Exhibit 99.3
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "SECURITY AGREEMENT") is made
and entered into as of July 30, 2004 by PEDIATRIX MEDICAL GROUP, INC., a Florida
corporation (the "COMPANY" and a "GRANTOR" and a "BORROWER"), and each of the
undersigned Material Subsidiaries (as defined in the Credit Agreement) of the
Company and each other Person who shall become party hereto by execution of a
Security Joinder Agreement (each a "GRANTOR" and a "BORROWER", and collectively
with the Company, the "GRANTORS" and the "BORROWERS"), and BANK OF AMERICA,
N.A., a national banking association, as Administrative Agent (the
"Administrative Agent") for each of the Lenders (as defined in the Credit
Agreement) now or hereafter party to the Credit Agreement defined below
(collectively with the Administrative Agent, and certain other Persons parties
to Related Swap Contracts as more particularly described in SECTION 24 hereof,
the "SECURED PARTIES") now or hereafter party to the Credit Agreement (as
defined below). All capitalized terms used but not otherwise defined herein or
pursuant to SECTION 1 hereof shall have the respective meanings assigned thereto
in the Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Lenders have agreed to provide to the Grantors a certain
revolving credit facility with a letter of credit sublimit and swing line
facility pursuant to that certain Credit Agreement of even date herewith by and
among the Grantors, the Administrative Agent and the Lenders (as from time to
time amended, revised, modified, supplemented or amended and restated, the
"CREDIT AGREEMENT"); and
WHEREAS, as collateral security for payment and performance of the
Obligations and the obligations and liabilities of any Borrower now existing or
hereafter arising under Related Swap Contracts, each Grantor is willing to grant
to the Administrative Agent for the benefit of the Secured Parties a security
interest in certain of its personal property and assets pursuant to the terms of
this Security Agreement; and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Grantors enter into this Security Agreement;
NOW, THEREFORE, in order to induce the Lenders to enter into the Loan
Documents and to make Loans and issue Letters of Credit, and in further
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used in this Security
Agreement, not otherwise expressly defined herein or in the Credit Agreement,
and for which meanings are provided in the Uniform Commercial Code of the State
of New York (the "UCC"), shall have such meanings. The term "QUALIFYING CONTROL
AGREEMENT" shall have the meaning set forth on SCHEDULE 1 hereto.
2. GRANT OF SECURITY INTEREST. Each Borrower hereby grants as
collateral security for the payment, performance and satisfaction of all of the
Obligations and the obligations and
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liabilities of any Borrower now existing or hereafter arising under Related Swap
Contracts, and the payment and performance of its obligations and liabilities
(whether now existing or hereafter arising) hereunder or under any of the other
Loan Documents to which it is now or hereafter becomes a party (such obligations
and liabilities of the Grantors referred to collectively as the "SECURED
OBLIGATIONS"), to the Administrative Agent for the benefit of the Secured
Parties a continuing first priority security interest in and to, and other than
as to any Grantor's rights in and to copyrights, collaterally assigns to the
Administrative Agent for the benefit of the Secured Parties, certain of the
personal property of such Grantor or in which such Grantor has or may have or
acquire an interest or the power to transfer rights therein, whether now owned
or existing or hereafter created, acquired or arising and wheresoever located as
follows:
(a) All accounts, and including accounts receivable,
contracts, bills, acceptances, choses in action, and other forms of
monetary obligations at any time owing to such Grantor arising out of
property sold, leased, licensed, assigned or otherwise disposed of or
for services rendered or to be rendered by such Grantor, including
health-care-insurance receivables, and all of such Grantor's rights
with respect to any property represented thereby, whether or not
delivered, property returned by customers and all rights as an unpaid
vendor or lienor, including rights of stoppage in transit and of
recovering possession by proceedings including replevin and reclamation
(collectively referred to hereinafter as "ACCOUNTS");
(b) All inventory, including all goods manufactured or
acquired for sale or lease, and any piece goods, raw materials, work in
process and finished merchandise, component materials, and all
supplies, goods, incidentals, office supplies, packaging materials and
any and all items used or consumed in the operation of the business of
such Grantor or which may contribute to the finished product or to the
sale, promotion and shipment thereof, in which such Grantor now or at
any time hereafter may have an interest, whether or not the same is in
transit or in the constructive, actual or exclusive occupancy or
possession of such Grantor or is held by such Grantor or by others for
such Grantor's account (collectively referred to hereinafter as
"INVENTORY");
(c) All goods, including all machinery, equipment, motor
vehicles, parts, supplies, apparatus, appliances, tools, patterns,
molds, dies, blueprints, fittings, furniture, furnishings, fixtures and
articles of tangible personal property of every description, and all
computer programs embedded in any of the foregoing and all supporting
information relating to such computer programs (collectively referred
to hereinafter as "EQUIPMENT");
(d) All general intangibles, including all rights now or
hereafter accruing to such Grantor under contracts, leases, agreements
or other instruments, including all Management Agreements or contracts
or contract rights to perform or receive services, to purchase or sell
goods, or to hold or use land or facilities, and to enforce all rights
thereunder, all causes of action, corporate or business records,
inventions, patents and patent rights, rights in mask works, designs,
trade names and trademarks and all goodwill associated therewith, trade
secrets, trade processes, copyrights, licenses, permits, franchises,
customer lists, computer programs and software, all internet domain
names and registration rights thereto, all internet websites and the
content thereof, all payment
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intangibles, all claims under guaranties, tax refund claims, all rights
and claims against carriers and shippers, leases, all claims under
insurance policies, all interests in general and limited partnerships,
limited liability companies, and other Persons not constituting
Investment Property (as defined below), all rights to indemnification
and all other intangible personal property and intellectual property of
every kind and nature (collectively referred to hereinafter as "GENERAL
INTANGIBLES");
(e) All deposit accounts, including demand, time, savings,
passbook, or other similar accounts maintained with any bank by or for
the benefit of such Grantor (collectively referred to hereinafter as
"DEPOSIT ACCOUNTS");
(f) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively referred
to hereinafter as "CHATTEL PAPER");
