ex10-19



 




EXHIBIT 10.19



EXECUTION COPY



MASTER SECURITY AGREEMENT,

COLLATERAL ASSIGNMENT AND EQUITY PLEDGE



         THIS MASTER SECURITY AGREEMENT, COLLATERAL ASSIGNMENT AND EQUITY PLEDGE
(as defined in Article 6 hereof, along with all other defined terms, this
“Security Agreement”) is made and effective as of May      , 2002, by EACH
“GRANTOR” THAT IS FROM TIME TO TIME LISTED ON SCHEDULE 1 HERETO OR OTHERWISE
ADDED AS A SIGNATORY HERETO (each, as more fully defined below, a “Grantor”;
collectively, the “Grantors”), in favor of HEARx LTD. (including any successor,
participant, assignee, pledgee or transferee thereof, “Lender”).


RECITALS



         WHEREAS, pursuant to that certain Credit Agreement by and among Borrowers
and Lender dated as of April 30, 2002 (as may be amended from time to time,
“Credit Agreement”), each Grantor is required to have executed and delivered
this Security Agreement encumbering all of each Grantor’s tangible and
intangible personal property assets in favor of Lender; and


         WHEREAS, each Grantor has determined that it is in its best interest to
execute this Security Agreement inasmuch as each Grantor will derive
substantial direct and indirect benefits from the funding of the Advances by
Lender pursuant to the Credit Agreement;


         NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) and intending to be legally bound
hereby, each Grantor and Lender hereby agree as follows:


ARTICLE 1: SECURITY INTEREST, COLLATERAL ASSIGNMENT AND PLEDGE



         1.1. Grant of Security. Each Grantor (as of the effective date of
becoming a signatory hereto) hereby collaterally assigns and pledges to Lender,
and hereby grants to Lender a present, absolute, unconditional and continuing
security interest in, all of the following property, assets and equity
interests, whether or not such property and assets are covered by Article 9 of
the applicable UCC or Personal Property Security Act (Ontario) (the “PPSA”)
(collectively, and including all Pledged Collateral, “Collateral”):


                  a. Fixtures and Improvements — All of such Grantor’s fixtures and
improvements to real property in all of its forms, including the following:
all buildings, structures, furnishings, and all heating, electrical, lighting,
power and air conditioning equipment, and all antennas, transmitters, receivers
and related equipment, and all other equipment that under applicable law
constitutes a fixture, and all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor
(any and all of the foregoing being the “Fixtures”); and



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                  b. Equipment (and Computer Hardware) — All of such Grantor’s equipment in
all of its forms, including the following: all machinery, tools, motor
vehicles, furniture and furnishings, and all antennas, transmitters, receivers
and related equipment, all communications, telecommunications, switches and
related equipment, and all computer and other electronic data processing
hardware, integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers, tape
drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and other
related computer hardware, and all documentation manuals and materials with
respect to such hardware, and all rights with respect to all of the foregoing,
including any and all licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any model conversions of any of the
foregoing, and all parts thereof and all accessions, additions, parts
(including replacement parts), attachments, improvements, substitutions and
replacements thereto and therefor (any and all of the foregoing being the
“Equipment”); and



                  c. Inventory — All of such Grantor’s inventory in all of its forms,
including the following: (1) all raw materials and work in process therefor,
finished goods thereof, and materials used or consumed in the preparation,
manufacture, creation or production thereof, and (2) all goods in which any
Grantor has an interest in mass or a joint or other interest or right of any
kind (including goods in which any Grantor has an interest or right as
consignee), and (3) all goods which are returned to or repossessed by any
Grantor, and in each instance all accessions thereto, products thereof and
documents therefor (any and all of the foregoing being the “Inventory”); and



                  d. Receivables, Accounts, Contracts, Money, Instruments, Chattel Paper and
Related Documents — All of such Grantor’s Accounts (as defined in the UCC),
receivables, cash collateral accounts (general or special, time or demand,
provisional or final), lock box accounts, other deposit accounts, security
deposits, advance payments, contracts, contract rights, leases, licenses,
insurance policies, chattel paper, documents, instruments (whether or not
negotiable), money, general intangibles and other obligations of any kind, and
whether or not arising out of or in connection with the sale or lease of goods
or the rendering of services (any and all of the foregoing being the “Contract
Rights”), and all rights of any Grantor in and to all agreements, security
agreements, guaranties, leases and other contracts securing or otherwise
relating to any such Contract Rights (any and all such security agreements,
guaranties, leases and other contracts being the “Related Contracts”); and



                  e. Intellectual Property — Without limiting any of the foregoing, all of
such Grantor’s intellectual and information related property, rights and
assets, including the following (collectively, “Intellectual Property
Collateral”):



                           1. Computer Software and Data — (a) All software programs and data bases
(including source code, object code and all related applications and data
files) owned, licensed or leased by any Grantor, and (b) all firmware
associated therewith or with any of the Equipment, and (c) all documentation
and materials (including all flow charts, logic diagrams, algorithms, manuals,
guides, instructions, indices, abstracts and specifications) with respect to
such software and firmware, and (d) all rights with respect to all of the
foregoing, including any and all copyrights,

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trademarks, licenses, options,
warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements, additions or model
conversions of any of the foregoing (collectively, “Computer Software
Collateral”), and


                           2. Copyrights — All copyrights of such Grantor in each work or authorship
and derivative works thereof, whether published or unpublished and whether or
not the same also constitutes a trade secret, whether statutory or common law,
registered or unregistered, throughout the world, including all of such
Grantor’s right, title and interest in and to all copyrights registered in the
United States Copyright Office or anywhere else in the world, and all
applications for registration thereof, whether pending or in preparation, and
all copyright licenses, and further including the right to sue for past,
present and future infringements of any thereof, all rights corresponding
thereto throughout the world, and all goodwill associated therewith, all
extensions, continuations and renewals of any thereof, and all proceeds of the
foregoing, including licenses, fees, royalties, income, payments, claims,
damages and proceeds of suit (collectively, “Copyright Collateral”), and



                           3. Patents — All patents and like protections, including all
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, and all applications for registration
thereof, whether pending or in preparation, all patent licenses, the right to
sue for past, present and future infringements of any thereof, all rights
corresponding thereto throughout the world, and all goodwill associated
therewith, all extensions, continuations and renewals of any thereof, and all
proceeds of the foregoing, including licenses, fees, royalties, income,
payments, claims, damages and proceeds of suit (collectively, “Patent
Collateral”), and



                           4. Trademarks — (a) All trademarks, service marks, trade names, corporate
names, company names, business names, operating names, domain names, fictitious
business names, trade styles, certification marks, collective marks, call
signs, logos, other source of business identifiers, prints, labels and goods on
which any of the foregoing appear or have appeared, designs (including product
designs) and general intangibles of a like nature (any and all of the foregoing
being the “Trademarks”), anywhere in the world, whether registered or not and
whether currently in use or not, all registrations and recordings thereof and
all applications to register the same, whether pending or in preparation for
filing, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the United
States of America or any State thereof or any foreign country, and (b) all
Trademark licenses, and (c) all reissues, extensions or renewals of any of the
foregoing, and (d) all of the goodwill of the business connected with the use
of, and symbolized by, the items described in the foregoing, and (e) all
proceeds, fees, royalties, income or payments of, and rights associated with,
the foregoing, including any claim by any Grantor against third parties for
past, present or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any
Trademark license (collectively, “Trademark Collateral”), and



                           5. Trade Secrets — All common law and statutory trade secrets and all
other confidential or proprietary or useful information and all know-how
obtained by or used in or contemplated at any time for use in any Grantor’s
business (any and all of the foregoing being the

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“Trade Secrets”), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or referring in any
way to such
Trade Secrets, all Trade Secret licenses, and including the right to sue
for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license (collectively, “Trade Secret Collateral”); and


                  f. Publication, Customer and Production-Related Property — Without
limiting any of the foregoing, all of such Grantor’s right, title, interest and
benefits in, to and under (a) all books, writings, journals, articles and
publications, and (b) all patient, customer, prospect, inquiry, marketing,
advertising, publicity, and promotional files, lists, records, documents,
contracts and agreements, including all files, lists and records of active,
former, prospective, trial and conditional patients and customers, and all
files, lists and records of current, former and prospective advertisers, and
all internally generated, purchased and rented mailing lists (but only to the
extent of any Grantor’s rights therein), and all promotional letters,
catalogues, flyers, reply cards, sales materials, promotional materials, sample
mailing pieces, artwork, drawings, advertising materials, and any similar
materials, and (c) all publication rights, programming rights, editorial
rights, promotional rights, advertising rights, licensing rights, distribution
and redistribution rights, and printing and reprinting rights (and any and all
agreements, contracts, documents and materials in any way governing or relating
to any of the foregoing rights), and (d) all editorial, publishing,
programming, manufacturing, prepublication and post-publication, royalty,
sales, pricing, cost and promotional files, lists, records and documents, and
(e) all indices, abstracts, compilations, summaries, glossaries and archives of
or for any of the foregoing items, and (f) all other information and property
relating to, used or useful in connection with, evidencing, embodying,
incorporating or referring to, any of the foregoing property identified in this
clause or elsewhere in this Section 1.1 and regardless of whether such property
is embodied in a tangible or intangible medium; and



                  g. Licenses and Authorizations — Without limiting any of the foregoing,
all of such Grantor’s right, title, interest and benefits in, to and under all
present and future Licenses, Authorizations and other rights for the
construction, development, operation and ownership of its business and
properties including (but only to the extent that and only during such time as
it is not unlawful to grant and enforce a security interest therein), and all
proceeds of such Licenses, Authorizations and other rights, and all rights of
such Grantor in and to all agreements, security agreements, guaranties, leases
and other contracts securing or otherwise relating to any such Licenses,
Authorizations and other rights; and



                  h. Other General Intangibles — Without limiting any of the foregoing, all
of such Grantor’s right, title, interest and benefits in, to and under all
other General Intangibles (as defined in the UCC), wherever arising, including
the following: (a) all corporate, partnership, limited liability company and
joint venture investments and other interests in and to any other entity
(including all ownership rights and interests in such Grantor’s subsidiaries,
whether or not such rights and interests are certificated), and the proceeds
and general intangibles related thereto (including all dividends,
distributions, capital accounts and proceeds thereof), and (b) all leasehold
interests (whether as lessee or as lessor) and all related rights thereunder
and proceeds thereof, and (c) all tax refunds and other refunds or rights to
receive payment from U.S. federal, state, or local governments or from foreign
governments, whether or not arising out of or in connection with the sale or
lease of goods or the

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rendering of services, and (d) all settlements, judgments
and other awards (whether or not resulting from judicial or arbitration
proceedings) and all commercial tort claims specified on the attached Schedule
in (“Commercial Tort Claims”) and contract claims and causes of action; and all
rights of such Grantor in and to all security agreements, guaranties, leases and
other contracts securing or otherwise relating to any such general intangibles;
and


                  i. Securities and Investment Property — Without limiting any of the
foregoing, all of such Grantor’s right, title, interest and benefits in, to and
under all stocks, options, warrants, bonds, and other securities, security
entitlements, securities accounts, financial assets and other investment
property (including all such securities representing ownership in such
Grantor’s subsidiaries), and the proceeds and general intangibles related
thereto (including all dividends and distributions); and



                  j. Other General Property — All of such Grantor’s other property and
rights of every kind and description and interests therein; and



                  k. Products and Proceeds — All products, offspring, rents, issues,
profits, returns, refunds, income and proceeds of and from any and all of the
foregoing Collateral, including the following: all proceeds of the Licenses
and Authorizations, all proceeds that constitute property of the types
described in this Section 1.1, all proceeds deposited from time to time in any
lock boxes of any Grantor, and, to the extent not otherwise included, all
payments, unearned premiums and cash or surrender value under insurance
policies (whether or not Lender or any Lender is a loss payee or additional
insured thereof), and any indemnity, warranty or guaranty payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral;



in each instance (whether or not expressly specified above), wherever
located, and whether now existing, owned, leased or licensed or hereafter
acquired , leased, licensed, arising, developed, generated, adopted or
created for or by any Grantor, and howsoever any Grantor’s interest
therein may arise or appear (whether by ownership, security interest,
claim or otherwise).


