and the Borrower of even date herewith (as the same may hereafter
be amended, the "LOAN AGREEMENT");
B. Under the terms of the Loan Agreement, Pledgor is required to
establish and maintain a separate deposit account and deposit Four Hundred
Sixteen Thousand Six Hundred Sixty Six Dollars ($416,666) of the proceeds of the
Loan into such deposit account immediately after the Closing of the Loan;
C. As more particularly set forth in this Agreement, under the terms of
the Loan Agreement, Lender further requires Pledgor to assign and pledge such
account to Lender as security for the Loan Obligations (as defined in the Loan
Agreement); and
D. All capitalized terms used herein but not defined herein, shall have
the meanings set forth in the Loan Agreement.
NOW, THEREFORE, the parties agree as follows:
1. ESTABLISHMENT OF DEPOSIT ACCOUNT. Pledgor has agreed to secure the Loan
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Obligations by the establishment and pledge of a deposit account in the amount
of $416,666. Such deposit shall be made with a bank or financial institution
acceptable to Lender (such bank or financial institution is referred to herein,
together with any successor financial institution, as the "BANK") and shall be
held in the name of Pledgor in a segregated account (which funds, together with
interest from time to time earned are referred to herein as the "PLEDGED
FUNDS"). Such account must be segregated from any other funds, and will not be
placed with a bank or financial institution to which Pledgor has any debt or
other obligation, whether primary or secondary, fixed or contingent and Pledgor
will not hereafter become indebted to Bank. The account into which Pledged
Funds are placed is herein referred to as the "DEPOSIT ACCOUNT."
2. INVESTMENT OF FUNDS. The Pledged Funds may be invested and reinvested
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from time to time in an interest-bearing deposit account of Bank, with interest
accruing at the rate Bank pays from time to time on overnight deposits provided
such investments cannot be such as would result in the loss of principal or the
loss of Lender's first-priority pledge and security interest in the Pledged
Funds. All interest which shall accrue on the Pledged Funds shall remain in the
Deposit Account but may be disbursed to Pledgor periodically provided that there
is no outstanding Event of Default pursuant to the Loan Agreement and any such
withdrawal is done in accordance with the procedures set forth in Section 3.
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3. WITHDRAWL OF PLEDGED FUNDS. Any or all of the Pledged Funds may be
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withdrawn only upon satisfaction of the following two conditions:
(a) Delivery by Pledgor to Lender of a certificate signed by and executive
officer of Pledgor certifying that such funds to be withdrawn are to be used (i)
exclusively to obtain a Distribution Agreement and identifying the third party
to such potential Distribution Agreement or (ii) such other use as determined by
Pledgor;
(b) Pledgor must obtain Lender's Approval of the use of such withdrawn funds
as described in such certificate described in subsection (a) and
(c) Pledgor must obtain the signature of an authorized signatory of Lender
in addition to an authorized signatory of Pledgor on the withdrawal slip to be
delivered to Bank in connection with any such withdrawal of Pledged Funds.
4. GRANT OF SECURITY INTEREST. In order to secure the Loan Obligations, the
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Pledgor hereby assigns, sells, transfers, pledges, sets over and delivers to the
Lender and grants Lender a security interest in the Pledged Funds then held on
deposit with the Bank in the Deposit Account, including all accrued interest
thereon, together with all certificates or other writings now or hereafter
issued by the Bank as evidence thereof. Pledgor authorizes Lender to file such
financing statements in such jurisdictions as Lender deems appropriate in the
name of Pledgor as debtor describing the Pledged Funds and Deposit Account as
collateral.
5. PAYMENT UPON DEFAULT. Upon the occurrence of any Event of Default
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pursuant to the Loan Agreement, the Lender may, and is hereby authorized, in
Lender's sole discretion, to require that Bank pay all Pledged Funds (including
interest earned by not yet disbursed to Pledgor) to the Lender , and Lender may
apply all or any portion of the Pledged Funds in full or partial payment of the
Loan Obligations, whether or not then due, in such order, manner, and extent as
the Lender may elect, including but not limited to, the performance of any of
the Pledgor's covenants under the Loan Agreement or other Loan Documents.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and
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warrants that the Pledgor has full power and authority to pledge the Pledged
Funds in the Deposit Account to the Lender, and that the Pledged Funds in the
Deposit Account are free and clear of all liens and encumbrances of any nature
whatsoever (other than the assignment, pledge and security interest created
hereby), and Pledgor will not permit any further encumbrance upon the Pledged
Funds in the Deposit Account to exist without Lender's prior written consent.