(g) All investment property, including all securities,
security entitlements, securities accounts, commodity contracts and
commodity accounts of or maintained for the benefit of such Grantor,
but excluding Pledged Interests and any equity interest in Pediatrix
Medical Services, Inc. so long as it is a not-for-profit entity under
Texas Law, in each case whether now existing or hereafter created or
acquired (collectively referred to hereinafter as "INVESTMENT
PROPERTY");
(h) All instruments, including all promissory notes
(collectively referred to hereinafter as "INSTRUMENTS");
(i) All documents, including warehouse receipts, bills of
lading and other documents of title (collectively referred to
hereinafter as "DOCUMENTS");
(j) All rights to payment or performance under letters of
credit including rights to proceeds of letters of credit
("LETTER-OF-CREDIT RIGHTS") other than letters of credit issued under
the Credit Agreement, and all guaranties, endorsements, Liens, other
Guarantee obligations or supporting obligations of any Person securing
or supporting the payment, performance, value or liquidation of any of
the foregoing (collectively, with Letter-of-Credit Rights, referred to
hereinafter as "SUPPORTING OBLIGATIONS");
(k) All Pledged Interests, whether now existing or hereafter
created or acquired, including without limitation the Pledged Interests
more particularly described on SCHEDULE 11(F) hereto;
(l) All money, securities, security entitlements and other
investment property, dividends, rights, general intangibles or other
property at any time and from time to time (x) declared or distributed
in respect of or in exchange for or on conversion of any Pledged
Interest, or (y) by its or their terms exchangeable or exercisable for
or convertible into any Pledged Interest;
(m) All other property of whatever character or description,
including money, securities, security entitlements or other investment
property, and general intangibles
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hereafter delivered to the Administrative Agent in substitution for or
as an addition to any of the Pledged Interests;
(n) All securities accounts to which may at any time be
credited any or all of the Pledged Interests or any proceeds thereof
and all certificates and instruments representing or evidencing any of
the Pledged Interest or any proceeds thereof;
(o) All real property and immovable property and fixtures,
leasehold interests and easements wherever located, together with all
estates and interests of such Grantor therein, including lands,
buildings, stores, manufacturing facilities and other structures
erected on such property, fixed plant, fixed equipment and all permits,
rights, licenses, benefits and other interests of any kind or nature
whatsoever in respect of such real and immovable property (collectively
referred to hereinafter as "REAL PROPERTY");
(p) All motor vehicles and aircraft (collectively referred to
hereinafter as "MOTOR VEHICLES");
(q) All books and records relating to any of the forgoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media on
which such data, files, programs, materials and records are or may be
stored)); and
(r) All proceeds, products and replacements of, accessions to,
and substitutions for, any of the foregoing, including without
limitation proceeds of insurance policies insuring any of the
foregoing.
All of the property and interests in property described in subsections
(a) through (r) are herein collectively referred to as the "COLLATERAL."
3. EXCLUDED PROPERTY. Notwithstanding SECTION 2, the payment and
performance of the Secured Obligations shall not be secured by and the
Collateral shall not include:
(a) any contract, license, permit or franchise that validly prohibits
the creation by such Grantor of a security interest in such contract, license,
permit or franchise (or in any rights or property obtained by such Grantor under
such contract, license, permit or franchise) (but excluding any rights or
property acquired in connection with any Restrictive Agreement); but only to the
extent such prohibition is valid following application of Sections 9-408 and
9-409 of the UCC; and, provided further that the provisions of this SECTION 3
shall not prohibit the security interests created by this Security Agreement
from extending to the proceeds of such contract, license, permit or franchise
(or such rights or property) or to the monetary value of the good will and other
general intangibles of the Grantors relating thereto; or
(b) any rights or property to the extent that any valid and enforceable
law or regulation applicable to such rights or property prohibits the creation
of a security interest therein, but only to the extent such prohibition is valid
following application of Sections 9-408 and 9-409 of the UCC; and, provided
further that the provisions of this SECTION 3 shall not
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prohibit the security interests created by this Security Agreement from
extending to the proceeds of such rights or property or to the monetary value of
the good will and other general intangibles of the Grantors relating thereto.
In addition, in the event any Grantor disposes of assets to third
parties in a transaction permitted by SECTION 7.05 of the Credit Agreement, such
assets, but not the proceeds or products thereof, shall be released from the
Lien of the Administrative Agent and the Administrative Agent shall promptly
execute such instruments as are reasonably necessary to so release the Lien.
4. ADDITIONAL PERFECTION ACTIONS AND COLLATERAL.
(a) Each Grantor covenants and agrees that it will take such actions
necessary to perfect the first priority Lien of the Administrative Agent for the
benefit of the Secured Parties, in Real Property and Motor Vehicles as the
Administrative Agent may from time to time request by notice to such Grantor,
including by execution of all mortgages, deeds of trusts or certificates of
title as the Administrative Agent shall reasonably request, and simultaneously
with such perfection action, such Grantor shall deliver such title insurance
documents (and endorsements), surveys, appraisals and other documents evidencing
real property and enter into any amendments to the Credit Agreement or any other
Loan Document as the Administrative Agent shall reasonably request.
(b) Each Grantor covenants and agrees that, upon the request of the
Administrative Agent, it shall use its commercially reasonable efforts to obtain
control agreements from (i) depositary institutions with respect to such Deposit
Accounts as the Administrative Agent shall reasonably request, and (ii)
securities intermediaries with respect to such Investment Property as the
Administrative Agent shall reasonably request, which control agreements shall be
in a form substantially similar to SCHEDULE I attached hereto or such other form
as shall be acceptable to the Administrative Agent.
(c) Each Grantor covenants and agrees that, upon the request of the
Administrative Agent, it shall use its commercially reasonable efforts to cause
the Persons who own the Equity Interests in each Practice to pledge such Equity
Interests to the Administrative Agent for the benefit of the Secured Parties, as
collateral security for the Borrowers' Obligations, and to deliver such
documents and evidence of such pledge as the Administrative Agent may reasonably
require.