         1.2. Security for Secured Obligations. This Security Agreement secures
the payment and performance in full of (a) all obligations (monetary or
otherwise) of each Borrower and each other Obligor now or hereafter existing
under the Credit Agreement or any other Loan Document as well as under any
other agreement with Lender to extend credit to any Obligor or to any Affiliate
of any such Obligor (whether for principal, interest, costs, fees, expenses,
protective advances or otherwise), and (b) all obligations (monetary or
otherwise) of any Grantor now or hereafter existing under this Security
Agreement or any other Loan Document (all such obligations under Clauses “(a)”
and “(b)” being referred to collectively as the “Secured Obligations”).


         1.3. Continuing Security Interest; Assignment; Termination. This Security
Agreement creates a continuing security interest in and collateral assignment
and pledge of the Collateral and will remain in full force and effect until
terminated as described below in this Section. This Security Agreement is
binding upon each Grantor and its successors, transferees and assignees, and
(together with the rights and remedies of Lender hereunder) inures to the
benefit of Lender and its successors, transferees, participants and assignees.
Without limiting the generality of the foregoing, except to


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the extent
restricted under the Credit Agreement, Lender may assign, syndicate,
participate or otherwise transfer (in whole or in part, and without any
Grantor’s consent) any Loan Document and any indebtedness thereunder to any
other Person, and such other Person or entity will thereupon become vested with
all the rights and benefits in respect thereof granted to Lender under any such
Loan Document (including this Security Agreement) or otherwise, subject,
however, to any contrary provisions in such assignment or transfer. The
security interest, collateral assignment and pledge granted herein will
terminate (and all rights to the Collateral will revert to Grantors) upon
satisfaction of the following conditions: (a) payment and performance in full
of all Secured Obligations (unconditionally and indefeasibly) and (b) the
termination of the Credit Agreement (and the Facilities thereunder). Upon any
such termination, Lender (at Grantors’ request and sole expense) (a) will
execute and deliver to a Grantor (without any representation, warranty or
recourse of any kind whatsoever) such documents as such Grantor may reasonably
request and provide to Lender to evidence such termination, and (b) will
deliver to a Grantor or to another Person that Lender reasonably believes may
be entitled thereto (without any representation, warranty or recourse of any
kind whatsoever) all stock certificates and instruments representing or
evidencing Collateral being physically held by Lender hereunder.


         1.4. Security Interest Absolute. All rights of Lender and the security
interests, collateral assignments and pledges granted, assigned and pledged to
Lender hereunder, and all obligations of each Grantor hereunder, are absolute
and unconditional, irrespective of the occurrence of any one or more of the
following:



	 	 	 
	a.	 	
Any lack of validity or enforceability of any Loan
Document; or
	
	
	
	

	
	
	
	

	
	
	
	

	b.	 	
The failure of Lender or any holder of any Note:




	 	 	 
	1.	 	
To assert any claim or demand or to
enforce any right or remedy under the provisions of any
Loan Document or otherwise, or
	
	
	
	

	
	
	
	

	
	
	
	

	2.	 	
To exercise any right or remedy against
any other Obligor of, or any collateral securing, any
obligations of any Borrower owing to any Lender; or




	 	 	 
	c.	 	
Any change in the time, manner or place of payment
of, or in any other term of, any Secured Obligation; or
	
	
	
	

	
	
	
	

	
	
	
	

	d.	 	
Any other extension, increase, refinancing,
restructuring, compromise or renewal of any Secured Obligation;
or
	
	
	
	

	
	
	
	

	
	
	
	

	e.	 	
Any reduction, limitation, impairment or
termination of any Secured Obligation for any reason, including
any waiver, release, surrender, alteration or compromise; or
	
	
	
	

	
	
	
	

	
	
	
	

	f.	 	
Any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, the terms of
any Loan Document; or



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	g.	 	
Any addition, exchange, release, surrender or
nonperfection of any collateral (including the Collateral), or
any amendment to or waiver or release of or addition to or
consent to departure from any guaranty, for any Secured
Obligation; or
	
	
	
	

	
	
	
	

	
	
	
	

	h.	 	
Any other circumstances which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, any Grantor or its obligations hereunder,
including, without limitation, any and all suretyship defenses.



Each Grantor hereby waives any right to or any claim of any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of any
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Secured Obligation.


         1.5. Equity Pledge.


                  a. Grant of Security Interest. Pursuant to Section 1.1, without limiting
the generality thereof, each Grantor pledges, hypothecates, assigns, charges,
mortgages, delivers, and transfers to Lender and grants to Lender a present,
absolute, unconditional and continuing security interest in all of the
following property (collectively, “Pledged Equity Collateral”):




	 	 	 
	1.	 	All Pledged Equity currently owned by such Grantor; and	 
	
	
	
	

	2.	 	All Pledged Equity issued from time to
time hereafter to such Grantor; and	 
	
	
	
	

	3.	 	All other Pledged Equity Property
(including, all options and warrants for Pledged Equity)
owned by such Grantor, whether now or hereafter delivered
to Lender in connection with this Security Agreement; and	 
	
	
	
	

	4.	 	All Dividends, Distributions, capital
accounts, and other payments and rights with respect to
any Pledged Equity Property received or receivable by
such Grantor; and	 
	
	
	
	

	5.	 	All proceeds of any of the foregoing;
and	 



in each case, whether now existing or owned or hereafter acquired by such
Grantor and howsoever such Grantor’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).


                  b. Delivery of Pledged Equity Property. To the extent that any of the
Collateral is evidenced by a certificate or instrument, then all such
certificates or instruments (a) must be delivered to and held by or on behalf
of Lender pursuant hereto, and (b) must be in suitable form for transfer by
delivery, and (c) must be accompanied by all necessary powers, appointments and
instruments of transfer or assignment, duly executed in blank. To the extent
that any of the

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Collateral is not evidenced by a certificate or instrument,
then such Grantor shall cause the issuer of such uncertifcated security to
either (a) register the Lender a registered owner thereof on the books and
records of the issuer or (b) execute a control agreement pursuant to which such
issuer agrees to comply with the Lender’s instructions with respect to such
uncertificated security without further consent by such Grantor.


                  c. Dividends and Distributions on Pledged Shares. Except as otherwise
provided in the Credit Agreement, all Dividends, Distributions, non-Dividend
cash payments, and proceeds thereof paid or payable to any Grantor must be paid
directly to Lender (properly endorsed if required hereby or requested by
Lender) as additional Collateral hereunder to be held by Lender separate,
segregated and apart from its other property, unless and until Lender has
terminated this Security Agreement as provided in Section 1.3. All Dividends,
Distributions, cash payments, and proceeds that at any time and from time to
time may be delivered to any Grantor but which such Grantor is then obligated
to deliver to Lender, as additional collateral hereunder, until delivery to
Lender, must be held by such Grantor (a) in trust for Lender and (b) separate,
segregated and apart from its other property.



         1.6. Collateral Assignment of Contracts.


                  a. Grant of Security Interest. Pursuant to Section 1.1, without limiting
the generality thereof, each Grantor collaterally assigns to Lender all of such
Grantor’s right, title and interest in and to all of such Grantor’s contracts,
licenses, leases and other agreements and all rights, interests, powers,
privileges and other benefits thereunder (including the rights to receive all
proceeds and payments under each such contract, license, lease and other
agreement). This assignment of each contract, license, lease and other
agreement constitutes a fully perfected, absolute, unconditional and present
assignment, provided, however, that prior to the occurrence of an Event of
Default, such Grantor may exercise any rights and powers under and may receive
all payments and enjoy all other benefits of each such contract, license, lease
and other agreement, subject to the terms and provisions of this Security
Agreement and the other Loan Documents.



                  b. Lender’s Right to Cure. Lender shall have the right (but not the
obligation) to cure or remedy any breach or default under any contract,
license, lease or other agreement on the part of any Grantor. The exercise by
Lender of any of its rights hereunder will not release any Grantor from any of
its duties or obligations under any such contracts, licenses, leases or other
agreements included in the Collateral. Lender shall have no obligation or
liability under any such contracts, licenses, leases or other agreements
included in the Collateral by reason of this Security Agreement, nor is Lender
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.



         1.7. Collateral Interest in Certain Intellectual Property.
Notwithstanding the language of Section 1.1, Lender’s interest in Copyrights,
Patents and Trademarks (and any applications therefor) is as a security
interest and pledge and not as an absolute assignment.


         1.8. Restrictions on Granting Security Interests and Collateral
Assignments. Notwithstanding the terms of this Security Agreement, the
collateral assignment of and security

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interest in a Grantor’s interests in
contracts, licenses, leases and other agreements shall not apply to any
contract, license, lease or other agreement to the extent that each of the
following characteristics are satisfied with respect thereto: (a) it either (i)
exists on the Closing Date, or (ii) is a Material Contract entered into after
the Closing Date in accordance with the standards under Section 5.15 of the
Credit Agreement, or (iii) is not a Material Contract, and (b) its existence
has been disclosed to Lender to the extent it is a Material Contract, and (c)
it expressly prohibits the granting of a security
interest in or the collateral assignment of such Grantor’s interest
therein, and (d) such prohibition is enforceable under applicable law.


ARTICLE 2: REPRESENTATIONS AND WARRANTIES



         Each Grantor hereby represents and warrants to Lender as set forth in this
Article.


         2.1. Location of Collateral. Except as identified on Schedule 2.1, all of
the Collateral of each Grantor is and has been for the previous five (5) years
located in the jurisdictions set forth on Schedule 2.1. The names and
addresses of all persons or entities other than the Grantors that have
possession or are intended to have possession of any of the Collateral is set
forth on Schedule 2.1. The principal places of business and chief executive
office of each Grantor and the offices where each Grantor keeps its records
concerning the Contract Rights and Related Contracts are located at the address
identified on Schedule 2.1.


         2.2. Operating Names; State of Organization. Except as identified on
Schedule 2.2, during the preceding 12 years, no Grantor has been (a) operating
under or known by any legal or trade name different from the one set forth on
the signature page hereto (which name is the exact name of such Grantor as it
appears in such Grantor’s organizational documents, as amended, as filed in
such Grantor’s jurisdiction of organization) or (b) the subject of any merger
or other corporate reorganization. Each Grantor’s Federal Employer
Identification Number and its organizational identification number, if
applicable, are each set forth on Schedule 2.2. Each Grantor’s state of
organization is and has been for the four (4) month period preceding the date
hereof in the jurisdictions set forth on Schedule 2.2.


