1
EXHIBIT 99.2
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SECURITY AGREEMENT
DATED AS OF JUNE 12, 1998
BETWEEN
PHYSICIANS CLINICAL LABORATORY, INC.
AND
OAKTREE CAPITAL MANAGEMENT, LLC
SOLELY AS AGENT AND NOMINEE
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EXH. 99.2 - 1
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TABLE OF CONTENTS
Page
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Section 1. Definitions and Interpretation...................................................1
1.1 Certain Defined Terms...........................................................1
Section 2. Collateral.......................................................................4
2.1 Grant...........................................................................4
2.2 Intellectual Property...........................................................6
2.3 Perfection......................................................................6
2.4 Preservation and Protection of Security Interests...............................6
2.5 Attorney-in-Fact................................................................7
2.6 Use of Intellectual Property....................................................8
2.7 Instruments.....................................................................8
2.8 Use of Collateral...............................................................8
2.9 Rights and Obligations..........................................................9
2.10 Release of Motor Vehicles......................................................9
2.11 Termination...................................................................10
2.12 Subordination and Release Prior to Termination................................10
Section 3. Representations and Warranties..................................................10
3.1 Title..........................................................................10
3.2 Intellectual Property..........................................................10
3.3 Goods..........................................................................11
Section 4. Covenants.......................................................................11
4.1 Books and Records..............................................................11
4.2 Removals, Etc..................................................................12
4.3 Sales and Other Liens..........................................................12
4.4 Intellectual Property..........................................................12
4.5 Further Assurances.............................................................13
Section 5. Remedies........................................................................14
5.1 Events of Default, Etc.........................................................14
5.2 Deficiency.....................................................................15
5.3 Private Sale...................................................................15
5.4 Application of Proceeds........................................................16
Section 6. Miscellaneous...................................................................16
6.1 Waiver.........................................................................16
6.2 Notices........................................................................16
6.3 Expenses, Etc..................................................................17
6.4 Amendments, Etc................................................................17
6.5 Successors and Assigns.........................................................17
6.6 Survival.......................................................................17
6.7 Agreements Superseded..........................................................18
6.8 Severability...................................................................18
EXH. 99.2 - 2
3
6.9 Captions.......................................................................18
6.10 Counterparts..................................................................18
6.11 GOVERNING LAW.................................................................18
6.12 Liabilities of Oaktree Capital Management, LLC................................18
6.13 Agent Representation..........................................................18
ANNEX 1 - LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS
AND APPLICATIONS FOR COPYRIGHT REGISTRATION
ANNEX 2 - LIST OF PATENTS AND PATENT APPLICATIONS
ANNEX 3 - LIST OF TRADE NAMES, TRADEMARKS, SERVICE
MARKS, TRADEMARK AND SERVICE XXXX REGISTRATIONS
AND APPLICATIONS FOR TRADEMARK AND SERVICE
XXXX REGISTRATIONS
ANNEX 4 - LIST OF CONTRACTS, LICENSES AND OTHER
AGREEMENTS
ANNEX 5 - LIST OF LOCATIONS
ANNEX 6 - DEPOSIT ACCOUNTS
EXH. 99.2 - 3
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") dated as of June 12,
1998 is made between Physicians Clinical Laboratory, Inc. (the "Company") and
Oaktree Capital Management, LLC, solely as agent and nominee for the entities
set forth on Schedule 1 (each such entity a "Fund" and collectively, the
"Funds"), in such capacity, the "Agent".
R E C I T A L S
M. Concurrently with the execution hereof, the Company is
entering into that certain Note Purchase Agreement, dated the
date hereof (the "Purchase Agreement"), with the Agent.
N. The Purchase Agreement provides for the issuance by the
Company of its 15% Senior Secured Notes Due 2001 (the "Senior
Notes"), in an aggregate principal amount of $4,000,000 on the
date hereof. Any Person that holds any of the Senior Notes now
or hereafter shall be referred to herein as a "Noteholder".
O. To induce the Agent to enter into the Purchase Agreement and
the other documents related thereto, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company has agreed to pledge and grant
a security interest in the Collateral (as hereinafter defined)
as security for the Secured Obligations (as hereinafter
defined).
A G R E E M E N T
Now therefore, in consideration of the above recitals and other
consideration and the mutual covenants hereinafter set forth, the parties hereto
agree as follows:
Section 1. Definitions and Interpretation.
1.1 Certain Defined Terms. Unless otherwise defined,
all capitalized terms used in this Agreement
that are defined in the Purchase Agreement
(including those terms incorporated by
reference) shall have the respective meanings
assigned to them in the Purchase Agreement. In
addition, the following terms shall have the
following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in
Section 2.1(a).
"Collateral" shall have the meaning assigned to that term in
Section 2.1.
"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by the Company, including each Copyright identified
in Annex 1.
XXX. 00.0 - 0
0
"Xxxxxxxxxx" xxxxx xxxx, xxxxxxxxxxxx, (x) all copyrights,
copyright registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present or future infringements) now
or hereafter due or payable under or with respect to any of the foregoing, (ii)
to xxx for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in
Section 2.1(e).
"Equipment" shall have the meaning assigned to that term in
Section 2.1(d).
"Governmental Approvals" shall mean any authorization, consent,
approval, license, lease, ruling, permits, waiver, exemption, filing,
registration or notice by or with any Governmental Person.