5. PERFECTION. As of the date of execution of this Security Agreement
or Security Joinder Agreement by each Grantor, as applicable (with respect to
each Grantor, its "APPLICABLE DATE"), such Grantor shall have:
(a) furnished the Administrative Agent with duly authorized
financing statements in form, number and substance suitable for filing,
sufficient under applicable law, and satisfactory to the Administrative
Agent in order that upon the filing of the same the Administrative
Agent, for the benefit of the Secured Parties, shall have a duly
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perfected security interest in all Collateral in which a security
interest can be perfected by the filing of financing statements; and
(b) delivered to the Administrative Agent possession of all
Collateral with respect to which either a security interest can be
perfected only by possession or a security interest perfected by
possession shall have priority as against Persons not having
possession, and including in the case of Instruments, Documents,
Investment Property and Pledged Interests in the form of certificated
securities, duly executed endorsements or stock powers in blank, as the
case may be, affixed thereto in form and substance acceptable to the
Administrative Agent and sufficient under applicable law so that the
Administrative Agent, for the benefit of the Secured Parties, shall
have a security interest in all such Collateral perfected by
possession;
with the effect that the Liens conferred in favor of the Administrative Agent
shall be and remain duly perfected and of first priority subject only, to the
extent applicable, to Liens allowed to exist under SECTION 7.01 of the Credit
Agreement ("PERMITTED LIENS"). All financing statements (including all
amendments thereto and continuations thereof), control agreements, certificates,
acknowledgments, stock powers and other documents, electronic identification,
restrictive legends, and instruments furnished in connection with the creation,
enforcement, protection, perfection or priority of the Administrative Agent's
security interest in Collateral, including such items as are described above in
this SECTION 5, are sometimes referred to herein as "PERFECTION DOCUMENTS". The
delivery of possession of items of or evidencing Collateral, causing other
Persons to execute and deliver Perfection Documents as appropriate, the filing
or recordation of Perfection Documents, the establishment of control over items
of Collateral, and the taking of such other actions as may be necessary or
advisable in the determination of the Administrative Agent to create, enforce,
protect, perfect, or establish or maintain the priority of, the security
interest of the Administrative Agent for the benefit of the Secured Parties in
the Collateral is sometimes referred to herein as "PERFECTION ACTION".
6. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.
(a) Except as otherwise provided in SECTION 4, each Grantor
will from time to time at its own expense, deliver specific assignments
of Collateral or such other Perfection Documents, and take such other
or additional Perfection Action (including but not limited to delivery
of any Pledged Interests that are in the form of certificated
securities, together with duly executed endorsements or stock powers in
blank, as the case may be, affixed thereto in form and substance
acceptable to the Administrative Agent and sufficient under applicable
law so that the Administrative Agent, for the benefit of the Secured
Parties, shall have a security interest in all such Collateral
perfected by possession), as may be required by the terms of the Loan
Documents or as the Administrative Agent may reasonably request in
connection with the administration or enforcement of this Security
Agreement or related to the Collateral or any part thereof in order to
carry out the terms of this Security Agreement, to perfect, protect,
maintain the priority of or enforce the Administrative Agent's security
interest in the Collateral, subject only to Permitted Liens, or
otherwise to better assure and confirm unto the Administrative Agent
its rights, powers and remedies for the benefit of the Secured
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Parties hereunder. Without limiting the foregoing, each Grantor hereby
irrevocably authorizes the Administrative Agent to file (with, or to
the extent permitted by applicable law, without the signature of the
Grantor appearing thereon) financing statements (including amendments
thereto and initial financing statements in lieu of continuation
statements) or other Perfection Documents (including copies thereof)
showing such Grantor as "debtor" at such time or times and in all
filing offices as the Administrative Agent may from time to time
determine to be necessary or advisable to perfect or protect the rights
of the Administrative Agent and the Secured Parties hereunder, or
otherwise to give effect to the transactions herein contemplated, any
of which Perfection Documents, at the Administrative Agent's election,
may describe the Collateral as or including all property of the
Grantor. Each Grantor hereby irrevocably ratifies and acknowledges the
Administrative Agent's authority to have effected filings of Perfection
Documents made by the Administrative Agent prior to its Applicable
Date.
(b) With respect to any and all Collateral, each Grantor
agrees to do and cause to be done all things necessary, subject to
SECTION 4, to perfect, maintain the priority of and keep in full force
the security interest granted in favor of the Administrative Agent for
the benefit of the Secured Parties, including, but not limited to, the
prompt payment upon demand therefor by the Administrative Agent of all
fees and expenses (including documentary stamp, excise or intangibles
taxes) incurred in connection with the preparation, delivery, or filing
of any Perfection Document or the taking of any Perfection Action to
perfect, protect or enforce a security interest in Collateral in favor
of the Administrative Agent for the benefit of the Secured Parties,
subject only to Permitted Liens. All amounts not so paid when due shall
constitute additional Secured Obligations and (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
(c) Each Grantor agrees to maintain among its books and
records appropriate notations or evidence of, and to make or cause to
be made appropriate disclosure upon its financial statements of, the
security interest granted hereunder to the Administrative Agent for the
benefit of the Secured Parties.
(d) Each Grantor agrees that, in the event any proceeds (other
than goods) of Collateral shall be or become commingled with other
property not constituting Collateral, then such proceeds may, to the
extent permitted by law, be identified by application of the lowest
intermediate balance rule to such commingled property.
(e) Each Grantor agrees that, should it have or obtain an
ownership interest in any material United States patent or patent
application that is not now identified on SCHEDULE II, any material
trademark or trademark application that is not now identified on
SCHEDULE III or any material copyright registration or copyright
application that is not now identified on SCHEDULE IV: (i) the
provisions of this Security Agreement shall automatically apply to such
item, and such item shall automatically become part of the Collateral;
(ii) such Grantor shall, within a reasonable time after acquiring or
becoming aware of such ownership interest, (A) give written notice
thereof to the Administrative Agent, (B) take all reasonable and
appropriate steps to protect such patents, trademarks
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and copyrights, as, for example, by filing applications for their
registration with the Patent and Trademark Office or the Copyright
Office, as applicable, and (C) with respect to such patents, trademarks
and copyrights, prepare, execute and file in the Patent and Trademark
Office or the Copyright Office, as applicable, within the requisite
time period, all documents that are known by such Grantor to be
necessary or that the Administrative Agent, on behalf of the Secured
Parties, reasonably requests in order to perfect the Lien of the
Administrative Agent, on behalf of the Secured Parties, therein,
including delivery to the Administrative Agent of an executed
assignment of intellectual property. Each Grantor authorizes the
Administrative Agent, on behalf of the Secured Parties, to execute and
file such a document in the name of such Grantor if such Grantor fails
to do so.