         2.3. Ownership; No Liens. Except as identified on Schedule 2.3, Grantors
are the sole and exclusive owners of or have the irrevocable, exclusive and
transferable right to possess and use or the power to transfer the Collateral,
and Grantors have full authority to pledge, assign and grant a security
interest in the Collateral. The Collateral is free and clear of any Lien
except (a) the security interest, collateral assignment and pledge created by
this Security Agreement and (b) as otherwise permitted by the Credit Agreement.
No effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording office,
except (1) financing statements and intellectual property security agreements
filed in favor of Lender relating to this Security Agreement and (2) such other
financing statements and instruments as identified on Schedule 2.3.


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         2.4. Government Contracts. Except as identified on Schedule 2.4, no
Grantor is a party to any Federal, state, provincial, or local government
contract (either domestic or foreign).


         2.5. Negotiable Documents, Instruments, Certificated Securities and
Chattel Paper. Contemporaneously with the execution hereof, each Grantor has
delivered to Lender possession of all originals of all negotiable documents,
certificated securities, instruments and chattel paper (other than checks
received in the ordinary course of business) currently owned or held by such
Grantor (duly endorsed in blank, if requested by Lender).


         2.6. Intellectual Property Collateral. With respect to each item of
Intellectual Property Collateral:


                  a. Such Intellectual Property Collateral is subsisting, valid and
enforceable, and to each Grantor’s knowledge (after due inquiry), such
Intellectual Property Collateral has not been adjudged invalid or
unenforceable, in whole or in part.



                  b. To each Grantor’s knowledge (after due inquiry), no claim has been made
that the use of any Intellectual Property Collateral does or may violate the
asserted rights of any third party.



                  c. Each Grantor has performed all acts and has paid all required fees and
taxes to maintain each and every item of its Intellectual Property Collateral
in full force and effect throughout the world, as applicable, except where such
fees and taxes are being contested in good faith with diligent prosecution.



                  d. Each Grantor owns directly, or is entitled to use by license or
otherwise, all Patents, Trademarks, Trade Secrets, Copyrights, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor’s
business. To the extent any such Intellectual Property Collateral was
developed or created for or on behalf of any Grantor as a “work for hire,” then
such Grantor has obtained a waiver of any rights herein by the author or
creator hereof.



         2.7. As to Pledged Shares. With respect to any Pledged Equity
constituting Collateral, all of such Pledged Equity is duly authorized and
validly issued, fully paid, and non-assessable. The Pledged Equity constitutes
all of the issued and outstanding shares (and other rights) of equity ownership
of each Pledged Equity Issuer owned by any Grantor.


         2.8. Valid and Perfected Security Interest. This Security Agreement
creates a valid security interest in and collateral assignment and pledge of
the Collateral and proceeds thereof securing the payment of the Secured
Obligations. All filings and other actions necessary or desirable to perfect
and protect such security interest, collateral assignment and pledge have been
duly taken or will be duly taken as of the effective date hereof. Schedule 2.8
(a) lists each filing (including filing locations and “debtor” names) that is
necessary or appropriate to perfect the security interests, collateral
assignments and pledges created hereby (including with respect to Intellectual
Property Collateral), and Schedule 2.8 (b) identifies the items of Collateral
that must be delivered to or

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possessed by Lender to perfect Lender’s interest
hereunder. Upon perfection (as described in this Section), such security
interest, collateral assignment and pledge will be of a first priority ranking
except as and to the extent noted in Section 2.3 (or on the corresponding
schedule thereto).


         2.9. Authorization and Approval. Except as noted in Section 2.8 (or on
the corresponding schedule thereto), no authorization, approval or other action
by (and no notice to or filing with) any Official Body or other Person is
required either (a) for the grant by any Grantor of the security interest,
collateral assignment and pledge granted hereby, or (b) for the execution,
delivery and performance of this Security Agreement by any Grantor, or (c) for
the perfection by Lender of its
rights and interests hereunder, or (d) except as provided in Section
5.9(d), for the exercise by Lender of its rights and remedies hereunder.


         2.10. Compliance with Laws and Contracts. Each Grantor is (and after
execution and delivery of the Loan Documents to which such Grantor is a party,
such Grantor will be) in compliance in all material respects with the
requirements of all applicable laws, rules, regulations, policies, orders and
decrees of every Official Body and with all contractual restrictions, in either
instance the non-compliance with which individually or in the aggregate could
reasonably be expected to have or cause a Material Adverse Effect.


         2.11. Validity of Obligations. This Security Agreement constitutes the
legal, valid and binding obligation of each Grantor and is enforceable against
each Grantor in accordance with the terms hereof.


         2.12. Solvency; Fraudulent Transfers. No Grantor is “insolvent,” as such
term is defined in Section 101(32) of the Bankruptcy Code (11 U.S.C. § 101(32))
or any applicable law of another foreign jurisdiction, including without
limitation, the Bankruptcy and Insolvency Act (Canada). No Grantor, by virtue
of its obligations and actions in connection with the Loan Documents, has
engaged or is engaging in any transaction that constitutes a fraudulent
transfer or fraudulent conveyance under applicable federal, provincial, or
state law (including without limitation under Section 548 of the Bankruptcy
Code or under the Uniform Fraudulent Transfer Act or the Uniform Fraudulent
Conveyance Act).


         2.13. Commercial Tort Claims. Except as described in Schedule 2.13, no
Grantor holds any Commercial Tort Claims or is aware of any such pending
claims.


ARTICLE 3: COVENANTS



         Each Grantor covenants and agrees that, so long as this Security Agreement
remains effective, each Grantor will comply with the covenants set forth in
this Article, unless Lender otherwise consents in writing.


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         3.1. As to Equipment and Inventory.


                  a. Except as permitted by Section 5.13 of the Credit Agreement, each
Grantor will keep all the Equipment and Inventory (other than Inventory and
Equipment sold in the ordinary course of business or as otherwise permitted by
the Credit Agreement) at the places therefor specified in Section 2.1 or (upon
prior written notice to Lender of at least 30 calendar days) at such other
places in a jurisdiction where all of the representations and warranties in
Article 2 at that time will be true and correct. Each Grantor will take all
actions necessary to ensure the continued perfection of Lender’s interest in
such Equipment and Inventory.



                  b. Each Grantor will maintain and preserve the Equipment in the same
condition, repair and working order as when new (ordinary wear and tear
excepted) and in all material respects in accordance with all manufacturer’s
manuals. Each Grantor will forthwith (or, in the case of any
loss or damage to any Equipment, as quickly as practicable after the
occurrence thereof) make or cause to be made all repairs, replacements and
other improvements in connection with the Equipment that are necessary or
desirable to maintain the Equipment in accordance with the standard set forth
in this Section. Each Grantor will promptly furnish to Lender a statement
respecting any loss or damage to any of the Equipment, the value of which,
individually or in the aggregate, is the excess of $50,000.



                  c. Each Grantor will pay promptly before delinquent all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (whether for labor, materials or supplies) against, the Equipment and
Inventory, except to the extent the validity thereof is being contested in good
faith by appropriate proceedings diligently prosecuted and for which adequate
reserves in accordance with GAAP have been set aside.



                  d. If any inventory or other goods are at any time in the possession of a
bailee, Grantors shall promptly notify Lender thereof and shall promptly obtain
an acknowledgment from the bailee, in form and substance satisfactory to
Lender, that the bailee holds such Collateral for the benefit of Lender and
shall act upon the instructions of Lender without the further consent of any
Grantor. Lender agrees to not give any such instructions unless an Event of
Default has occurred and is continuing (and any applicable grace period under
Section 7.2 of the Credit Agreement has expired) or would occur after taking
into account any action by any Grantor with respect to the bailee.



         3.2. As to Contracts and Related Rights.


                  a. Each Grantor will keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Contract Rights and Related Contracts, and all originals of all chattel paper
which evidence Contract Rights, located at the places therefor specified in
Section 2.1 or (upon prior written notice to Lender of at least 30 calendar
days) at such other places in a jurisdiction where all of the representations
and warranties in Article 2 at that time will be true and correct. Each
Grantor will take all actions necessary to ensure the continued perfection of
Lender’s interest in the Contract Rights and Related Contracts. No Grantor
will change its (a) name, (b) state of organization or information, (c)
organizational identification numbers, or (d)

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type of organization except upon
prior written notice to Lender of at least 30 calendar days. Each Grantor will
hold and preserve such records and chattel paper concerning the Contract Rights
and Related Contracts and will permit representatives of Lender at any time
during normal business hours to inspect and make abstracts from such records
and chattel paper.


                  b. Each Grantor will remain liable under the contracts, licenses, leases
and other agreements included in the Collateral to the extent set forth
therein. Without limiting the foregoing, unless a Grantor otherwise receives
Lender’s prior written consent (which consent will not be unreasonably withheld
while no Default is occurring), then such Grantor (a) will faithfully abide by,
perform and discharge each and every material obligation, covenant and
agreement under each Material Contract (as such term is defined in the Credit
Agreement) to be performed by such Grantor, and (b) will not materially amend,
modify or otherwise alter the terms of any Material Contract (including the
term or duration thereof or the amount of or methodology for calculating the
compensation due thereunder), and (c) will not assign its rights under any
Material Contract, and (d) will not accept (and will not take any action to cause) a surrender,
termination, revocation or cancellation of any Material Contract unless
replaced by a substantially similar contractual relationship reasonably
acceptable to Lender, and (e) will enforce the performance of each and every
material obligation, covenant and condition of each Material Contract to be
performed by the other parties thereto, and (f) will appear in and defend any
action or proceeding arising under or in any manner connected with any Material
Contract.



                  c. Each Grantor will give prompt written notice to Lender of the
occurrence of any default, breach or other material event, condition or
circumstance relating to any of such Grantor’s Material Contracts (together, if
applicable, with a true and complete copy of any related written notice that
such Grantor may have given to or received from any other party thereto).



                  d. For each deposit or similar account that any Grantor at any time opens
or maintains, such Grantor shall, at Lender’s request and option, pursuant to
an agreement in form and substance satisfactory to Lender, either (a) cause the
depositary bank to agree to comply at any time with instructions from Lender to
such depositary bank directing the disposition of funds from time to time
credited to such deposit account, without further consent of such Grantor, or
(b) arrange for Lender to become the customer of the depositary bank with
respect to the deposit account, with such Grantor being permitted, only with
the consent of Lender, to exercise rights to withdraw funds from such deposit
account. Lender shall not give any such instructions or withhold any
withdrawal rights from such Grantor, unless an Event of Default has occurred
and is continuing (and any applicable grace period under Section 7.2 of the
Credit Agreement has expired), or, after giving effect to any withdrawal not
otherwise permitted by the Loan Documents, would occur. As of the date of this
Agreement, all deposit and similar accounts maintained by Grantors are set
forth in Schedule 3.2 to this Agreement. Grantors shall not open any new
depositary or similar account unless (1) Grantors shall have given Lender at
least fifteen (15) days prior written notice thereof and (2) Grantors shall
have taken all actions requested to be taken by Lender with respect thereto as
otherwise described above in this Section of this Agreement. The provisions of
this Section of this Agreement shall not apply to (i) any deposit account for
which any Grantor, the depositary bank, and Lender have entered into a cash
collateral agreement specifically negotiated among such Grantor, the depositary
bank, and Lender for the specific purpose set forth therein, (ii) deposit
accounts for which Lender is the

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depositary, and (iii) deposit accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of such Grantor’s salaried
employees.


                  e. If any Grantor at any time holds or acquires an interest in any
electronic chattel paper or any “transferable record,” as that term is defined
in Section 201 of the federal Electronic Signatures in Global and National
Commerce Act, or in § 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction, such Grantor shall promptly notify Lender
thereof and, at the request of Lender, shall take such action as Lender may
reasonably request to vest in Lender control of such electronic chattel paper
or control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, § 16 of the Uniform Electronic
Transaction is Act, as so in effect in such jurisdiction, of such transferable
record. Lender will arrange, pursuant to procedures satisfactory to Lender and
so long as such procedures will not result in Lender’s loss of control, for
such Grantor to make alterations to the electronic chattel paper or
transferable record permitted under the New York UCC, any UCC of any other
applicable jurisdiction or, as the case maybe, Section 201 of the federal
Electronic Signatures
in Global and National Commerce Act or § 16 of the Uniform Electronic
Transactions Act for a party in control to make without loss of control, unless
an Event of Default has occurred and is continuing (and after any applicable
grace period under Section 7.2 of the Credit Agreement has expired) or would
occur after taking into account any action by such Grantor with respect to such
electronic chattel paper or transferable record.