"Governmental Person" shall mean any national (Federal or
foreign), state or local government, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, agency, body or corporation, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, any central bank or any
comparable authority.
"Instruments" shall have the meaning assigned to that term in
Section 2.1(b).
"Intellectual Property" shall mean all Copyright Collateral, all
Patent Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information, know-how,
trade secrets, computer software, source codes, mask works, and technology; (b)
all licenses or user or other agreements granted to the Company with respect to
any of the foregoing, in each case whether now or hereafter owned or used,
including the licenses or other agreements with respect to the Copyright
Collateral, the Patent Collateral or the Trademark Collateral listed in Annex 4;
(c) all information, customer lists, advertising, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs; (d) all field repair data, sales data and other
information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) all Governmental Approvals now held or hereafter
obtained by the Company in respect of any of the foregoing; and (g) all causes
of action, claims and warranties now owned or hereafter acquired by the Company
in respect of any of the foregoing. It is understood that Intellectual Property
shall include all of the foregoing owned or acquired by the Company on a
worldwide basis.
"Inventory" shall have the meaning assigned to that term in
Section 2.1(c).
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
XXX. 00.0 - 0
0
"Xxxxxx Xxxxxxxxxx" shall mean all Patents, whether now owned or
hereafter acquired by the Company, including each Patent identified in Annex 2.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to xxx for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Secured Obligations" shall mean any and all obligations of the
Company under the Purchase Agreement and the Senior Notes.
"Signing Date" shall mean the date of this Agreement.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by the Company, including each Trademark identified
in Annex 3. Notwithstanding the foregoing, the Trademark Collateral shall not
include any Trademark which would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the Trademark
Collateral.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service xxxx registrations
and applications for trademark and service xxxx registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future infringements)
now or hereafter due or payable under or with respect to any of the foregoing,
(ii) to xxx for all past, present and future infringements with respect to any
of the foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service xxxx.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the State of California from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
Section 2. Collateral.
2.1 Grant. Subject to Section 2.11, as
collateral security for the prompt payment in
full when due (whether at stated maturity, by
acceleration or otherwise) and performance of
the Secured Obligations, the Company hereby
pledges and grants to the Agent a security
interest in all of the Company's right, title
and interest in and to the following property,
whether now owned or hereafter acquired by the
Company and whether now existing or hereafter
coming into existence (collectively, the
"Collateral"):
EXH. 99.2 - 6
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(a) all accounts and general intangibles (each as
defined in the Uniform Commercial Code) of the
Company constituting a right to the payment of
money, whether or not earned by performance,
including all moneys due and to become due to
the Company in repayment of any loans or
advances, in payment for goods (including
Inventory and Equipment) sold or leased or for
services rendered, in payment of tax refunds and
in payment of any guarantee of any of the
foregoing (collectively, the "Accounts");
(b) all instruments, chattel paper or letters of
credit (each as defined in the Uniform
Commercial Code) of the Company evidencing,
representing, arising from or existing in
respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts
(collectively, the "Instruments");
(c) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including
Motor Vehicles) of the Company that are held by
the Company for sale, lease or furnishing under
a contract of service (including to its
Subsidiaries or Affiliates), that are so leased
or furnished or that constitute raw materials,
work in process or material used or consumed in
its business, including all spare parts and
related supplies, all goods obtained by the
Company in exchange for any such goods, all
products made or processed from any such goods
and all substances, if any, commingled with or
added to any such goods (collectively, the
"Inventory");
(d) all equipment (as defined in the Uniform
Commercial Code) and all other goods (including
Motor Vehicles) of the Company that are used or
bought for use primarily in its business,
including all spare parts and related supplies,
all goods obtained by the Company in exchange
for any such goods, all substances, if any,
commingled with or added to such goods and all
upgrades and other improvements to such goods,
in each case to the extent not constituting
Inventory (collectively, the "Equipment");
(e) all documents of title (as defined in the
Uniform Commercial Code) or other receipts of
the Company covering, evidencing or representing
Inventory or Equipment (collectively, the
"Documents");
(f) all contracts and other agreements of the
Company relating to the sale or other
disposition of all or any part of the Inventory,
Equipment or Documents and all rights,
warranties, claims and benefits of the Company
against any
EXH. 99.2 - 7
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Person arising out of, relating to or in
connection with all or any part of the
Inventory, Equipment or Documents of the
Company, including any such rights, warranties,
claims or benefits against any Person storing or
transporting any such Inventory or Equipment or
issuing any such Documents;
(g) all other accounts or general intangibles of
the Company not constituting Accounts,
including, (i) to the extent related to all or
any part of the other Collateral, all books,
correspondence, credit files, records, invoices,
tapes, cards, computer runs and other papers and
documents in the possession or under the control
of the Company or any computer bureau or service
company from time to time acting for the Company
and (ii) all clinical laboratory licenses issued
to or held by the Company and all other
licenses, permits, approvals or authorizations
of any kind or nature relating to the laboratory
testing business or any other business in which
the Company may at any time be engaged; and all
contracts, contract rights, undertakings,
franchise agreements, other agreements, whether
written or oral in or under which the Company
may now or hereafter have any right, title or
interest, including, without limitation, with
respect to an Account, any agreement relating to
the terms of payment or the terms of performance
thereof;
(h) all other tangible and intangible property of
the Company, including all Intellectual
Property;
(i) all of the Company's rights, title, estate and
interest, whether now existing or hereafter
acquired, in and to any and all deposit accounts
(as defined in the Uniform Commercial Code)
including, without limitation, those identified
on Annex 6 hereto (collectively, the "Deposit
Accounts"); and
(j) all proceeds and products in whatever form of
all or any part of the other Collateral,
including all proceeds of insurance and all
condemnation awards and all other compensation
for any casualty event with respect to all or
any part of the other Collateral (together with
all rights to recover and proceed with respect
to the same), and all accessories to,
substitutions for and replacements of all or any
part of the other Collateral.