7. TERMINATION OF ASSIGNMENT. This is a continuing pledge and assignment,
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and this Assignment shall remain in full force and effect until the earlier of
the withdrawal of all of the Pledged Funds or such time as the all Loan
Obligations are fully paid, at which time this Assignment shall become null and
void; otherwise, it shall remain in full force and effect until proper release
thereof is made in writing by the Lender.
8. NO WAIVERS OR RELEASES BY LENDER TO AFFECT ASSIGNMENT. The Lender may
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take or release any other security and may release any party primarily or
secondarily liable for any obligations hereby secured, and may grant extensions,
renewals, or indulgences of such Loan Obligations, or any of them, all without
releasing or in any way affecting this Assignment. Lender may proceed under
this Assignment without first resorting to any other collateral or making demand
on any other party liable on the Loan Obligations hereby secured.
9. SEVERABILITY. The provisions of this Assignment are severable;
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inapplicability or unenforceability of any provision shall not limit or impair
the operation or validity of any other provisions of this Assignment.
10. SUCCESSORS AND ASSIGNS. This Assignment and all representations and
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warranties, powers, and rights contained herein shall bind the successors and
assigns of the Pledgor and shall inure to the benefit of the Lender and its
successors and assigns.
11. NOTICES. All notices and other communications provided for hereunder
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shall be given at the addresses of the Pledgor and Lender as set forth in the
Loan Agreement and shall be deemed received in accordance with the provisions
set forth in the Loan Agreement.
12. TAX IDENTIFICATION NUMBER. Pledgor's federal tax identification number
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is 33-0601331, and all interest accruing from time to time on the Deposit
Account will be reported under such number to the Internal Revenue Service.
13. FURTHER ASSURANCES. Pledgor will, at its expense, at any time and from
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time to time, promptly execute and deliver all further instruments and documents
and take all further action that may be necessary or desirable or that the
Lender may reasonably request in order (a) to perfect and protect the security
interest created or purported to be created hereby; (b) to enable the Lender to
exercise and enforce its rights and remedies hereunder in respect of the Pledged
Funds.
14. CONTROLLING LAW. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT
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OF THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW JERSEY. THE LENDER'S PRINCIPAL PLACE OF BUSINESS IS
LOCATED IN THE STATE OF NEW JERSEY, AND THE PLEDGOR AGREES THAT THIS ASSIGNMENT
SHALL BE HELD BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING OF
THIS ASSIGNMENT BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS
OF PLEDGOR WITH THE STATE OF NEW JERSEY FOR THE PURPOSE OF CONFERRING
JURISDICTION UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH STATE AND THE
COUNTY OF LENDER'S PRINCIPAL PLACE OF BUSINESS. THE PLEDGOR CONSENTS THAT ANY
LEGAL ACTION OR PROCEEDING ARISING HEREUNDER MAY BE BROUGHT IN THE FEDERAL AND
STATE COURTS PRESIDING IN SUCH COUNTY AND STATE AND ASSENTS AND SUBMITS TO THE
PERSONAL JURISDICTION OF ANY SUCH COURT IN ANY ACTION OR PROCEEDING INVOLVING
THIS ASSIGNMENT. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF ANY OTHER
COURT.
15. WAIVER OF JURY TRIAL. THE PLEDGOR HEREBY WAIVES ANY RIGHT THAT IT MAY
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HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS ASSIGNMENT OR
THE LOAN, OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR
INCIDENTAL TO ANY DEALINGS OF LENDER AND/OR PLEDGOR WITH RESPECT TO THE LOAN
DOCUMENTS OR IN CONNECTION WITH THIS ASSIGNMENT OR THE EXERCISE OF EITHER
PARTY'S RIGHTS AND REMEDIES UNDER THIS ASSIGNMENT OR OTHERWISE, OR THE CONDUCT
OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. PLEDGOR AGREES THAT LENDER MAY FILE A COPY OF THIS ASSIGNMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED-FOR
AGREEMENT OF PLEDGOR IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN
INDUCEMENT OF LENDER TO MAKE THE LOAN, AND THAT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN PLEDGOR AND LENDER
SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
as of the day and year first above written.
WORLDWIDE MEDICAL CORPORATION,
a Delaware corporation
By: /s/ Daniel G. McGuire
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Name: Daniel G. McGuire
Title: President
ZIEGLER HEALTHCARE FUND I, L.P.,
a Delaware limited partnership
By: /s/ Douglas Korey
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Name: Douglas A. Korey
Title: Member
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