         3.3. As to Pledged Equity Collateral.


                  a. Powers and Appointments. Each Grantor agrees that all Pledged Equity
(and all other equity ownership interests constituting Pledged Equity
Collateral) delivered by any Grantor pursuant to this Security Agreement will
be accompanied by duly executed undated blank powers, appointments or other
equivalent instruments of transfer acceptable to Lender. From time to time at
Lender’s request, each Grantor will promptly deliver to Lender such powers,
appointments, instruments and similar documents (satisfactory in form and
substance to Lender) with respect to the Collateral. From time to time at
Lender’s request after the occurrence and during the continuance of any Event
of Default (and after any applicable grace period under Section 7.2 of the
Credit Agreement has expired), each Grantor will promptly transfer any Pledged
Equity or other shares of capital stock or ownership interests constituting
Collateral into the name of any nominee designated by Lender.



                  b. Continuous Pledge; Protect Pledged Equity Collateral. At all times,
each Grantor will keep pledged to Lender pursuant hereto all Pledged Equity,
all other Pledged Collateral, all Dividends and Distributions with respect
thereto (subject, however, to Section 1.5.c), and all other securities,
instruments, proceeds, capital accounts, and rights from time to time received
by or distributable to any Grantor in respect of any Pledged Equity Collateral.
Each Grantor will warrant and defend the right and title herein granted to
Lender in and to the Pledged Equity Collateral (and all right, title, and
interest represented by the Pledged Equity Collateral) against the claims and
demands of all persons whomsoever.



-14-







 





                  c. Delivery of Dividends, Distributions and Other Collateral. Except as
provided in the Credit Agreement, promptly upon receipt and without any request
by Lender, each Grantor agrees to deliver to Lender (properly endorsed if
required hereby or requested by Lender) all Distributions, all Dividends
(subject, however, to Section 1.5.c), all other non-Dividend cash payments, and
all proceeds thereof, all of which will be held by Lender separate, segregated
and apart from its other property as additional Pledged Equity Collateral. All
Dividends, Distributions, cash payments, and proceeds that at any time and from
time to time may be delivered to any Grantor but which such Grantor is then
obligated to deliver to Lender, as additional collateral hereunder, until
delivery to Lender, must be held by such Grantor (a) in trust for Lender and
(b) separate, segregated and apart from its other property.



                  d. Voting Rights.



                           1. Unless and until an Event of Default has occurred and is continuing
(and any applicable grace period under Section 7.2 of the Credit Agreement has
expired), each Grantor will have the exclusive right to exercise all voting
rights with respect to its Pledged Equity. Upon written request from a Grantor
(and at such Grantor’s sole expense), Lender will promptly execute and deliver
such proxies and other documents, if any, as reasonably requested in writing by
such Grantor (together with a reasonably acceptable form thereof) that are
necessary to allow such Grantor to exercise voting power with respect to any
such Pledged Equity owned by such Grantor constituting Pledged Equity
Collateral; provided, however, that no vote may be cast or other action taken
by any Grantor (including, the giving of any consent, waiver, or ratification)
that could impair any Pledged Equity Collateral or would otherwise be
inconsistent with or violate any provision of any Loan Document (including this
Security Agreement).



                           2. After any Event of Default has occurred and is continuing (and any
applicable grace period under Section 7.2 of the Credit Agreement has expired)
and Lender has notified any Grantor of Lender’s intention to exercise its
voting power, unless otherwise then expressly impermissible under applicable
law, Lender may exercise (to the exclusion of each Grantor) the voting power
and all other incidental rights of ownership with respect to any Pledged Equity
or other ownership interests constituting Pledged Equity Collateral. Each
Grantor hereby grants Lender an irrevocable proxy, exercisable under such
circumstances, to vote the Pledged Equity and such other Pledged Equity
Collateral. Each Grantor hereby covenants to promptly deliver to Lender such
additional proxies, appointments and other documents as may be necessary to
allow Lender to exercise such voting power and other incidental ownership
rights.



         3.4. As to Intellectual Property Collateral.


                  a. No Grantor (1) will fail to maintain (in a manner consistent with its
historical practices) the quality of products and services offered under all of
the Trademark Collateral, or (2) will fail to employ with all of the Trademark
Collateral (whether or not registered with any Official Body) an appropriate
notice of such trademark, or (3) will fail to employ with all of the Copyright
Collateral an appropriate notice of such copyright, or (4) will fail to employ
with any Patent Collateral registered with the U.S. Patent and Trademark
Office, or in a foreign country, an appropriate notice of such registration.



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                  b. No Grantor will do or permit any act (or knowingly omit to do any act)
whereby any of the Intellectual Property Collateral may lapse or become
abandoned, forfeited, invalid, dedicated to the public or unenforceable (except
upon expiration of the end of an unrenewable term of a registration thereof)
without the prior written consent of Lender (which consent will not be
unreasonably withheld while no Default is occurring).



                  c. Each Grantor will promptly notify Lender if such Grantor believes (or
has reason to believe) that (1) any application or registration relating to any
material item of the Intellectual Property Collateral may become abandoned,
dedicated to the public, placed in the public domain, invalid or unenforceable,
or (2) there has been or will be an adverse determination or development
(including the institution of, or any determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any other Official Body) regarding such Grantor’s ownership
of any material item of the Intellectual Property Collateral, its right to
register the same, or its right to keep, maintain and enforce the same.



                  d. If any Grantor files an application for the registration of any
Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any other Official Body, then
such Grantor must notify Lender thereof within 30 calendar
days thereafter, and upon request of Lender, must promptly execute and
deliver any and all agreements, instruments, documents and papers that Lender
may request to evidence Lender’s security interest in such Intellectual
Property Collateral.



                  e. Each Grantor will perform all acts and will pay all required fees and
taxes (including in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any other Official
Body) to maintain each and every item of Intellectual Property Collateral in
full force and effect throughout the world and to pursue any application filed
with respect to the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
opposition, and interference and cancellation proceedings.



                  f. Upon any Grantor’s acquiring any Intellectual Property Collateral the
acquisition of which must be recorded in order to perfect such Grantor’s
interest therein, then such Grantor will promptly record its interest therein
and will notify Lender thereof within 30 calendar days thereafter.



                  g. Each Grantor (1) will protect, defend and maintain the validity and
enforceability of the Intellectual Property Collateral, and (2) will use its
best efforts to detect infringements of the Intellectual Property Collateral
and promptly notify Lender in writing of material infringements detected.



                  h. Each Grantor, on a continuing basis, will register such Grantor’s
Trademarks, pursue patent protection for such Grantor’s inventions, and
register the most recent versions of any of such Grantor’s Copyrights.



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                  i. No Grantor will enter into any agreement that would materially impair
or conflict with such Grantor’s obligations hereunder with respect to its
Intellectual Property Collateral. No Grantor will permit the inclusion in any
material contract to which it becomes a party any provisions that could in any
way prevent the creation of a security interest in such Grantor’s rights and
interest in any property included within the definition of the Intellectual
Property Collateral acquired or licensed under such contracts. No Grantor will
arrange for the creation or development of any Intellectual Property Collateral
as a “work for hire” without concurrently obtaining a waiver of all rights
therein by the author or creator thereof.



                  j. Each Grantor will promptly notify Lender in writing upon obtaining
knowledge of any event that materially adversely affects (1) the value of any
material Intellectual Property Collateral, or (2) the ability of such Grantor
to dispose of any material Intellectual Property Collateral, or (3) the rights
and remedies of Lender in relation thereto, including the levy of any legal
process against any of the Intellectual Property Collateral.



                  k. Each Grantor, on a continuing basis, will make, execute, acknowledge
and deliver, and will file and record in the proper filing and recording places
in the United States and Canada, all such instruments, collateral agreements
and filings (including all appropriate financing and continuation statements)
with the United States Patent and Trademarks Office, the Register of
Copyrights, and the Canadian Intellectual Property Office and will take all
such action as Lender may
reasonably deem to be necessary or advisable to perfect or protect
Lender’s security interest in all Intellectual Property Collateral and
otherwise to carry out the intent and purpose of this Security Agreement, or
for assuring and confirming to Lender the grant or perfection of a security
interest in all Intellectual Property Collateral.



         3.5. As to Customer and Material Business Records and Computer Software.


                  a. Upon Lender’s request, each Grantor (at its cost and expense) will
maintain at a separate location a duplicate current copy of (1) all lists,
files and records of active and prospective customers and patients, and (2) all
material computer software and data bases (including all material application
and operating system software and all material data files and operating
manuals), and (3) all other material business files, records and software that
Lender may reasonably request in writing from time to time. Unless Lender
otherwise consents, such records, materials and information must be kept (at
Grantors’ election) either with Lender or with an unrelated business that is
engaged in the business of storing such items and that is reasonably acceptable
to Lender. For purposes of this Clause, such records, materials and
information will be considered “current” if they were accurate and complete
within the immediately preceding 30 calendar days.



                  b. If any Grantor elects to keep such records, materials and information
with an unrelated business, then (upon Lender’s request) such Grantor will
notify such business at which such records, materials and information are
maintained (1) that Lender and its representatives are authorized from time to
time to inspect, examine, audit and make copies and abstracts of such records,
materials and information during normal business hours, and (2) that, upon
receipt of written notice from Lender that an Event of Default has occurred and
is continuing under the Loan Documents (and after any applicable grace period
under Section 7.2 of the Credit Agreement has

-17-







 





expired), such business is to
release and deliver such records, materials and information to Lender in such
manner and at such place as Lender may direct (in its sole and absolute
discretion), and (3) that such business is not to release or return such
records, materials or information to any Grantor without Lender’s prior written
consent unless (a) such Grantor has delivered a more current version thereof to
such business or (b) this Security Agreement has been terminated in accordance
with Section 1.3.


                  c. Each Grantor, and Lender to the extent it has access thereto or
possession thereof, will also otherwise utilize standard industry precautions
to safeguard the utility, value and confidentiality of all such records,
materials and information covered by this Section.