2.2 Intellectual Property. Solely for the purpose
of enabling the Agent to exercise its rights,
remedies, powers and privileges under Section 5
at such time or times as the Agent shall be
lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no
other purpose, the Company hereby grants to the
Agent, to the extent assignable, an irrevocable,
EXH. 99.2 - 8
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nonexclusive license (exercisable without
payment of royalty or other compensation to the
Company) to use, assign, license or sublicense
any of the Intellectual Property of the Company,
together with reasonable access to all media in
which any of the licensed items may be recorded
or stored and to all computer programs used for
the compilation or printout of such items.
2.3 Perfection. Concurrently with the execution
and delivery of this Agreement, the Company
shall (i) file such financing statements and
other documents in such offices as shall be
necessary or as the Agent may reasonably request
to perfect and establish the priority (subject
only to Liens permitted under the terms of the
Purchase Agreement) of the Liens granted by this
Agreement, (ii) deliver and pledge to the Agent
any and all Instruments, endorsed or accompanied
by such instruments of assignment and transfer
in such form and substance as the Agent may
request, (iii) cause the Agent (to the extent
requested by the Agent) to be listed as the
lienholder on all certificates of title or
ownership relating to Motor Vehicles owned by
the Company and deliver to the Agent originals
of all such certificates of title or ownership
for the Motor Vehicles together with the
odometer statements for each respective Motor
Vehicle and (iv) take all such other actions as
shall be necessary or as the Agent may request
to perfect and establish the priority (subject
only to such permitted Liens) of the Liens
granted by this Agreement.
2.4 Preservation and Protection of Security
Interests. Subject to Section 2.11, the Company
shall:
(a) upon the acquisition after the Signing Date by
the Company of any Instrument, promptly deliver
and pledge to the Agent all such Instruments,
endorsed or accompanied by such instruments of
assignment and transfer in such form and
substance as the Agent may request;
(b) upon the acquisition after the Signing Date by
the Company of any Motor Vehicle, promptly
deliver to the Agent originals of the
certificates of title or ownership for such
Motor Vehicles with the Agent listed as
lienholder, together with the manufacturer's
statement of origin and odometer statements;
(c) without limiting the obligations of the
Company under Section 2.04(b), upon the
acquisition after the Signing Date by the
Company of any Equipment covered by a
certificate of title or ownership, promptly
cause the Agent to be listed as the lienholder
on such certificate of title and within 120 days
EXH. 99.2 - 9
10
of the acquisition of such Equipment deliver
evidence of the same to the Agent;
(d) upon the Company's acquiring, or otherwise
becoming entitled to the benefits of, any
Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or
associated goodwill) or other Intellectual
Property or upon or prior to the Company's
filing, either directly or through any agent,
licensee or other designee, of any application
with any Governmental Person for any Copyright,
Patent, Trademark, or other Intellectual
Property, in each case after the Signing Date,
execute and deliver such contracts, agreements
and other instruments as the Agent may request
to evidence, validate, perfect and establish the
priority (subject only to Liens permitted under
the Purchase Agreement) of the Liens granted by
this Agreement in such and any related
Intellectual Property and, if requested by the
Agent, amend Annex 1, 2 or 3 (as the case may
be) to reflect the inclusion of any such
Intellectual Property as part of the Collateral
(it being understood that the failure to amend
any such Annex shall not affect the Liens
granted by this Agreement on any such
Intellectual Property); and
(e) give, execute, deliver, file or record any and
all financing statements, notices, contracts,
agreements or other instruments, obtain any and
all Governmental Approvals and take any and all
steps that may be necessary or as the Agent may
request to create, perfect, establish the
priority (subject only to Liens permitted under
the Purchase Agreement) of, or to preserve the
validity, perfection or priority (subject only
to such permitted Liens) of, the Liens granted
by this Agreement or to enable the Agent to
exercise and enforce its rights, remedies,
powers and privileges under this Agreement with
respect to such Liens.
2.5 Attorney-in-Fact.
(a) Subject to the rights of the Company under
Sections 2.6, 2.7, 2.8 and 2.9, the Agent is
hereby appointed the attorney-in-fact of the
Company for the purpose of carrying out the
provisions of this Agreement and taking any
action and executing any instruments which the
Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, to
preserve the validity, perfection and priority
(subject only to Liens permitted under terms of
the Purchase Agreement) of the Liens granted by
this Agreement and, following any Default, to
exercise its rights, remedies, powers and
privileges under this Agreement. This
appointment as attorney-in-fact is irrevocable
and coupled with an interest.