(f) Each Grantor agrees: (i) to take all necessary steps in
any proceeding before the Patent and Trademark Office, the Copyright
Office or any similar office or agency in any other country or any
political subdivision thereof or in any court, to maintain and pursue
each patent application now or hereafter included in the Collateral
which the Grantor determines to be material to the conduct of its
business, and to maintain each such patent, and each trademark or
copyright now or hereafter included in the Collateral, including the
filing of divisional, continuation, continuation-in-part and substitute
applications, the filing of applications for reissue, renewal or
extensions, the payment of fees, and the participation in interference,
reexamination, opposition and infringement proceedings; (ii) to take
corresponding steps with respect to unpatented inventions which the
Grantor determines to be material to the conduct of its business and on
which such Grantor is now or hereafter becomes entitled to seek
protection, and (iii) to bear any expenses incurred in connection with
such activities.
(g) No Grantor shall do any act or omit to do any act whereby
any patent, trademark or copyright may become dedicated or abandoned,
except where such dedication or abandonment (i) will not cause, create
or give rise to a Material Adverse Effect, and (ii) is in the ordinary
course of such Grantor's business.
(h) Each Grantor agrees that in the event that any patent,
trademark or copyright which is material to the operation of its
business and as to which it has granted a Lien pursuant to this
Security Agreement is infringed or misappropriated by a third party and
such infringement would have a Material Adverse Effect, such Grantor
shall take all reasonable steps to terminate the infringement or
misappropriation, and take such other actions as such Grantor shall
deem appropriate under the circumstances to protect such Collateral.
Any expense incurred in connection with such activities shall be borne
by such Grantor.
7. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and
be continuing and a Grantor (or any of its Affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral (other than those proceeds which are received by any such
stockholder, director, officer, employee or agent as payment of employee
compensation), including without limitation monies, checks, notes, drafts or any
other items of payment, each Grantor shall hold all such items of payment in
trust for the Administrative Agent for the benefit of the Secured Parties, and
as the property of the
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Administrative Agent for the benefit of the Secured Parties, separate from the
funds and other property of such Grantor, and no later than the first Business
Day following the receipt thereof, at the election of the Administrative Agent,
such Grantor shall cause such Collateral to be forwarded to the Administrative
Agent for its custody, possession and disposition on behalf of the Secured
Parties in accordance with the terms hereof and of the other Loan Documents.
8. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Administrative Agent shall be under no duty or
liability with respect to the collection, protection or preservation of
the Collateral, or otherwise. Each Grantor shall be responsible for the
safekeeping of its Collateral, and in no event shall the Administrative
Agent have any responsibility for (i) any loss or damage thereto or
destruction thereof occurring or arising in any manner or fashion from
any cause, other than due to the gross negligence or willful misconduct
of the Administrative Agent with respect to Collateral in its
possession or control, (ii) any diminution in the value thereof, or
(iii) any act or default of any carrier, warehouseman, bailee or
forwarding agency thereof or other Person in any way dealing with or
handling such Collateral.
(b) Each Grantor shall keep and maintain its tangible personal
property Collateral in good operating condition and repair, ordinary
wear and tear excepted and except as otherwise provided in the Credit
Agreement, and shall make all necessary repairs thereto and renewals
and replacements thereof except where failure to do so could not
reasonably be expected to have a Material Adverse Effect. No Grantor
shall permit any such items to become a fixture to real property
(unless such Grantor has granted to the Administrative Agent for the
benefit of the Secured Parties a Lien on such real property having a
priority acceptable to the Administrative Agent) or accessions to other
personal property.
(c) Each Grantor agrees (i) to pay when due all taxes, charges
and assessments against the Collateral in which it has any interest,
unless being contested in good faith by appropriate proceedings
diligently conducted and against which adequate reserves have been
established in accordance with GAAP applied on a basis consistent with
the application of GAAP in the Audited Financial Statements and
provided that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed, and (ii) to cause to be terminated
and released all Liens (other than Permitted Liens) on the Collateral.
Upon the failure of any Grantor to so pay or contest such taxes,
charges, or assessments, or cause such Liens to be terminated, the
Administrative Agent at its option may pay or contest any of them or
amounts relating thereto (the Administrative Agent having the right to
determine the legality or validity and the amount necessary to
discharge such taxes, charges, Liens or assessments) but shall not have
any obligation to make any such payment or contest. All sums so
disbursed by the Administrative Agent, including reasonable attorneys'
fees, court costs, expenses and other charges related thereto, shall be
payable on demand by the applicable Grantor to the Administrative Agent
and shall be additional Secured Obligations secured by the Collateral,
and any amounts not so paid on demand (in addition to other rights and
remedies resulting from
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such nonpayment) shall bear interest from the date of demand until paid
in full at the Default Rate.
9. STATUS OF GRANTORS AND COLLATERAL GENERALLY. Each Grantor represents
and warrants to, and covenants with, the Administrative Agent for the benefit of
the Secured Parties, with respect to itself and the Collateral as to which it
has or acquires any interest, that:
(a) It is at its Applicable Date (or as to Collateral acquired
after its Applicable Date will be upon the acquisition of the same)
and, except as permitted by the Credit Agreement and subsection (b) of
this SECTION 9, will continue to be, the owner of the Collateral, free
and clear of all Liens, other than the security interest hereunder in
favor of the Administrative Agent for the benefit of the Secured
Parties and Permitted Liens, and that it will at its own cost and
expense take such action as is reasonable to defend such Collateral and
any products and proceeds thereof against all claims and demands of all
Persons (other than holders of Permitted Liens) to the extent of their
claims permitted under the Credit Agreement at any time claiming the
same or any interest therein adverse to the Secured Parties. Upon the
failure of any Grantor to so defend, the Administrative Agent may do so
at its option but shall not have any obligation to do so. All sums so
disbursed by the Administrative Agent, including reasonable attorneys'
fees, court costs, expenses and other charges related thereto, shall be
payable on demand by the applicable Grantor to the Administrative Agent
and shall be additional Secured Obligations secured by the Collateral,
and any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except for Dispositions permitted under the Credit
Agreement, (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral except for the security interests created by
this Security Agreement and Permitted Liens, or (iii) take any other
action in connection with any of the Collateral that would materially
impair the value of the interest or rights of such Grantor in the
Collateral taken as a whole or that would materially impair the
interest or rights of the Administrative Agent for the benefit of the
Secured Parties.