         3.6. As to Certain Investment Property (including Margin Stock). Without
obtaining Lender’s prior written consent (which consent will not be
unreasonably withheld while no Default is occurring), no Grantor will establish
or maintain any “securities account” or “financial asset” with any “securities
intermediary” (as such terms are defined in Article 8 of the UCC), unless a
control agreement acceptable in form and substance to Lender is first executed
by such “securities intermediary” securing Lender’s first priority interest and
rights in and to all “financial assets” and “security entitlements” associated
with such “securities account”. Without obtaining Lender’s prior written
consent (which consent will not be unreasonably withheld while no Default is
occurring), no Grantor will purchase or carry any “Margin Stock” within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System.


         3.7. Insurance. Each Grantor will maintain insurance coverages to the
same extent and subject to the same requirements and conditions as required for
Borrowers under the Credit Agreement. Payments and proceeds of claims or
losses in respect of insurance coverage are to be delivered to Lender and may
be held by Lender (at its discretion) as additional Collateral for, and at any
time during the occurrence of an Event of Default (and after any applicable
grace period under Section 7.2 of the Credit Agreement has expired) may be
applied by Lender in whole or in part against, all or any part of the Secured
Obligations in such order as Lender elects.


         3.8. Transfers and Other Liens.


                  a. No Grantor will sell, transfer, assign, lease, license or otherwise
dispose of any of the Collateral, except (1) Inventory sold, leased or licensed
in the ordinary course of business to unrelated third parties for value
received, and (2) Equipment that has become obsolete or worn out, and (3)
Equipment leased or licensed in the ordinary course of business to unrelated
third parties for value received, and (4) Intellectual Property Collateral
licensed to unrelated third parties for value received and subject to at least
commercially reasonable terms and conditions from the perspective of such
Grantor, and (5) as otherwise permitted by the Credit Agreement.



                  b. Each Grantor will maintain the security interest, collateral assignment
and pledge created hereby as a first priority interest (except as otherwise
permitted by the Credit Agreement), and no Grantor will create or suffer to
exist any Lien upon or with respect to any of the Collateral to secure any
indebtedness or obligations of any Person, (except as otherwise permitted by
the Credit Agreement).



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         3.9. Letter of Credit Rights. If any Grantor is at any time a beneficiary
under a letter of credit, such Grantor shall promptly notify Lender thereof
and, at the request and option of Lender, such Grantor shall, pursuant to an
agreement in form and substance satisfactory to Lender, either (a) arrange for
the issuer and any confirmer of such letter of credit to consent to an
assignment to Lender of the proceeds of any drawing under the letter of credit,
or (b) arrange for Lender to become the transferee beneficiary of the letter of
credit, with Lender agreeing, in each case, that the proceeds of any drawing
under the letter of credit are to be applied as provided in the Credit
Agreement which is one of the Loan Documents.


         3.10. Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a commercial tort claim, such Grantor shall immediately notify Lender
in a writing signed by such Grantor and describing the brief details thereof
and grant to Lender in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to Lender.


         3.11. Further Assurances. Each Grantor (from time to time at its own
expense) will promptly execute and deliver all further instruments and
documents to the extent, if any, that such Grantor’s signature thereof is
required, and will take all further action, that may be necessary or desirable
(or that Lender may reasonably request) in order to perfect, preserve and
protect any security interest, collateral assignment or pledge granted or
purported to be granted hereby or to enable Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, each Grantor:


                  a. Will mark conspicuously each chattel paper included in the Contract
Rights and, at the request of Lender, each of its records pertaining to the
Collateral with a legend (in form and substance reasonably satisfactory to
Lender) indicating that such chattel paper is subject to the security interest,
collateral assignment and pledge granted hereby; and



                  b. If any Contract Rights shall be evidenced by a promissory note or other
instrument, negotiable document or chattel paper, then will deliver and pledge
to Lender hereunder such promissory note, instrument, negotiable document or
chattel paper duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance reasonably satisfactory to
Lender; and



                  c. Will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be necessary
(or as Lender may reasonably request), to the extent, if any, that such
Grantor’s signature thereof is required, in order to perfect and preserve the
security interests, collateral assignments, pledges and other rights granted
or purported to be granted to Lender hereby; and



                  d. Will furnish to Lender (from time to time at Lender’s request)
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in reasonable detail.



-19-







 





With respect to the foregoing and the grant of the security interest,
collateral assignment and pledge hereunder, each Grantor hereby authorizes
Lender to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral. A carbon, photographic
or other reproduction of this Security Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.


ARTICLE 4: LENDER



         4.1. Lender Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Lender as such Grantor’s attorney-in-fact, with full authority in the
name, place and stead of such Grantor or otherwise, from time to time in
Lender’s reasonable discretion, to take any action and to execute any
instrument which Lender may deem reasonably necessary or advisable to
accomplish the purposes of this Security Agreement upon the occurrence and
during the continuation of an Event of Default. This authority includes the
following:



	 	 	 	 	 
	 	 	
a.
	 	To ask, demand, collect, sue for, recover,
compromise, restructure, receive and give acquittance and
receipts for moneys due and to become due under or in respect
of any of the Collateral; and/or
	
	
	
	

	
	 	 	 	 
	
	
	
	

	 	 	
b.
	 	To notify the parties obligated on any of the
Collateral to make payment to Lender of any amount due or to
become due in connection therewith; and/or
	
	
	
	

	
	 	 	 	 
	
	
	
	

	 	 	
c.
	 	To receive, endorse, and collect any drafts, checks
or other instruments, documents and chattel paper in connection
with Clause “a” of this Section; and/or
	
	
	
	

	
	 	 	 	 
	
	
	
	

	 	 	
d.
	 	To file any claims or take any action or institute
any proceedings which Lender may deem reasonably necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Lender or any Grantor with
respect to any of the Collateral; and/or
	
	
	
	

	
	 	 	 	 
	
	
	
	

	 	 	
e.
	 	To execute (in the name, place and stead of any
Grantor) endorsements, assignments, powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral; and/or
	
	
	
	

	
	 	 	 	 
	
	
	
	

	 	 	
f.
	 	To perform any and all of the affirmative
obligations and covenants of such Grantor hereunder (with
notice thereof to be provided to such Grantor by Lender within
a reasonable time thereafter).



Each Grantor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with
an interest, but that it will terminate upon the termination of this
Security Agreement pursuant to Section 1.3.


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         4.2. Lender May Perform. From time to time, Lender (at its option) may
perform (or may cause the performance of) any act which any Grantor agrees
hereunder to perform and which such Grantor fails to perform after being
requested in writing so to perform (it being understood that no such request
need be given during the continuance of an Event of Default), and Lender from
time to time may also take any other action which Lender reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein or collateral assignments or
pledges thereof. The costs and expenses of Lender incurred in connection with
any such performance will be payable by Grantors (jointly and severally)
pursuant to Section 5.5 hereof.


         4.3. Lender Has No Duty. The rights and powers conferred upon Lender
hereunder are solely to protect Lender’s interest in the Collateral and do not
impose any duty on Lender to exercise any such rights or powers. Except for
reasonable care of any Collateral in Lender’s possession and the accounting for
moneys actually received by it hereunder, Lender has no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.


         4.4. Reasonable Care. Lender is required to exercise reasonable care in
the custody and preservation of any of the Collateral in its possession;
provided, however, Lender will be deemed to have exercised such reasonable care
in the custody and preservation of any of the Collateral if Lender takes such
action for that purpose as any Grantor reasonably requests in writing at times
other than after the occurrence or during the continuance of an Event of
Default (and after any applicable grace period under Section 7.2 of the Credit
Agreement has expired). Notwithstanding the foregoing, any failure or refusal
by Lender at any time to comply with any such request by any Grantor will not
in itself be deemed a failure to exercise reasonable care.


ARTICLE 5: DEFAULTS AND REMEDIES



         5.1. Events of Default. The occurrence of any “Event of Default” under
and as defined in the Credit Agreement will constitute an independent Event of
Default (“Event of Default”) hereunder.


         5.2. Certain Remedies. If any Event of Default occurs and is continuing:


                  a. In addition to other rights and remedies provided for herein (including
under Article 4) or otherwise available to Lender (including under the other
Loan Documents and/or applicable law), Lender may also exercise in respect of
the Collateral all the rights and remedies of a secured party upon default
under the UCC or PPSA, as applicable (whether or not the UCC or PPSA applies to
the affected Collateral). Upon the occurrence of any Event of Default and
during the continuance, Lender will have the immediate right to enforce and
realize upon any and all collateral security granted under the Loan Documents
(including the Collateral hereunder) in any manner or order that Lender deems
expedient without regard to any equitable principles of marshalling or
otherwise. All rights and remedies available to Lender are to be considered
cumulative in nature. With respect to any Collateral consisting of Commercial
Tort Claims, Grantors, on demand, shall cause such Collateral to become an
assignment, transfer and conveyance of such Collateral by the Grantors to the
Lender on such terms and conditions and in such manner as Lender shall
determine.

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Notwithstanding the foregoing, Lender agrees not to enforce and
realize upon any Collateral hereunder during any grace period provided under
Section 7.2 of the Credit Agreement.


                  b. Without notice except as expressly specified herein or required by
applicable law, Lender may also sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Lender’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as Lender may deem commercially reasonable. To the extent notice of sale
is required by law, each Grantor agrees that prior notice to a Grantor of at
least ten (10) calendar days indicating the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Lender may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale (without further notice) may be made at the
time and place to which it was so adjourned.



                  c. Lender may require Grantors to, and each Grantor hereby agrees (at its
expense) that it will, forthwith assemble all or part of the Collateral as
directed by Lender and make it available to Lender at a place designated by
Lender that is reasonably convenient to both Lender and Grantors.



                  d. Unless Lender otherwise consents, each Grantor will remit to Lender all
cash proceeds received in respect of any sale of, or collection from, or other
realization upon all or any part of the Collateral. All cash proceeds received
by Lender from any Grantor or otherwise in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral (in the
discretion of Lender) may be held by Lender as additional Collateral for the
Secured Obligations, and/or then or at any time thereafter may be applied in
whole or in part by Lender against all or any part of the Secured Obligations
in an order consistent with the designated application of payments
provided for in Section 1.4 of the Credit Agreement. Any surplus of such
cash or cash proceeds held by Lender and remaining after payment in full of all
the Secured Obligations will be paid over to a Grantor or to whomsoever Lender
reasonably believes may be lawfully entitled to receive such surplus.



                  e. To the extent any of the Collateral represents an interest in a
partnership, a limited liability company or other unincorporated enterprise, in
addition to any other rights and remedies available to Lender under the Loan
Documents or applicable law, Lender (at its option but with notice to the
relevant Grantor) may also exercise all rights and privileges of the holder of
such interest under the agreements governing such Collateral and the Organic
Documents for the related organization or may instruct such Grantor how to
exercise such rights and privileges (with which instructions each Grantor
hereby agrees to comply). Each Grantor, in addition, covenants and agrees (at
Lender’s request) to amend (and to use its best efforts to cause others to
amend) any of the Organic Documents for such organization in order to authorize
Lender to so exercise any such rights and privileges associated with such
Collateral (including voting rights and the rights to participate in management
decisions). The rights of Lender under this Subsection may be transferred to
and exercised by any subsequent acquiror or transferee of the Collateral
pursuant to any sale of or foreclosure on such Collateral. Each Grantor hereby
agrees that the rights of Lender (or any

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subsequent acquiror or transferee of
the Collateral) under this Subsection may be enforced by specific performance
or otherwise.