EXH. 99.2 - 10
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Without limiting the generality of the
foregoing, the Agent shall be entitled under
this Agreement upon the occurrence and
continuation of any Event of Default (i) to ask,
demand, collect, xxx for, recover, receive and
give receipt and discharge for amounts due and
to become due under and in respect of all or any
part of the Collateral; (ii) to receive, endorse
and collect any Instruments or other drafts,
instruments, documents and chattel paper in
connection with clause (i) above (including any
draft or check representing the proceeds of
insurance or the return of unearned premiums);
(iii) to file any claims or take any action or
proceeding that the Agent may deem necessary or
advisable for the collection of all or any part
of the Collateral, including the collection of
any compensation due and to become due under any
contract or agreement with respect to all or any
part of the Collateral; and (iv) to execute, in
connection with any sale or disposition of the
collateral under Section 5, any endorsements,
assignments, bills of sale or other instruments
of conveyance or transfer with respect to all or
any part of the Collateral.
(b) Without limiting the rights and powers of the
Agent under Section 2.05(a), the Company hereby
appoints the Agent as its attorney-in-fact,
effective the Signing Date and terminating upon
the termination of this Agreement, for the
purpose of (i) executing on behalf of the
Company title or ownership applications for
filing with appropriate state agencies to enable
Motor Vehicles now owned or hereafter acquired
by the Company to be retitled and the Agent to
be listed as lienholder as to such Motor
Vehicles, (ii) filing such applications with
such state agencies and (iii) executing such
other documents and instruments on behalf of,
and taking such other action in the name of, the
Company as the Agent may deem necessary or
advisable to accomplish the purposes of this
Agreement (including the purpose of creating in
favor of the Agent a perfected lien on the Motor
Vehicles and exercising the rights and remedies
of the Agent under Section 6). This appointment
as attorney-in-fact is irrevocable and coupled
with an interest.
2.6 Use of Intellectual Property. Subject to such
action not otherwise constituting a Default and
so long as no Event of Default shall have
occurred and be continuing, the Company will be
permitted to exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or
take other actions with respect to the
Intellectual Property in the ordinary course of
the business of the Company. In furtherance of
the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Agent
shall from time to time, upon the request of the
Company, execute and deliver any
EXH. 99.2 - 11
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instruments, certificates or other documents, in
the form so requested, which such Company shall
have certified are appropriate (in its judgment)
to allow them to take any action permitted above
(including relinquishment of the license
provided pursuant to Section 2.2 as to any
specific Intellectual Property). The exercise of
rights, remedies, powers and privileges under
Section 5 by the Agent shall not terminate the
rights of the holders of any licenses or
sublicenses theretofore granted by the Company
in accordance with the first sentence of this
Section 2.6.
2.7 Instruments. So long as no Event of Default
shall have occurred and be continuing, the
Company may retain for collection in the
ordinary course of business any Instruments
obtained by it in the ordinary course of
business, and the Agent shall, promptly upon the
request, and at the expense of, the Company,
make appropriate arrangements for making any
Instruments pledged by the Company available to
the Company for purposes of presentation,
collection or renewal. Any such arrangement
shall be effected, to the extent deemed
appropriate by the Agent, against trust receipt
or like document.
2.8 Use of Collateral. So long as no Event of
Default shall have occurred and be continuing,
the Company shall, in addition to its rights
under Sections 2.6, 2.7 and 2.8 in respect of
the Collateral contemplated in those sections,
be entitled to use and possess the other
Collateral and to exercise its rights, title and
interest in all contracts, agreements, licenses
and Governmental Approvals, subject to the
rights, remedies, powers and privileges of the
Agent under Section 5.
2.9 Rights and Obligations.
(a) The Company shall remain liable to perform its
duties and obligations under the contracts and
agreements included in the Collateral in
accordance with their respective terms to the
same extent as if this Agreement had not been
executed and delivered. The exercise by the
Agent of any right, remedy, power or privilege
in respect of this Agreement shall not release
the Company from any of its duties and
obligations under such contracts and agreements.
The Agent shall have no duty, obligation or
liability under such contracts and agreements or
in respect to any Governmental Approval included
in the Collateral by reason of this Agreement or
any other Document, nor shall the Agent be
obligated to perform any of the duties or
obligations of the Company under any such
contract or agreement or any such Governmental
Approval or to take any action to collect or
enforce any claim
EXH. 99.2 - 12
13
(for payment) under any such contract or
agreement or Governmental Approval.
(b) No Lien granted by this Agreement in the
Company's right, title and interest in any
contract, agreement or Governmental Approval
shall be deemed to be a consent by the Agent to
any such contract, agreement or Governmental
Approval.
(c) No reference in this Agreement to proceeds or
to the sale or other disposition of Collateral
shall authorize the Company to sell or otherwise
dispose of any Collateral except to the extent
otherwise expressly permitted by the terms of
any Document.
(d) The Agent shall not be required to take steps
necessary to preserve any rights against prior
parties to any part of the Collateral.
2.10 Release of Motor Vehicles. So long as no Event
of Default shall have occurred and be
continuing, upon the request of, and at the
expense of, the Company, the Agent shall execute
and deliver to the Company such instruments as
the Company shall reasonably request to remove
the notation of the Agent as lienholder on any
certificate of title for any Motor Vehicle;
provided that any such instruments shall be
delivered, and the release shall be effective,
only upon receipt by the Agent of a certificate
from the Company stating that the Motor Vehicle
the Lien on which is to be released is to be
sold in the ordinary course of business or has
suffered a casualty loss (with title passing to
the appropriate casualty insurance company in
settlement of the claim for such loss).