(c) It has full power, legal right and lawful authority to
enter into this Security Agreement (and any Security Joinder Agreement
applicable to it) and to perform its terms, including the grant of the
security interests in the Collateral herein provided for.
(d) No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Authority or any
other Person which has not been given or obtained, as the case may be,
is required either (i) for the grant by such Grantor of the security
interests granted hereby or for the execution, delivery or performance
of this Security Agreement (or any Security Joinder Agreement) by such
Grantor, or (ii) for the perfection of or the exercise by the
Administrative Agent, on behalf of the Secured Parties, of its rights
and remedies hereunder, except for action required by the UCC to
perfect and exercise remedies with respect to the security interest
conferred hereunder.
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(e) No effective financing statement or other Perfection
Document similar in effect, nor any other Perfection Action, covering
all or any part of the Collateral purported to be granted or taken by
or on behalf of such Grantor (or by or on behalf of any other Person
and which remains effective as against all or any part of the
Collateral) has been filed in any recording office, delivered to
another Person for filing (whether upon the occurrence of a contingency
or otherwise), or otherwise taken, as the case may be, except such as
pertain to Permitted Liens and such as may have been filed for the
benefit of, delivered to, or taken in favor of, the Administrative
Agent for the benefit of the Secured Parties in connection with the
security interests conferred hereunder.
(f) SCHEDULE 9(F) attached hereto contains true and complete
information as to each of the following: (i) the exact legal name of
each Grantor as it appears in its Organizational Documents as of its
Applicable Date and at any time during the five (5) year period ending
as of its Applicable Date (the "COVERED PERIOD"), (ii) the jurisdiction
of formation and form of organization of each Grantor, and the
identification number of such Grantor in its jurisdiction of formation
(if any), (iii) each address of the chief executive office of each
Grantor as of its Applicable Date and at any time during the Covered
Period, (iv) all trade names or trade styles used by such Grantor as of
its Applicable Date and at any time during the Covered Period, (v) the
address of each location of such Grantor at which any tangible personal
property Collateral (including Account Records and Account Documents)
is located at its Applicable Date or has been located at any time
during the Covered Period, (vi) with respect to each location described
in clause (v) that is not owned beneficially and of record by such
Grantor, the name and address of the owner thereof; and (vii) the name
of each Person other than such Grantor and the address of such Person
at which any tangible personal property Collateral of such Grantor is
held under any warehouse, consignment, bailment or other arrangement as
of its Applicable Date. No Grantor shall change its name, change its
jurisdiction of formation (whether by reincorporation, merger or
otherwise), change the location of its chief executive office, or
utilize any additional location where tangible personal property
Collateral (including Account Records and Account Documents) may be
located, except in each case upon giving not less than five (5) days'
prior written notice to the Administrative Agent and taking or causing
to be taken at such Grantor's expense all such Perfection Action,
including the delivery of such Perfection Documents, as may be
reasonably requested by the Administrative Agent to perfect or protect,
or maintain the perfection and priority of, the Lien of the
Administrative Agent for the benefit of the Secured Parties in
Collateral contemplated hereunder.
(g) No Grantor shall engage in any consignment transaction in
respect of any of the Collateral, whether as consignee or consignor,
without the prior written consent of the Administrative Agent in each
instance.
(h) Except in the case of Motor Vehicles, no Grantor shall
cause, suffer or permit any of the tangible personal property
Collateral (i) to be evidenced by any document of title (except for
shipping documents as necessary or customary to effect the receipt of
raw materials or components or the delivery of inventory to customers,
in each
11
case in the ordinary course of business) or (ii) to be in the
possession, custody or control of any warehouseman or other bailee
unless such location and Person are set forth on SCHEDULE 9(F) or the
Administrative Agent shall have received not less than five (5) days'
prior written notice of each such transaction, the Administrative Agent
shall have received a duly executed Qualifying Control Agreement from
such warehouseman or bailee, and the Grantor shall have caused at its
expense to be prepared and executed such additional Perfection
Documents and to be taken such other Perfection Action as the
Administrative Agent may deem necessary or advisable to carry out the
transactions contemplated by this Security Agreement.
(i) No tangible personal property Collateral is or shall be
located at any location that is leased by such Grantor from any other
Person other than Inventory the value of which, when aggregated with
all other Inventory kept at any location which is leased by all
Grantors, is less than $5,000,000, unless (x) such location and lessor
is set forth on SCHEDULE 9(F) attached hereto or such Grantor provides
not less than five (5) days' prior written notice thereof to the
Administrative Agent, (y) if requested by the Administrative Agent,
such lessor acknowledges the Lien in favor of the Administrative Agent
for the benefit of the Secured Parties conferred hereunder and waives
its statutory and consensual liens and rights with respect to such
Collateral in form and substance acceptable to the Administrative Agent
and delivered in writing to the Administrative Agent prior to any
Collateral being located at any such location, and (z) the Grantor
shall have caused at its expense to be prepared and executed such
additional Perfection Documents and to be taken such other Perfection
Action as the Administrative Agent may deem necessary or advisable to
carry out the transactions contemplated by this Security Agreement.