           5.3.     Special Securities-Related Remedies.



                  a. Additional Rights. If, during the continuance of an Event of Default
(and after any applicable grace period under Section 7.2 of the Credit
Agreement has expired), Lender determines to exercise its right to sell all or
any portion of the Pledged Equity Collateral pursuant to Section 5.2, upon
Lender’s request, then each Grantor (at its own expense):




	 	 	 	 	 	 	 
	 	 	 	
1.
	 	 	Will execute and deliver, and will use
best efforts to cause each issuer of the Pledged Equity
Collateral contemplated to be sold (and the directors and
officers thereof) to execute and deliver, all such
instruments and documents, and will do or use best
efforts to cause to be done all such other acts and
things as may be necessary or, in Lender’s opinion,
reasonably advisable (1) to register such Pledged Equity
Collateral under the provisions of the Securities Act,
and (2) to cause the registration statement relating
thereto to become effective and to remain effective for
such period as prospectuses are required by law to be
furnished, and (3) to make all amendments and supplements
thereto and to the related prospectus which, in Lender’s
opinion, are necessary or reasonably advisable, all in
conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and
Exchange Commission applicable thereto; and
	
	
	
	

	
	 	 	 	 	 	 
	
	
	
	

	 	 	 	
2.
	 	 	Will use its best efforts to qualify
the Pledged Equity Collateral under the state securities
or “Blue Sky” laws and to obtain all necessary
governmental approvals for the sale of the Pledged Equity
Collateral, as requested by Lender; and
	
	
	
	

	
	 	 	 	 	 	 
	
	
	
	

	 	 	 	
3.
	 	 	Will use best efforts to cause each
such issuer to make available to its security holders, as
soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities
Act; and
	
	
	
	

	
	 	 	 	 	 	 
	
	
	
	

	 	 	 	
4.
	 	 	Will use its best efforts to qualify
for distribution of resale such Pledged Equity Collateral
pursuant to the relevant Canadian securities legislation,
if applicable, including under any exemption available
under such Canadian securities legislation, and to obtain
all necessary approvals for the sale of the Pledged
Equity Collateral; and
	
	
	
	

	
	 	 	 	 	 	 
	
	
	
	

	 	 	 	
5.
	 	 	Will do or use best efforts to cause to
be done all such other acts and things as may be
reasonably necessary, or in Lender’s opinion, advisable
to make such sale of the Pledged Equity Collateral or any
part thereof valid and binding and in compliance with
applicable law.




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In furtherance of the foregoing (and not in limitation of any other
obligations under the Loan Documents), each Grantor covenants that it will
fully cooperate with each other Grantor and Lender, and will comply with
all requests of Lender, in order to permit Lender to fully and timely
exercise the remedies under this Section.


                  b. Compliance with Restrictions. Each Grantor agrees that, in any sale of
any of the Pledged Equity Collateral, Lender is authorized to comply with any
limitation or restriction in connection with the type of such sale pursued as
Lender may be advised by counsel is necessary or reasonably desirable in order
to avoid any violation of applicable law (including compliance with such
procedures as may restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any Official Body. Each Grantor further agrees that such
compliance will not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner, nor will Lender or any Lender be
liable or accountable to any Grantor for any discount allowed by reason of the
fact that such Collateral is sold at foreclosure or otherwise in compliance
with any such limitation or restriction or by reason of the fact that such
Pledge Equity Collateral may represent a minority interest in any Grantor.



         5.4. Special IP-Related Remedies (License of Intellectual Property
Collateral). Each Grantor hereby grants Lender a royalty-free, non-exclusive,
worldwide, irrevocable license (the “Remedies License”) to make, use and sell
from time to time after the occurrence of any Event of Default that is not
waived by Lender (and after any applicable grace period under Section 7.2 of
the Credit Agreement has expired) and delivery of notice thereof by Lender
(unless such Event of Default is under Section 7.1.10 of the Credit Agreement,
in which case no such notification shall be required) all present and future
Intellectual Property Collateral of such Grantor (including the right to
sub-license such Intellectual Property Collateral) in connection with the
maintenance, preservation, preparation, sale, disposition, collection,
foreclosure, or other realization of, upon, or with respect to
the Collateral or payment of the Secured Obligations in accordance with
the Loan Documents. The Remedies License shall remain in full force and effect
until this Security Agreement is terminated in accordance with Section 1.3 (but
any sub-license or transfer of the Remedies License prior to the termination of
the Remedies License shall survive such termination of the Remedies Licenses
unless otherwise provided on such sub-license or transfer document). The
rights of Lender under the Remedies License are assignable by Lender (without
the consent of such Grantor) in connection with (a) any sale or other
disposition of Collateral in accordance with the Loan Documents to the extent
necessary or appropriate to permit the purchaser of such Collateral to have
continuing and royalty-free, worldwide rights with respect to such Collateral
or (b) any assignment or other transfer by Lender of all or any part of its
rights under and in accordance with the Loan Documents. Upon or at any time
after the occurrence and during the continuance of any Event of Default (and
after any applicable grace period under Section 7.2 of the Credit Agreement has
expired), each Grantor will deliver to Lender (at Lender’s request but at such
Grantor’s expense) a copy of all such Intellectual Property Collateral and all
related other Collateral in a form requested by Lender. Lender’s rights as a
licensee under this Section constitute a separately enforceable contract from
the balance of this


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Security Agreement.


         5.5. Indemnity and Expenses.


                  a. Each Grantor agrees (jointly and severally) to indemnify and hold
Lender harmless from and against any and all claims, losses and liabilities
arising out of or in any manner resulting from any or all of the following:
(1) any Grantor’s failure to perform or otherwise observe any of its
obligations hereunder, or (2) Lender’s enforcement of any of the provisions
hereof, except where any such claims, losses or liabilities result from
Lender’s own gross negligence, misrepresentation, fraud or willful misconduct,
or (3) any Grantor’s gross negligence, misrepresentation, willful misconduct or
fraud.



                  b. Upon demand, each Grantor (jointly and severally) will pay Lender the
amount of any and all reasonable costs and expenses that Lender may incur in
connection with any of the matters described under clause “a” of this Section.
Without limitation, each Grantor’s obligation to reimburse Lender for such
fees, costs and expenses includes all reasonable fees and disbursements of
Lender’s counsel and any other experts and agents that Lender may retain in
connection herewith (whether or not litigation is commenced)



         5.6. Lender’s Rights Upon Occurrence of Liquidation Events.


                  a. Right to Certain Payments and Distributions. Upon the occurrence of
any Liquidation Event, any payment or distribution of any kind or character
(whether in cash, securities or other property) that but for this Security
Agreement would be payable or deliverable to a Grantor must instead be paid or
delivered directly to Lender for application on the Secured Obligations,
whether or not then due or mature.



                  b. Non-Cash Payments and Distributions. Notwithstanding the provisions of
Clause “a” of this Section, if Lender receives delivery of any such payment or
distribution in connection with a Liquidation Event in a form other than cash,
then Lender may hold such property as additional Collateral for the Secured
Obligations, and neither any Grantor nor any other Obligor of
the Secured Obligations will be entitled to a credit with respect to the
Secured Obligations, nor will the Secured Obligations otherwise be adjusted in
any respect, until such time as Lender (in its sole and absolute discretion)
has sold, discounted or otherwise liquidated such distribution (at a price
considered by Lender to be in its sole best interest) and then (subject to the
terms of Section 7.8), such credit or adjustment to the Secured Obligations
will be limited only to the net cash proceeds realized therefrom after the
payment of all costs and expenses associated with such sale or liquidation.



                  c. Collection of Payments and Distributions. In addition to any rights
otherwise permitted under the Loan Documents or applicable law, each Grantor
hereby irrevocably authorizes and empowers Lender, upon the occurrence of a
Liquidation Event, to file and/or vote claims and take such other proceedings,
in each instance in Lender’s own name or in the name of a Grantor, or
otherwise, all as Lender may deem reasonably necessary or advisable for the
enforcement of this Security Agreement. Each Grantor further agrees duly and
promptly (i) to take such action as may be

-25-







 




requested by Lender to assist in the
collection and/or compromise of any amounts owed to any Grantor, and (ii) to
file appropriate proofs of claim in respect of such amounts, and (iii) to
execute and deliver to Lender on demand such powers of attorney, proofs of
claim, assignments of claim or other instruments as may be requested by Lender
to enable Lender to enforce any and all claims upon or with respect to such
amounts, and (iv) to collect, compromise and receive any and all payments or
distributions which may be payable or deliverable at any time upon or with
respect to such amounts.



         5.7. Delivery of Payments and Distributions. If any Grantor receives any
payment, distribution or any other funds or property in contravention of the
provisions hereof or any other Loan Document, then such Grantor must
immediately forthwith deliver such payment, distribution or other funds or
property (or proceeds thereof) to Lender in precisely the form received (except
for the endorsement or assignment without recourse of such Grantor where
necessary) for application on the Secured Obligations (or, at Lender’s option,
held as additional Collateral therefor), whether or not then due or mature.
Until such funds or property are delivered to Lender, such Grantor must hold
such payment, distribution or other funds or property (or proceeds thereof) (a)
in trust for the benefit of and as property of Lender and (b) separate from
(i.e., not commingled with) its other assets. If a Grantor fails or refuses to
make any such endorsement or assignment, then Lender (or any of its officers or
employees) are hereby irrevocably authorized by such Grantor to make the
endorsement and/or assignment.


         5.8. Cooperation and Assistance. Each Grantor agrees (during the
existence of an Event of Default) to take any actions that Lender may
reasonably request in order to enable Lender and each Lender to receive the
full rights and benefits granted to Lender and each Lender by the Loan
Documents. Each Grantor further agrees that, during the existence of an Event
of Default, each Grantor will assist and cooperate with Lender (and will use
its best efforts to cause others to assist and cooperate with Lender) to ensure
that each Grantor continues (a) to operate in the normal course of business,
and (b) to fulfill all of its legal, regulatory and contractual obligations and
(c) to otherwise be properly and professionally managed. At Lender’s request
and the expense of Grantors (jointly and severally), at any time during the
existence of an Event of Default, such assistance and cooperation may include
the employment of (and, to the maximum extent not prohibited by the rules,
regulations and orders of any Official Body with jurisdiction, the delegation
of appropriate management authority to) one or more qualified and independent
consultants and professional
managers acceptable to Lender to assist in the interim operations of
Grantors; all of which each Grantor hereby agrees not to challenge.