2.11 Termination. When all Secured Obligations
shall have been paid in full, this Agreement
shall terminate, and the Agent shall forthwith
cause to be assigned, transferred and delivered,
against receipt but without any recourse,
warranty or representation whatsoever, any and
all remaining Collateral and money received in
respect of the Collateral, to or on the order of
the Company and to be released, canceled and
granted back all licenses and rights referred to
in Section 2.2. The Agent shall also execute and
deliver to the Company upon such termination
such Uniform Commercial Code termination
statements, certificates for terminating the
Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested
by the Company to effect the termination and
release of the Liens granted by this Agreement
on the Collateral.
EXH. 99.2 - 13
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2.12 Subordination and Release Prior to
Termination. The Agent hereby acknowledges that
pursuant to the Intercreditor and Subordination
Agreement dated as of June 12, 1998, the
security interest in Accounts and Instruments
granted pursuant to Sections 2.01(a) and 2.01(b)
is expressly subordinated to the security
interest granted by the Company to Daiwa
Healthco-2 LLC and the rights of the parties
with respect thereto are as set forth in such
intercreditor agreement.
Section 3. Representations and Warranties. As of the
Signing Date, the Company represents and
warrants to the Agent as follows:
3.1 Title. The Company is the sole beneficial
owner of the Collateral in which it purports to
xxxxx x Xxxx pursuant to this Agreement, and
such Collateral is free and clear of all Liens,
except for the Liens granted to the Agent
pursuant to this Agreement and the Liens
permitted under the terms of the Purchase
Agreement. The Liens granted by this Agreement
in favor of the Agent have attached and
constitute a perfected security interest in all
of such Collateral (other than Intellectual
Property registered or otherwise located outside
of the United States of America) prior to all
other Liens (except such permitted Liens).
3.2 Intellectual Property.
(a) Annexes 1, 2 and 3 set forth completely and
correctly all Copyrights, Patents and Trademarks
owned by the Company on the Signing Date; except
pursuant to licenses and other user agreements
entered into by the Company in the ordinary
course of business and listed in Annex 4, the
Company owns and possesses the right to use, and
has done nothing to authorize or enable any
other Person to use, any Copyright, Patent or
Trademark listed in Annex 1, 2 or 3; all
registrations listed in Annexes 1, 2 and 3 are
valid and in full force and effect; and, except
as may be set forth in Annex 4 the Company owns
and possesses the right to use all Copyrights,
Patents and Trademarks listed in Annexes 1, 2
and 3.
(b) Annex 4 sets forth completely and correctly
all licenses and other user agreements included
in the Intellectual Property on the Signing
Date.
(c) To the Company's knowledge, (i) except as set
forth in Annex 4, there is no violation by
others of any right of the Company with respect
to any Copyright, Patent or Trademark listed in
Annex 1, 2 or 3 and (ii) the Company is not
infringing in any respect upon any Copyright,
Patent or
EXH. 99.2 - 14
15
Trademark of any other Person; and no
proceedings have been instituted, are pending
against the Company or, to the Company's
knowledge, have been threatened against, and no
claim has been received by, the Company,
alleging any such violation, except as may be
set forth in Annex 4.
(d) The Company does not own any Trademarks
registered in the United States of America to
which the last sentence of the definition of
Trademark Collateral applies.
3.3 Goods. Any goods now or hereafter manufactured
or otherwise produced by the Company or any of
its Subsidiaries included in the Collateral have
been and will be produced in compliance with the
requirements of the Fair Labor Standards Act.
Section 4. Covenants.
4.1 Books and Records. The Company shall:
(a) keep full and accurate books and records
relating to the Collateral and stamp or
otherwise xxxx such books and records in such
manner as the Agent may reasonably require in
order to reflect the Liens granted by this
Agreement;
(b) furnish to the Agent from time to time (but,
unless a Default shall have occurred and be
continuing, no more frequently than quarterly)
statements and schedules further identifying and
describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such
other reports in connection with the Copyright
Collateral, the Patent Collateral and the
Trademark Collateral, as the Agent may
reasonably request, all in reasonable detail;
(c) prior to filing, either directly or through an
agent, licensee or other designee, any
application for any Copyright, Patent or
Trademark, furnish to the Agent prompt notice of
such proposed filing; and
(d) permit representatives of the Agent, upon
reasonable notice, at any time during normal
business hours to inspect and make abstracts
from its books and records pertaining to the
Collateral, permit representatives of the Agent
to be present at the Company's place of business
to receive copies of all communications and
remittances relating to the Collateral and
forward copies of any notices or communications
received by the Company with respect to the
Collateral, all in such manner as the Agent may
request.
EXH. 99.2 - 15
16
4.2 Removals, Etc. Without at least 30 days' prior
written notice to the Agent, the Company shall
not (i) maintain any of its books and records
with respect to the Collateral at any office or
maintain its principal place of business at any
place, or permit any Inventory or Equipment to
be located anywhere, other than at the address
initially indicated for notices to it under
Section 6 or at one of the locations identified
in Annex 5 or in transit from one of such
locations to another or (ii) except with respect
to the change of the Company's name to
Bio-Cypher Laboratories Ltd., change its
corporate name, or the name under which it does
business, from the name shown on the signature
pages to this Agreement.