10. INSPECTION. The Administrative Agent (by any of its officers,
employees and agents), on behalf of the Secured Parties, shall have the right
upon prior notice to an executive officer of the Company, and at any reasonable
times during the Company's usual business hours, to inspect the Collateral, all
records related thereto (and to make extracts or copies from such records), and
the premises upon which any of the Collateral is located, to discuss such
Grantor's affairs and finances with any Person (other than Persons obligated on
any Accounts ("ACCOUNT DEBTORS") except as expressly otherwise permitted in the
Loan Documents) and to verify with any Person other than (except as expressly
otherwise permitted in the Loan Documents) Account Debtors the amount, quality,
quantity, value and condition of, or any other matter relating to, the
Collateral and, if an Event of Default has occurred and is continuing, to
discuss any Grantor's affairs and finances with such Grantor's Account Debtors
and to verify the amount, quality, value and condition of, or any other matter
relating to, the Collateral with such Account Debtors. Upon or after the
occurrence and during the continuation of an Event of Default, the
Administrative Agent may at any time and from time to time employ and maintain
on any Grantor's premises a custodian selected by the Administrative Agent who
shall have full authority to do all acts necessary to protect the Administrative
Agent's (for the benefit of the Secured Parties) interest. All expenses incurred
by the Administrative Agent, on behalf of the Secured Parties, by reason of the
employment of such custodian shall be paid by such Grantor on demand from time
to time and shall be added to the Secured Obligations secured by the Collateral,
and any amounts not so paid on demand (in addition to other rights and remedies
12
resulting from such nonpayment) shall bear interest from the date of demand
until paid in full at the Default Rate.
Notwithstanding any other provision contained in this Security
Agreement, in no event shall the Administrative Agent or any Secured Party be
given access to Protected Health Information (as such term is defined in the
Administrative Simplification provisions of the Health Insurance Portability and
Accountability Act of 1996, 45 C.F.R. Parts 160, 162 and 164) maintained by any
Grantor, unless access to such Protected Health Information is permitted by
applicable law.
11. SPECIFIC COLLATERAL.
(a) ACCOUNTS. With respect to its Accounts whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Administrative Agent
for the benefit of the Secured Parties that:
(i) Each Grantor shall keep records of its Accounts
that are accurate and complete in all material respects
("ACCOUNT RECORDS") and from time to time at intervals
reasonably designated by the Administrative Agent such Grantor
shall provide the Administrative Agent with a schedule of
Accounts in form and substance reasonably acceptable to the
Administrative Agent describing all Accounts created or
acquired by such Grantor ("SCHEDULE OF ACCOUNTS"); PROVIDED,
HOWEVER, that such Grantor's failure to execute and deliver
any such Schedule of Accounts shall not affect or limit the
Administrative Agent's security interest or other rights in
and to any Accounts for the benefit of the Secured Parties. If
reasonably requested by the Administrative Agent, each Grantor
shall furnish the Administrative Agent with copies of proof of
delivery and other documents relating to the Accounts so
scheduled, including without limitation repayment histories
and present status reports (collectively, "ACCOUNT DOCUMENTS")
and such other matter and information relating to the status
of then existing Accounts as the Administrative Agent shall
reasonably request.
(ii) All Account Records and Account Documents are
and shall at all times be located only at the Company's or
such Grantor's chief executive office as set forth on SCHEDULE
9(F) attached hereto, such other locations as are specifically
identified on SCHEDULE 9(F) attached hereto as an "ACCOUNT
DOCUMENTS LOCATION," or as to which the Grantor has complied
with SECTION 9(F) hereof.
(iii) The Accounts are genuine, are in all respects
what they purport to be, are not evidenced by an instrument or
document or, if evidenced by an instrument or document, are
only evidenced by one original instrument or document.
13
(iv) The Accounts cover bona fide sales, leases,
licenses or other dispositions of property usually dealt in by
such Grantor, or the rendition by such Grantor of services, to
an Account Debtor in the ordinary course of business.
(v) Except for conditions generally applicable to
such Grantor's industry and markets and for set-offs,
discounts, allowances, claims or disputes in the ordinary
course of business, there are no events or occurrences which
are known to such Grantor and which are reasonably expected to
result in a material reduction of the amount payable in the
aggregate under the Accounts from the amount shown on any
Schedule of Accounts less any reserves established in
accordance with GAAP.
(vi) The property or services giving rise thereto are
not, and were not at the time of the sale or performance
thereof, subject to any Lien, claim, encumbrance or security
interest, except those of the Administrative Agent for the
benefit of Secured Parties and Permitted Liens.
(vii) In the event any amounts due and owing in
excess of $5,000,000 individually, or $15,000,000 in the
aggregate amount, are in dispute between any Account Debtor
and a Grantor (which shall include without limitation any
dispute in which an offset claim or counterclaim may result),
such Grantor shall provide the Administrative Agent with
written notice thereof as soon as practicable, explaining in
detail the reason for the dispute, all claims related thereto
and the amount in controversy.
(b) EQUIPMENT. With respect to its Equipment whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Administrative Agent
for the benefit of the Secured Parties that:
(i) Each Grantor, as soon as practicable following a
reasonable request therefor by the Administrative Agent, shall
deliver to the Administrative Agent any and all evidence of
ownership of any of the Equipment (including without
limitation certificates of title and applications for title).
(ii) Each Grantor shall maintain accurate, itemized
records describing the kind, type, quality, quantity of its
Equipment and shall furnish the Administrative Agent upon
reasonable request with a current schedule containing the
foregoing information, but, other than during the continuance
of an Event of Default, not more often than once per fiscal
year.
(iii) All Equipment is and shall at all times be
located only at such Grantor's locations as set forth on
SCHEDULE 9(F) attached hereto, at such other locations as to
which such Grantor has complied with SECTION 9(F) hereof or at
an Excluded Location (as defined below). No Grantor shall,
other than as provided above, in the ordinary course of
business or as expressly permitted under the Credit Agreement,
sell, lease, transfer, dispose of or remove any Equipment from
14
such locations. As used in this SECTION 11(B)(III), "EXCLUDED
LOCATION" means a location where Equipment is located that is
neither set forth on SCHEDULE 9(F) nor with respect to which a
Grantor complied with SECTION 9(F), so long as (x) the
aggregate book value or fair market value (whichever is
greater) of all Equipment located at such location does not
exceed $5,000,000, and (y) the aggregate book value or fair
market value (whichever is greater) of all Equipment located
at all such locations does not exceed $25,000,000.
(c) SUPPORTING OBLIGATIONS. With respect to its Supporting
Obligations whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Administrative Agent for the benefit of the Secured Parties that:
(i) Each Grantor shall from time to time at the
Administrative Agent's reasonable request, deliver to the
Administrative Agent a current list identifying in reasonable
detail each Supporting Obligation relating to any Collateral
from a single obligor in excess of $500,000, and (ii) upon the
request of the Administrative Agent from time to time
following the occurrence and during the continuance of any
Default or Event of Default, deliver to the Administrative
Agent the originals of all documents evidencing or
constituting Supporting Obligations, together with such other
documentation (executed as appropriate by the Grantor) and
information as may be necessary to enable the Administrative
Agent to realize upon the Supporting Obligations in accordance
with their respective terms or transfer the Supporting
Obligations as may be permitted under the Loan Documents or by
applicable law.