         5.9. Special Regulatory Remedies.


                  a. Each Grantor and Lender hereby acknowledge their intent that, during
the existence of an Event of Default (and after any applicable grace period
under Section 7.2 of the Credit Agreement has expired), to the fullest extent
permitted by applicable law and governmental policy, Lender will have all
rights necessary or desirable to obtain, use and/or sell the assets and
operations of each Grantor and the other Collateral, and to exercise all
remedies available to Lender and each Lender under the Loan Documents, the
Uniform Commercial Code or other applicable law, including the PPSA. Each
Grantor and Lender agree that, if any applicable law or governmental policy
changes subsequent to the date hereof that affects in any manner Lender’s
rights of access to,

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or use or sale of, any Grantor’s assets or other
Collateral (including patient files) or the procedures necessary to enable
Lender to obtain such rights of access, use or sale during an Event of Default,
then Lender and each Grantor will amend the Loan Documents (in such manner as
Lender reasonably requests) in order to provide Lender with all such rights to
the greatest extent possible consistent with then-applicable law and
governmental policy.



                  b. At any time during the existence of an Event of Default (and after any
applicable grace period under Section 7.2 of the Credit Agreement has expired),
at the cost and expense of Grantors (jointly and severally), each Grantor will
use its best efforts to assist and cooperate in obtaining all approvals which
are then required by applicable law or contract for or in connection with any
action or transaction contemplated by the Loan Documents, the Uniform
Commercial Code or the PPSA. Each Grantor further agrees, upon Lender’s
request and at the expense of Grantors (jointly and severally), at any time
during the existence of an Event of Default (and after any applicable grace
period under Section 7.2 of the Credit Agreement has expired), to prepare,
sign, file and diligently prosecute (and to use its best efforts to cause the
preparation, execution, filing and diligent prosecution by others) with the
applicable Official Body or transferor’s portion of any applications for
consent to the assignment of any Collateral or transfer of control thereof
necessary or appropriate under the rules of each Official Body for approval of
any sale or transfer of any Collateral pursuant to the exercise of Lender’s and
Lenders’ remedies under the Loan Documents. Each Grantor further consents to
(and agrees that it will not challenge), at any time during the existence of an
Event of Default (and after any applicable grace period under Section 7.2 of
the Credit Agreement has expired), the transfer of control or assignment of any
Collateral and other assets to a receiver, trustee, transferee, or similar
official or to any purchaser of the Collateral pursuant to any public or
private sale, judicial sale, foreclosure or exercise of other remedies
available to Lender as permitted by applicable law.



                  c. In addition to the other rights and remedies provided for herein or
otherwise available to Lender, upon the occurrence of an Event of Default (and
after any applicable grace period under Section 7.2 of the Credit Agreement has
expired), Lender may require each Grantor to, and each Grantor (at its sole
expense) hereby agrees that it will take all actions necessary or reasonably
advisable (1) to cooperate with Lender in effecting the transfer of any or all
of its Collateral to a transferee acceptable to the applicable Official Body or
(2) to sell any or all of the Collateral at a public or private sale for cash,
on credit or for future delivery. Each Grantor will also
use its best efforts to sell the Collateral for the best available price,
and (in furtherance of such efforts) each Grantor (a) will hire one or more
brokers to solicit buyers, and (b) will cause such information and materials
regarding the Collateral and its operations to be compiled as is customarily
prepared or as is needed under the circumstances, and (c) will make available
to prospective purchasers such information (including any information compiled
in accordance with Clause “(b)”) as is customary or as is needed under the
circumstances.



                  d. Notwithstanding anything to the contrary contained in any Loan
Document, neither Lender nor any Grantor will take any action pursuant to the
Loan Documents that would constitute or result in any assignment of any
Collateral or any transfer of control of any Grantor if such assignment of
Collateral or transfer of control would require under then existing law
(including the written rules and regulations promulgated by any Official Body)
the prior approval of

-27-







 




any Official Body, unless such approval has been obtained
(as applicable) from such Official Body (to the extent failure to obtain such
approval by Lender could reasonably be expected to have or cause a Material
Adverse Effect). Without limiting the generality of the foregoing, Lender
specifically agrees that (a) voting rights with respect to the pledged equity
interests of each Grantor will remain with the holders of such voting rights
during the existence of an Event of Default (and after any applicable grace
period under Section 7.2 of the Credit Agreement has expired) unless and until
any required prior approvals to the transfer of such voting rights have been
obtained (as applicable) from the applicable Official Body (to the extent
failure to obtain such approval by Lender could reasonably be expected to have
or cause a Material Adverse Effect), and (b) during the existence of any Event
of Default (and after any applicable grace period under Section 7.2 of the
Credit Agreement has expired) and foreclosure upon the Collateral by Lender,
there will be either a private or public sale of the Collateral, and (c) prior
to the exercise of voting rights by the purchaser at any such sale, any consent
of any Official Body under applicable law will be obtained.



ARTICLE 6: DEFINITIONS



         6.1. Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Security Agreement (including
the preamble and recitals hereof) have the meanings provided in the Credit
Agreement.


         6.2. Rules of Construction. The rules of interpretation and construction
set forth in Section 8.2 of the Credit Agreement apply to the interpretation
and construction of this Security Agreement.


         6.3. Certain Terms. The following terms (whether or not underscored) when
used in this Security Agreement (including the preamble and recitals hereof)
have the following meanings:


                  a. “Lender” means HEARx Ltd. and any successor, assignee, transferee,
pledgee or participant thereof.



                  b. “Borrower(s)” means, individually and collectively, each Borrower under
and as defined in the Credit Agreement, including any successor or assignee
thereof.



                  c. “Collateral” is defined in Section 1.1.



                  d. “Commercial Tort Claims” is defined in Section 1.1.



                  e. “Computer Software Collateral” is defined in Section 1.1.



                  f. “Contract Rights” is defined in Section 1.1.



                  g. “Copyright Collateral” is defined in Section 1.1.



                  h. “Credit Agreement” is defined in the Recitals.



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                  i. “Distribution” means all equity dividends, liquidating dividends,
shares or interests of equity resulting from (or in connection with the
exercise of) equity splits, reclassifications, warrants, options, non-cash
dividends, mergers, consolidations, distributions of capital accounts, and all
other distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Equity or other shares or interests of equity
constituting Pledged Equity Collateral, but such term does not include
Dividends.



                  j. “Dividend” means cash dividends and cash distributions with respect to
any Pledged Equity or other Pledged Equity Property made in the ordinary course
of business, but such term shall not include a liquidating dividend.



                  k. “Equipment” is defined in Section 1.1.



                  l. “Fixture” is defined in Section 1.1.



                  m. “Grantor” means each Person that from time to time executes this
Security Agreement (or a counterpart hereof or supplemental addendum hereto) as
a grantor hereunder, and any successor or permitted assignee thereof.



                  n. “Intellectual Property Collateral” means, collectively, the Computer
Software Collateral, the Copyright Collateral, the Patent Collateral, the
Trademark Collateral and the Trade Secrets Collateral, as defined in Section
1.1.



                  o. “Inventory” is defined in Section 1.1.



                  p. “License” means any authorization, permit, call sign, frequency
designation, consent, franchise, ordinance, registration, certificate, license,
agreement or other right filed with, granted by, or entered into by a federal,
state, provincial, or local Official Body.



                  q. “Lien” means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, option, claim, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement
of any kind or nature whatsoever.



                  r. “Liquidation Event” means any foreclosure on or any sale of all or any
material part of the assets of any Grantor, or any liquidation, dissolution or
other winding up (partial or complete) of any Grantor or any Grantor’s
business, or any sale, receivership, insolvency or bankruptcy proceeding, any
assignment for the benefit of creditors, or any other proceeding by or against
any Grantor or its assets for any relief under any bankruptcy or insolvency law
relating to the relief of debtors, readjustment of indebtedness, arrangements,
reorganizations, compositions or extensions.



                  s. “Official Body” means any federal, state, provincial, local, or other
government (or any political subdivision, agency, authority, bureau,
commission, department or

-29-







 




instrumentality thereof) and any court, tribunal,
grand jury or arbitrator, in each instance whether foreign or domestic.



                  t. “Operating Agreements” means any consulting agreement, management
agreement, employment agreement, cost allocation agreement or other similar
agreement relating to the operation of any Grantor’s business.



                  u. “Patent Collateral” is defined in Section 1.1.



                  v. “Person” means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.



                  w. “Pledged Equity” means all shares of capital stock and all other forms
of equity or ownership rights and interests (whether in the form of partnership
interests, membership interests or otherwise) of or in any corporation,
partnership, limited liability company business trust or other business entity.



                  x. “Pledged Equity Collateral” is defined in Section 1.5.



                  y. “Pledged Equity Issuer” means each Person who is an issuer of Pledged
Equity Collateral.



                  z. “Pledged Equity Property” means all Pledged Equity and all other forms
of equity interests and rights, all other securities (including, without
limitation, all options, warrants and puts for Pledged Equity), all assignments
of any amounts due or to become due, all other instruments which are now being
delivered by any Pledgor to Lender or may from time to time hereafter be
delivered by any Pledgor to Lender for the purpose of pledge under the Security
Agreement, and all proceeds of any of the foregoing.



                  aa. “Pledgor” means each Person (a) who is a Grantor hereunder and (b) who
pledges Pledged Equity Collateral.



                  bb. “Related Contracts” is defined in Section 1.1.



                  cc. “Secured Obligations” is defined in Section 1.2.



                  dd. “Security Agreement” means this Master Security Agreement, Collateral
Assignment and Equity Pledge and all exhibits, schedules and supplemental
addenda hereto, all as may be amended and otherwise modified from time to time
hereafter.



                  ee. “Securities Act” means the Securities Act of 1933, as amended from
time to time, and as implemented by the Securities Exchange Commission.



                  ff. “Trademark Collateral” is defined in Section 1.1.



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                  gg. “Trade Secrets Collateral” is defined in Section 1.1.



                  hh. “UCC” means the Uniform Commercial Code as in effect in the State of
New York or, if the laws of some other jurisdiction otherwise dictates, then
the Uniform Commercial Code as in effect in the jurisdiction whose laws govern
the interpretation of the relevant provisions of this Security Agreement.



         6.4. UCC Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the UCC are used
in this Security Agreement (including in the preamble and recitals hereof) with
such meanings.


ARTICLE 7: MISCELLANEOUS PROVISIONS



         7.1. Loan Document. This Security Agreement and each separate assignment
executed in connection herewith are Loan Documents executed pursuant to the
Credit Agreement and (unless otherwise expressly indicated herein) are to be
construed, administered and applied in accordance with the terms and provisions
thereof.


         7.2. Amendments. No amendment to or waiver of any provision of this
Security Agreement, nor consent to any departure by any Grantor herefrom, shall
in any event be effective unless such amendment, waiver or consent is in
writing and signed by Lender. Any such waiver or consent will be effective
only in the specific instance and for the specific purpose for which given.


         7.3. Addresses for Notices. Any notice, request, consent, waiver or other
communication required or permitted under or in connection with this Security
Agreement will be deemed satisfactorily given if it is in writing and is
delivered either personally to the addressee thereof, or by prepaid registered
or certified U.S. mail or Canadian Post (return receipt requested), or by a
nationally recognized commercial courier service with next-day delivery charges
prepaid, or by telegraph, or by facsimile (voice confirmed), or by any other
reasonable means of personal delivery to the party entitled thereto at its
respective address set forth below its signature to this Security Agreement
(or, if blank, then to such party at its address or facsimile number set forth
in the Credit Agreement). If any Grantor fails to insert an address below (and
in the Credit Agreement), then such failure shall constitute a designation of
its last known address as the address for all notices, including notices of
default and sale. Any party to this Security Agreement may change its address
or facsimile number for notice purposes by giving notice thereof to the other
parties hereto in accordance with this Section, provided that such change shall
not be effective until 2 calendar days after notice of
such change. All such notices and other communications will be deemed
given and effective (a) if by mail, then upon actual receipt or 5 calendar days
after mailing as provided above (whichever is earlier), or (b) if by facsimile,
then upon successful transmittal to such party’s designated number, or (c) if
by telegraph, then upon actual receipt or 2 Business Days after delivery to the
telegraph company (whichever is earlier), or (d) if by nationally recognized
commercial courier service, then upon actual receipt or 2 Business Days after
delivery to the courier service (whichever is earlier), or (e) if otherwise
delivered, then upon actual receipt.