4.3 Sales and Other Liens. Without the prior
written consent of the Agent, the Company shall
not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien (other than
Liens permitted under the terms of the Purchase
Agreement) upon any Collateral or file or suffer
to be on file or authorize to be filed, in any
jurisdiction, any financing statement or like
instrument with respect to all or any part of
the Collateral in which the Agent is not named
as the sole secured party for its own benefit;
provided, however, that the Company shall,
without the consent of the Agent, be allowed,
(i) to dispose of obsolete Collateral in the
ordinary course of business, and (ii) provided
that no Event of Default shall have occurred and
be continuing, to dispose of Collateral in the
ordinary course of business.
4.4 Intellectual Property.
(a) The Company (either itself or through
licensees) will, for each Trademark, (i) to the
extent consistent with past practice and good
business judgment, continue to use such
Trademark on each and every trademark class of
goods applicable to its current line as
reflected in its current catalogs, brochures and
price lists in order to maintain such Trademark
in full force and effect free from any claim of
abandonment for nonuse, (ii) maintain as in the
past the quality of products and services
offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of
registration and (iv) not (and not permit any
licensee or sublicensee to) do any act or
knowingly omit to do any act whereby any
Trademark material to the conduct of its
business may become invalidated.
(b) The Company (either itself or through
licensees) will not do any act or knowingly omit
to do any act whereby any Patent material to the
conduct of its business may become abandoned or
dedicated.
EXH. 99.2 - 16
17
(c) The Company shall notify the Agent immediately
if it knows or has reason to know that any
Intellectual Property material to the conduct of
its business may become abandoned or dedicated,
or of any adverse determination or development
(including the institution of, or any such
determination or development in, any proceeding
before any Governmental Person) regarding the
Company's ownership of any Intellectual Property
material to its business, its right to
copyright, patent or register the same (as the
case may be), or its right to keep, use and
maintain the same.
(d) The Company will take all necessary steps that
are consistent with good business practices in
any proceeding before any appropriate
Governmental Person to maintain and pursue each
application relating to any Intellectual
Property (and to obtain the relevant
registrations) and to maintain each registration
material to the conduct of its business,
including payment of maintenance fees, filing of
applications for renewal, affidavits of use,
affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In the event that any Intellectual Property
material to the conduct of its business is
infringed, misappropriated or diluted by a third
party, the Company shall notify the Agent within
(10) days after it learns of such event and
shall, if consistent with good business
practice, promptly xxx for infringement,
misappropriation or dilution, seek temporary
restraints and preliminary injunctive relief to
the extent practicable, seek to recover any and
all damages for such infringement,
misappropriation or dilution and take such other
actions as are appropriate under the
circumstances to protect such Collateral.
(f) The Company shall, through counsel acceptable
to the Agent, prosecute diligently any
application for any Intellectual Property
pending as of the Signing Date or thereafter
made until the termination of this Agreement,
make application on uncopyrighted but
copyrightable material, unpatented but
patentable inventions and unregistered but
registerable Trademarks and preserve and
maintain all rights in applications for any
Intellectual Property; provided, however, that
the Company shall have no obligation to make any
such application if making such application
would be unnecessary or imprudent in the good
faith business judgment of the Company. Any
expenses incurred in connection with such an
application shall be borne by the Company. The
Company shall not abandon any right to file an
application for any Intellectual Property or any
pending such application
EXH. 99.2 - 17
18
in the United States without the consent of the
Agent, which consent shall not be unreasonably
withheld.
(g) The Agent shall have the right but shall in no
way be obligated to bring suit in its own name
to enforce the Copyrights, Patents and
Trademarks and any license under such
Intellectual Property, in which event the
Company shall, at the request of the Agent, do
any and all lawful acts and execute and deliver
any and all proper documents reasonably required
by the Agent in aid of such enforcement action.
4.5 Further Assurances. The Company agrees that,
from time to time upon the written request of
the Agent, the Company will execute and deliver
such further documents and do such other acts
and things as the Agent may reasonably request
in order fully to effect the purposes of this
Agreement.
Section 5. Remedies.
5.1 Events of Default, Etc. If any Event of
Default shall have occurred and be continuing,
subject to Section 2.11:
(a) The Agent in its discretion may require the
Company to, and the Company shall, assemble the
Collateral owned by it at such place or places,
reasonably convenient to both the Agent and the
Company, designated in the Agent's request;
(b) the Agent in its discretion may make any
reasonable compromise or settlement it deems
desirable with respect to any of the Collateral
and may extend the time of payment, arrange for
payment in installments, or otherwise modify the
terms of, all or any part of the Collateral;
(c) the Agent in its discretion may, in its name
or in the name of the Company or otherwise,
demand, xxx for, collect or receive any money or
property at any time payable or receivable on
account of or in exchange for all or any part of
the Collateral, but shall be under no obligation
to do so;
(d) the Agent in its discretion may, upon ten
business days' prior written notice to the
Company of the time and place, with respect to
all or any part of the Collateral which shall
then be or shall thereafter come into the
possession, custody or control of the Agent or
any of its agents, sell, lease or otherwise
dispose of all or any part of such Collateral,
at such place or places as the Agent deems best,
for cash, for credit or for future delivery
(without thereby assuming any credit risk) and
at public or private sale, without demand of
performance or notice of intention to effect any
such
EXH. 99.2 - 18
19
disposition or of time or place of any such sale
(except such notice as is required above or by
applicable statute and cannot be waived), and
the Agent or any other Person may be the
purchaser, lessee or recipient of any or all of
the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any
private sale) and thereafter hold the same
absolutely, free from any claim or right of
whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the
Company, any such demand, notice and right or
equity being hereby expressly waived and
released. In the event of any sale, license or
other disposition of any of the Trademark
Collateral, the goodwill connected with and
symbolized by the Trademark Collateral subject
to such disposition shall be included, and the
Company shall supply to the Agent or its
designee, for inclusion in such sale, assignment
or other disposition, all Intellectual Property
relating to such Trademark Collateral. The Agent
may, without notice or publication, adjourn any
public or private sale or cause the same to be
adjourned from time to time by announcement at
the time and place fixed for the sale, and such
sale may be made at any time or place to which
the sale may be so adjourned; and
(e) the Agent shall have, and in its discretion
may exercise, all of the rights, remedies,
powers and privileges with respect to the
Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform
Commercial Code is in effect in the jurisdiction
where such rights, remedies, powers and
privileges are asserted) and such additional
rights, remedies, powers and privileges to which
a secured party is entitled under the laws in
effect in any jurisdiction where any rights,
remedies, powers and privileges in respect of
this Agreement or the Collateral may be
asserted, including the right, to the maximum
extent permitted by law, to exercise all voting,
consensual and other powers of ownership
pertaining to the Collateral as if the Agent
were the sole and absolute owner of the
Collateral (and the Company agrees to take all
such action as may be appropriate to give effect
to such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.1 and of the exercise of the license
granted to the Agent in Section 2.2 shall be applied in accordance with Section
5.4.