(ii) With respect to each letter of credit giving
rise to Letter-of-Credit Rights that has an aggregate stated
amount available to be drawn in excess of $500,000, each
Grantor shall, at the request of the Administrative Agent use
its commercially reasonable efforts to cause the issuer
thereof to execute and deliver to the Administrative Agent a
Qualifying Control Agreement.
(iii) With respect to each transferable letter of
credit giving rise to Letter-of-Credit Rights that has an
aggregate stated amount available to be drawn in excess of
$100,000, each Grantor shall, at the Administrative Agent's
request upon and during the continuance of any Default or
Event of Default, deliver to the Administrative Agent a duly
executed, undated transfer form in blank sufficient in form
and substance under the terms of the related letter of credit
to effect, upon completion and delivery to the letter of
credit issuer together with any required fee, the transfer of
such letter of credit to the transferee identified in such
form. Each Grantor hereby expressly authorizes the
Administrative Agent following the occurrence and during the
continuance of any Event of Default to complete and tender
each such transfer form as transferor in its own name or in
the name, place and stead of the Grantor in order to effect
any such transfer, either to the Administrative Agent or to
another transferee, as the case may be, in connection
15
with any sale or other disposition of Collateral or for any
other purpose permitted under the Loan Documents or by
applicable law.
(d) INVESTMENT PROPERTY. With respect to its Investment
Property whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Administrative Agent for the benefit of the Secured Parties that:
(i) SCHEDULE 11(D) attached hereto contains a true
and complete description of (x) the name and address of each
securities intermediary with which such Grantor maintains a
securities account in which Investment Property is or may at
any time be credited or maintained, and (y) all other material
Investment Property of such Grantor other than Pledged
Interests.
(ii) Except with the express prior written consent of
the Administrative Agent in each instance, all Investment
Property other than Pledged Interests shall be maintained at
all times in the form of (a) certificated securities, which
certificates shall have been delivered to the Administrative
Agent together with duly executed undated stock powers
endorsed in blank pertaining thereto, or (b) security
entitlements credited to one or more securities accounts as to
each of which the Administrative Agent has received copies of
the account agreement between the applicable securities
intermediary and the Grantor and the most recent statement of
account pertaining to such securities account (each certified
to be true and correct by an officer of the Grantor). Without
limiting the generality of the foregoing, (A) at any time
prior to the exercise by the Administrative Agent of any of
its rights under SECTION 4(B)(II), each Grantor shall, from
time to time upon the Administrative Agent's request, (x)
provide the Administrative Agent with a schedule with respect
to all Investment Property credited to or maintained in any
securities account not listed on SCHEDULE 11(D), setting forth
in reasonable detail the identity, location, account
intermediary and such other information as the Administrative
Agent may reasonably require with respect to all such
Investment Property, and (y) take or cause to be taken at such
Grantor's expense all such Perfection Action (other than
Perfection Action described in SECTION 4(B)(II)), including
the delivery of such Perfection Documents, as may be
reasonably requested by the Administrative Agent to perfect or
protect, or maintain the perfection and priority of, the Lien
of the Administrative Agent for the benefit of the Secured
Parties in such Investment Property, and (B) at all times
after the exercise by the Administrative Agent of any of its
rights under SECTION 4(B)(II), no Grantor shall cause, suffer
or permit any Investment Property to be credited to or
maintained in any securities account not listed on SCHEDULE
11(D) attached hereto except in each case upon giving not less
than fifteen (15) days' prior written notice to the
Administrative Agent and taking or causing to be taken at such
Grantor's expense all such Perfection Action, including the
delivery of such Perfection Documents, as may be reasonably
requested by the Administrative Agent to perfect or protect,
or maintain the perfection and priority
16
of, the Lien of the Administrative Agent for the benefit of
the Secured Parties in Collateral contemplated hereunder.
(iii) All dividends and other distributions with
respect to any of the Investment Property shall be subject to
the security interest conferred hereunder, PROVIDED, HOWEVER,
that cash dividends paid to a Grantor as record owner of the
Investment Property may be disbursed to and retained by such
Grantor so long as no Default or Event of Default shall have
occurred and be continuing, free from any Lien hereunder.
(iv) So long as no Default or Event of Default shall
have occurred and be continuing, the registration of
Investment Property in the name of a Grantor as record and
beneficial owner shall not be changed and such Grantor shall
be entitled to exercise all voting and other rights and powers
pertaining to Investment Property for all purposes not
inconsistent with the terms hereof or of any Qualifying
Control Agreement relating thereto.
(v) Upon the occurrence and during the continuance of
any Default or Event of Default, at the option of the
Administrative Agent, all rights of the Grantors to exercise
the voting or consensual rights and powers which it is
authorized to exercise pursuant to clause (iv) immediately
above shall cease and the Administrative Agent may thereupon
(but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Administrative
Agent or its nominee or agent for the benefit of the Secured
Parties and/or exercise such voting or consensual rights and
powers as appertain to ownership of such Collateral, and to
that end each Grantor hereby appoints the Administrative Agent
as its proxy, with full power of substitution, to vote and
exercise all other rights as a shareholder with respect to
such Investment Property upon the occurrence and during the
continuance of any Default or Event of Default, which proxy is
coupled with an interest and is irrevocable until the Facility
Termination Date, and each Grantor hereby agrees to provide
such further proxies as the Administrative Agent may request;
provided, however, that the Administrative Agent in its
discretion may from time to time refrain from exercising, and
shall not be obligated to exercise, any such voting or
consensual rights or such proxy.
(vi) Upon the occurrence and during the continuance
of any Default or Event of Default, all rights of the Grantors
to receive and retain cash dividends and other distributions
upon or in respect to Investment Property pursuant to clause
(iii) above shall cease and shall thereupon be vested in the
Administrative Agent for the benefit of the Secured Parties,
and each Grantor shall, or shall cause, all such cash
dividends and other distributions with respect to the
Investment Property to be promptly delivered to the
Administrative Agent (together, if the Administrative Agent
shall request, with any documents related thereto) to be held,
released or disposed of by it hereunder or, at the option of
the Administrative Agent, to be applied to the Secured
Obligations.