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         7.4. Severability. Wherever possible, each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law. If any provision of this Security Agreement shall be
prohibited by or invalid under such law, then such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.


         7.5. Governing Law; Entire Agreement. This Security Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, except to the extent that the validity or perfection of the security
interest, collateral assignment or pledge hereunder (or remedies hereunder) in
respect of any particular Collateral are required to be governed by the laws of
a jurisdiction other than the State of New York. This Security Agreement and
the other loan documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements (written or oral) with respect thereto.


         7.6. Reinstatement. To the maximum extent not prohibited by applicable
law, this Security Agreement shall continue to be effective or be reinstated if
at any time any amount received by Lender in respect of the Credit Agreement or
any other Loan Document is rescinded or must otherwise be restored or returned
by Lender or such Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Grantor or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for any Grantor
or any substantial part of any Grantor’s assets, or otherwise, all as though
such payments had not been made.


         7.7. Conflict Provision. In the event of any irreconcilable conflict
between the terms and conditions of this Security Agreement and the terms and
conditions of the Credit Agreement, the terms and conditions of the Credit
Agreement shall govern.


         7.8. Incorporation of Separate IP Security Agreements and Collateral
Assignments of Material Contracts. Each representation, warranty, covenant and
further assurance by any Grantor contained in any separate assignment or
security agreement relating to any Intellectual Property Collateral or any
material contract executed in connection the Credit Agreement is hereby
incorporated herein by reference.


         7.9. Incorporation of Financing Statements and Exhibits Thereto. Each UCC
financing statement (including each exhibit thereto) and PPSA financing
statement executed by any Grantor in connection with this Security Agreement is
hereby incorporated herein by reference.


         7.10. Lender. References in this Security Agreement to Lender shall mean
either to Lender in such capacity or (where appropriate) to Lender for the
benefit of itself. Unless otherwise indicated
in this Security Agreement or the other Loan Documents, all Collateral
held and all payments received by Lender are deemed to be held and received,
respectively, for the benefit of Lender.


         7.11. Waiver of Suretyship Defenses. Each Grantor hereby waives any and
all defenses and rights of discharge based on suretyship or impairment of
collateral (including any lack of attachment or perfection with respect
thereto) that it may now have or may hereafter acquire with respect to


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Lender
or any of such Grantor’s obligations hereunder or under any other agreement
that it may have or hereafter enter into with Lender.


         7.12. Waiver of Subrogation. Until this Security Agreement is terminated
in accordance with Section 1.3, each Grantor hereby irrevocably waives any
claim or other rights which it may now have or may hereafter acquire against
any other Obligor that arise from the existence, payment, performance or
enforcement of any Grantor’s obligations under this Security Agreement or any
other Loan Document, including any right of subrogation, reimbursement,
contribution, exoneration, or indemnification, any right to participate in any
claim or remedy of Lender against any other Obligor or any collateral which
Lender now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law.


         7.13. Waiver of Notice; Waiver of Bond. Each Grantor waives all rights of
notice and hearing of any kind prior to the exercise by Lender of its rights
during the continuance of any Event of Default to repossess the Collateral with
judicial process or to replevy, attach or levy upon the Collateral. Each
Grantor waives the posting of any bond otherwise required of Lender in
connection with any judicial process or proceeding to obtain possession of,
replevy, attach or levy upon Collateral or other security for the Secured
Obligations, to enforce any judgment or other court order entered in favor of
Lender, or to enforce by specific performance, temporary restraining order or
preliminary or permanent injunction this Security Agreement or any other Loan
Document.


         7.14. Waiver of Liability. Each Grantor (a) agrees that neither Lender
nor any director, officer, employee or agent of Lender shall have any liability
to any Grantor (whether sounding in tort, contract or otherwise) for losses or
costs suffered or incurred by any Grantor in any way related to the
transactions contemplated or the relationship established by any Loan Document,
or any act, omission or event occurring in connection therewith, except for
foreseeable actual losses resulting from Lender or such Lender’s own gross
negligence, willful misconduct or fraud, and (b) waives, releases and agrees
not to sue upon any claim against Lender (or its directors, officers, employees
or agents) whether sounding in tort, contract or otherwise, except for claims
for foreseeable actual losses resulting from Lender’s own gross negligence,
willful misconduct or fraud. Moreover, whether or not such damages are related
to a claim that is subject to the waiver effected above and whether or not such
waiver is effective, neither Lender nor any director, officer, employee or
agent of Lender or any Lender shall have any liability with respect to (and
each Grantor hereby waives, releases and agrees not to sue upon any claim for)
any special, indirect, consequential, punitive or non-foreseeable damages
suffered by any Grantor in any way related to the transactions contemplated or
the relationship established by any Loan Document, or any act, omission or
event occurring in connection therewith.


         7.15. Forum Selection and Consent to Jurisdiction. Any litigation in any
way related to any Loan Document, or any course of conduct, course of dealing,
statements (whether verbal or written), actions or inactions of Lender or any
Grantor will be brought and maintained exclusively in the courts of the State
of New York or in the United States District Court for the Southern District of
New York; provided, however, that any suit seeking


-33-







 




enforcement against any
Grantor or any Collateral may also be brought (at Lender’s or such Lender’s
option) in the courts of any jurisdiction where such Collateral may be found or
where Lender or any Lender may otherwise obtain personal jurisdiction over such
Grantor. Each Grantor hereby expressly and irrevocably submits to the
jurisdiction of the courts of the State of New York and of the United States
District Court for the Southern District of New York for the purpose of any
such litigation as set forth above and irrevocably agrees to be bound by any
final and non-appealable judgment rendered thereby in connection with such
litigation. Each Grantor further irrevocably consents to the service of
process by registered or certified mail, postage prepaid, or by personal
service within or outside the State of New York. Each Grantor hereby expressly
and irrevocably waives (to the fullest extent permitted by law) any objection
which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum. To the extent that
any Grantor has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, then such Grantor hereby irrevocably waives such
immunity in respect of its obligations under this Security Agreement.


         7.16. Waiver of Jury Trial. Lender, each Lender and each Grantor each
hereby knowingly, voluntarily and intentionally waives any rights it may have
to a trial by jury in respect of any litigation (whether as claim,
counter-claim, affirmative defense or otherwise) in any way related to any Loan
Document, or any course of conduct, course of dealing, statements (whether
verbal or written), actions or inactions of Lender, any Lender or any Grantor.
Each Grantor acknowledges and agrees (a) that it has received full and
sufficient consideration for this provision (and each other provision of each
other Loan Document to which it is a party), and (b) that it has been advised
by legal counsel in connection herewith, and (c) that this provision is a
material inducement for Lender and each Lender entering into the Loan Documents
and funding Advances thereunder.


         7.17. Counterparts. This Security Agreement may be executed in any number
of counterparts with the same effect as if all the signatures on such
counterparts appeared on one document. Each counterpart will be deemed to be
an original, but all counterparts together will constitute one and the same
instrument.


         7.18 Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the “Original Currency”) into another currency (the “Second
Currency”), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Lender could purchase in the Toronto
foreign exchange market, the Original Currency with the Second Currency on the
date two (2) Business Days preceding that on which judgment is given. Each
Obligor agrees that its obligation in respect of any Original Currency due from
it hereunder shall, notwithstanding any judgment or
payment in such other currency, be discharged only to the extent that, on the
Business Day following the date the Lender receives payment of any sum so
adjudged to be due hereunder in the Second Currency, the Lender may, in
accordance with normal banking procedures, purchase, in the Toronto foreign
exchange market, the Original Currency with the amount of the Second Currency
so paid;


-34-







 




 and if the amount of the Original Currency so purchased or could have
been so purchased is less than the amount originally due in the Original
Currency, each Obligor agrees as a separate obligation and notwithstanding any
such payment or judgment to indemnify the Lender against such loss. The term
“rate of exchange” in this Section 7.18 means the spot rate at which the
Lenders, in accordance with normal practices, is able on the relevant date to
purchase the Original Currency with the Second Currency and includes any
premium and costs of exchange payable in connection with such purchase.


         7.19 French/English Acknowledgment. It is the express wish of the parties
hereto that this Security Agreement and any related documents be drawn up and
executed in English. Il est la volonté expresse des parties que cette
convention et tous les documents s’y rattachant soient redigés et signés en
anglais.


[BALANCE OF PAGE INTENTIONALLY BLANK]



-35-







 





         IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement, as an instrument under seal (whether or not any such seals are
physically attached hereto), through their duly authorized officers, as of the
date first written above.



	 	 	 
	ATTEST:	 	
HELIX HEARING CARE OF AMERICA CORP.

(Grantor)
	 
	By:                     
                         
                         	 	By:                     
                         
                         
	 
	Name:                     
                         
                     	 	
Name: Steve Forget
	 
	Title:                     
                         
                       	 	
Title: President & Chief Executive Officer
	 
	CORPORATE SEAL:	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
COUSINEAU, DOUCET, PARENT, FORGET

AUDIOPROTHÉSISTES s.e.n.c (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	Name:                     
                         
                     
	 
	 	 	Title:                     
                         
                       
	 
	 	 	
Address:                     
                      
                    
	 
	 	 	
                       
                        
                       
      
	 
	 	 	
Facsimile: (     )           -
               
	 
	 
	 	 	
HELIX HEARING CARE OF AMERICA (U.S.A.)

CORP. (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
Les services de gestion Hearing Care of

America SGHCA Inc. (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Les services d’ approvsionement Hearing Care

of America SAHCA Inc. (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Les services de location Hearing Care of

America SLHCA Inc. (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
3371727 Canada Inc. (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Ohio) Corp.

(Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (New York)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
Helix Hearing Care of America (Missouri)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Wisconsin)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Minnesota)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
Helix Hearing Care of America (Indiana)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Pennsylvania)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Arizona)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
Helix Hearing Care of America (Washington)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Helix Hearing Care of America (Michigan)

Corp.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
American Hearing Centers, Inc.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029



 







 




	 	 	 
	 
	 	 	
Auxiliary Health Benefits Corporation,

d/b/a National Ear Care Plan  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	 	 	
Thomas W. Fell Co., Inc.  (Grantor)
	 
	 	 	By:                     
                         
                         
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029
	 
	 
	ATTEST:	 	
HEARx LTD. (Lender)
	 
	By:                     
                         
                         	 	By:                     
                         
                         
	 
	Name:                     
                         
                     	 	
Name: Stephen J. Hansbrough
	 
	Title:                     
                         
                       	 	
Title: President and Chief Operating Officer
	 
	 	 	
Address: 1250 Northpoint Parkway

West Palm Beach, FL 33407

Facsimile: (561) 688-8893