5.2 Deficiency. If the proceeds of, or other
realization upon, the Collateral by virtue of
the exercise of remedies under Section 5.1 and
of the exercise of the license granted by the
Agent in Section 2.2 are insufficient to cover
the costs and expenses of such exercise and the
payment in full of the other
EXH. 99.2 - 19
20
Secured Obligations, the Company shall remain
liable for any deficiency.
5.3 Private Sale.
(a) The Agent shall incur no liability as a result
of the sale, lease or other disposition of all
or any part of the Collateral at any private
sale pursuant to Section 5.01 conducted in a
commercially reasonable manner. The Company
hereby waives any claims against the Agent
arising by reason of the fact that the price at
which the Collateral may have been sold at such
a private sale was less than the price which
might have been obtained at a public sale or was
less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first
offer received and does not offer the Collateral
to more than one offeree.
(b) The Company recognizes that, by reason of
certain prohibitions contained in the Securities
Act of 1933 and applicable state securities
laws, the Agent may be compelled, with respect
to any sale of all or any part of the
Collateral, to limit purchasers to those who
will agree, among other things, to acquire the
Collateral for their own account, for investment
and not with a view to distribution or resale.
The Company acknowledges that any such private
sales may be at prices and on terms less
favorable to the Agent than those obtainable
through a public sale without such restrictions,
and, notwithstanding such circumstances, agree
that any such private sale shall be deemed to
have been made in a commercially reasonable
manner and that the Agent shall have no
obligation to engage in public sales and no
obligation to delay the sale of any Collateral
for the period of time necessary to permit the
respective Issuer of such Collateral to register
it for public sale.
5.4 Application of Proceeds. Except as otherwise
expressly provided in this Agreement and except
as provided below in this Section 5.4, the
proceeds of, or other realization upon, all or
any part of the Collateral by virtue of the
exercise of remedies under Section 5.1 or of the
exercise of the license granted in Section 2.2,
and any other cash at the time held by the Agent
under this Section 5, shall be applied by the
Agent:
First, to the payment of the costs and expenses of such exercise
of remedies, including reasonable out-of-pocket costs and expenses of the Agent,
the reasonable fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Agent in that connection;
EXH. 99.2 - 20
21
Next, to the payment in full of the remaining Secured Obligations
in such manner as the Agent may determine in accordance with the provisions of
the Purchase Agreement; and
Finally, to the payment to the Company, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.
As used in this Section 5, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Section 6. Miscellaneous.
6.1 Waiver. No failure on the part of the Agent to
exercise and no delay in exercising, and no
course of dealing with respect to, any right,
remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy,
power or privilege, nor shall any single or
partial exercise of any right, remedy, power or
privilege under this Agreement preclude any
other or further exercise of any such right,
remedy, power or privilege or the exercise of
any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided
in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and
privileges provided by law.
6.2 Notices. All notices and communications to be
given under this Agreement shall be given or
made in writing to the intended recipient at the
address specified below or, as to any party, at
such other address as shall be designated by
such party in a notice to each other party.
Except as otherwise provided in this Agreement,
all such communications shall be deemed to have
been duly given when transmitted by telex or
telecopier, delivered to the telegraph or cable
office or personally delivered or, in the case
of a mailed notice, upon receipt, in each case,
given or addressed as provided in this Section
6.2:
To the Company: Physicians Clinical Laboratory, Inc.
0000 "X" Xxxxxx, Xxxxx 000X
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: J. Xxxxxx Xxxxxxxxxx
To the Agent: Oaktree Capital Management, LLC
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention:
EXH. 99.2 - 21
22
6.3 Expenses, Etc. The Company agrees to pay or to
reimburse the Agent for all costs and expenses
(including reasonable attorney's fees and
expenses) that may be incurred by the Agent in
any effort to enforce any of the provisions of
Section 5 or any of the obligations of the
Company in respect of the Collateral or in
connection with (a) the preservation of the Lien
of, or the rights of the Agent under, this
Agreement or (b) any actual or attempted sale,
lease, disposition, exchange, collection,
compromise, settlement or other realization in
respect of, or care of, the Collateral,
including all such costs and expenses (and
reasonable attorney's fees and expenses)
incurred in any bankruptcy, reorganization,
workout or other similar proceeding.
6.4 Amendments, Etc. Any provision of this
Agreement may be modified, supplemented or
waived only by an instrument in writing duly
executed by the Company and the Agent. Any such
modification, supplement or waiver shall be for
such period and subject to such conditions as
shall be specified in the instrument effecting
the same and shall be binding upon the Agent,
each holder of any of the Secured Obligations
and the Company, and any such waiver shall be
effective only in the specific instance and for
the purposes for which given.
6.5 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the
Company, the Agent and each holder of any of the
Secured Obligations and their respective
successors and permitted assigns. The Company
shall not assign or transfer its rights under
this Agreement without the prior written consent
of the Agent.
6.6 Survival. All representations and warranties
made in this Agreement or in any certificate or
other document delivered pursuant to or in
connection with this Agreement shall survive the
execution and delivery of this Agreement or such
certificate or other document (as the case may
be) or any deemed repetition of any such
representation or warranty.
6.7 Agreements Superseded. This Agreement
supersedes all prior agreements and
understandings, written or oral, among the
parties with respect to the subject matter of
this Agreement.
6.8 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the
remaining provisions of this Agreement, and any
such prohibition or unenforceability in any
jurisdiction shall not
EXH. 99.2 - 22
23
invalidate or render unenforceable such
provision in any other jurisdiction.
6.9 Captions. The table of contents and captions
and section headings appearing in this Agreement
are included solely for convenience of reference
and are not intended to affect the
interpretation of any provision of this
Agreement.
6.10 Counterparts. This Agreement may be executed
in any number of counterparts, all of which
taken together shall constitute one and the same
instrument and any of the parties to this
Agreement may execute this Agreement by signing
any such counterpart.
6.11 GOVERNING LAW. THE INTERNAL LAW OF THE STATE
OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS AGREEMENT.
6.12 Liabilities of Oaktree Capital Management,
LLC. The Company hereby acknowledges that
Oaktree Capital Management LLC is entering into
this Agreement and all of the documents to be
executed and delivered in connection herewith
(collectively, the "Security Documents"), and
undertaking the obligations of the Funds under
the Security Documents as general partner,
attorney-in-fact or investment manager of each
of the Funds, and in each such Fund's behalf,
and not individually, and that, except with
respect to any actions taken outside of its
authority as general partner, attorney-in-fact
or investment advisor for each of the Funds,
Oaktree Capital Management, LLC is not
personally liable with respect to the
obligations of the Funds under the Security
Documents. The Company further acknowledges
that, with respect to the Security Documents,
(i) all of the obligations of the Funds are
several and not joint, in accordance with, and
in proportion to, the Funds' respective
percentage interests in the rights set out in
Exhibit A to this Agreement (it being the
parties' intent that each Fund will be
responsible only for its percentage of the
aggregate obligations of Oaktree Capital
Management LLC), and (ii) each representation
and warranty made by Oaktree Capital Management,
LLC on behalf of each Fund relates only to such
Fund, and that no Fund is liable for breach of
any representation or warranty made by or as to
any other Fund.
6.13 Agent Representation. The Agent has all
necessary power and authority to execute,
deliver and perform its obligations under this
Agreement on behalf of the Funds.
EXH. 99.2 - 23
24
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PHYSICIANS CLINICAL
LABORATORY, INC.
By:______________________________________
Name:
Title:
OAKTREE CAPITAL MANAGEMENT
LLC, solely as agent and nominee for the
Funds set forth on Schedule 1
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
25
ANNEX 1
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
PHYSICIANS CLINICAL LABORATORY, INC.
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
None.
EXH. 99.2 - 25
26
ANNEX 2
LIST OF PATENTS AND PATENT APPLICATIONS
PHYSICIANS CLINICAL LABORATORIES, INC.
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
None
EXH. 99.2 - 26
27
ANNEX 3
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE XXXX REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE XXXX REGISTRATIONS
U.S. TRADEMARKS
PHYSICIANS CLINICAL LABORATORIES, INC.
Application (A)
Registration (R) Registration
Xxxx or Series No. (S) or Filing Date
---------------------- --------------
See Attached.
XXX. 00.0 - 00
00
XXXXXXX TRADEMARKS
PHYSICIANS CLINICAL LABORATORIES, INC.
Application (A) Registration or
Xxxx Registration (R) Country Filing Date (F)
---- ---------------- ------- ---------------
None.
EXH. 99.2 - 28
29
ANNEX 4
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
PHYSICIANS CLINICAL LABORATORIES, INC.
None
EXH. 99.2 - 29
30
ANNEX 5
LIST OF LOCATIONS
PHYSICIANS CLINICAL LABORATORIES, INC.
See attached.
EXH. 99.2 - 30
31
ANNEX 6
DEPOSIT ACCOUNTS
See Attached.
XXX. 00.0 - 00
00
XXXXXXXX I
Fund or Account Amount
--------------- ------
OCM Opportunities Fund, L.P. $ 27,124,070
Columbia/HCA Master Retirement
Trust (Separate Account I) $ 2,252,330
OCM Opportunities Fund II, L.P. $ 20,546,500
Columbia/HCA Master Retirement
Trust (Separate Account II) $ 316,100
-----------
$ 50,239,000
EXH. 99.2 - 32