17
(e) DEPOSIT ACCOUNTS. With respect to its Deposit Accounts,
whether now existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the
Administrative Agent for the benefit of the Secured Parties that:
(i) SCHEDULE 11(E) attached hereto as of the date
hereof contains a true and complete description of each
Deposit Account of each Grantor as of the date hereof, setting
forth in reasonable detail the identity, location, depositary
institution, account number and such other information as the
Administrative Agent may reasonably require with respect to
each such Deposit Account;
(ii) at any time prior to the exercise by the
Administrative Agent of any of its rights under SECTION
4(B)(I), each Grantor shall, from time to time upon the
Administrative Agent's request, (x) provide the Administrative
Agent with an updated SCHEDULE 11(E) listing all of its
Deposit Accounts at such time and setting forth the
information required by SCHEDULE 11(E), and (y) other than
Perfection Action and Perfection Documents described in
SECTION 4(B)(I), take or cause to be taken at such Grantor's
expense all such Perfection Action, including the delivery of
such Perfection Documents, as may be reasonably requested by
the Administrative Agent to perfect or protect, or maintain
the perfection and priority of, the Lien of the Administrative
Agent for the benefit of the Secured Parties in each such
Deposit Account; and
(iii) upon the exercise by the Administrative Agent
of any of its rights under SECTION 4(B)(I), each Grantor shall
promptly provide to the Administrative Agent an updated
SCHEDULE 11(E) listing all of its Deposit Accounts at such
time and setting forth the information required by SCHEDULE
11(E), and at all times thereafter no Grantor shall cause,
suffer or permit any Deposit Account to be kept or maintained
with any financial institution not listed on such SCHEDULE
11(E) except in each case upon giving not less than fifteen
(15) days' prior written notice to the Administrative Agent
and taking or causing to be taken at such Grantor's expense
all such Perfection Action, including the delivery of such
Perfection Documents, as may be reasonably requested by the
Administrative Agent to perfect or protect, or maintain the
perfection and priority of, the Lien of the Administrative
Agent for the benefit of the Secured Parties in each such
Deposit Account.
(f) PLEDGED INTERESTS. All of the Pledged Interests are, as of
the date of execution of this Security Agreement or Security Joinder
Agreement by each Grantor pledging such Pledged Interests (such date as
applicable with respect to each Grantor, its "Applicable Date"), and
shall at all times thereafter be validly issued and outstanding, fully
paid and non-assessable and constitute (a) with respect to Direct
Foreign Subsidiaries, 65% of the Voting Securities (or if any Grantor
shall own less than 65%, then all of the Voting Securities owned by
them), and 100% of the other Equity Interests of each Direct Foreign
Subsidiary, and (b) with respect to Domestic Subsidiaries, all of
18
the Equity Interests of each Domestic Subsidiary, and are accurately
described on SCHEDULE 11(F).
(i) The Grantor is as at its Applicable Date and
shall at all times thereafter (subject to Dispositions
permitted under the Credit Agreement) be the sole registered
and record and beneficial owner of the Pledged Interests, free
and clear of all Liens, charges, equities, options,
hypothecations, encumbrances and restrictions on pledge or
transfer, including transfer of voting rights (other than the
pledge hereunder, Permitted Liens and applicable restrictions
pursuant to federal and state and applicable foreign
securities and healthcare laws and the Restrictive
Agreements). Without limiting the foregoing, the Pledged
Interests are not and will not be subject to any voting trust,
shareholders agreement, right of first refusal, voting proxy,
power of attorney or other similar arrangement (other than the
rights hereunder in favor of the Administrative Agent and
other than pursuant to the Restrictive Agreements).
(ii) At no time shall any Pledged Interests (i) be
held or maintained in the form of a security entitlement or
credited to any securities account and (ii) which constitute a
"security" under Article 8 of the UCC be maintained in the
form of uncertificated securities. With respect to Pledged
Interests that are "securities" under the UCC, or as to which
the issuer has elected at any time to have such interests
treated as "securities" under the UCC, such Pledged Interests
are, and shall at all times be, represented by the share
certificates listed on SCHEDULE 11(F) hereto, which share
certificates, with stock powers duly executed in blank by the
Grantor, have been delivered to the Administrative Agent or
are being delivered to the Administrative Agent simultaneously
herewith or, in the case of Additional Interests as defined in
SECTION 29, shall be delivered pursuant to SECTION 29. In
addition, with respect to all Pledged Interests, including
Pledged Interests that are not "securities" under the UCC, the
Grantor has at its Applicable Date delivered to the
Administrative Agent (or has previously delivered to the
Administrative Agent or, in case of Additional Interests shall
deliver pursuant to SECTION 29) UCC financing statements (or
appropriate amendments thereto) duly authorized by the Grantor
and naming the Administrative Agent for the benefit of the
Secured Parties as "secured party," in form, substance and
number sufficient in the reasonable opinion of the
Administrative Agent to be filed in all UCC filing offices and
in all jurisdictions in which filing is necessary or advisable
to perfect in favor of the Administrative Agent for the
benefit of the Secured Parties the Lien on such Pledged
Interests, together with all required filing fees. Without
limiting the foregoing provisions of this SECTION 11(G), with
respect to any Pledged Interests issued by any Direct Foreign
Subsidiary, Grantor shall deliver or cause to be delivered,
(i) in addition to or in substitution for all or any of the
foregoing items, as the Administrative Agent may elect, such
other instruments, certificates, agreements, notices, filings,
and other documents, and take or cause to be taken such other
action, as the Administrative Agent may determine to be
necessary or advisable under the laws of the jurisdiction of
formation of such Direct Foreign Subsidiary, to grant, perfect
and protect as a first priority lien in such Collateral in
favor of the Administrative Agent for the benefit of the
Secured
19
Parties, and (ii) an opinion of counsel reasonably acceptable
in form and substance to the Administrative Agent issued by a
law firm reasonably acceptable to the Administrative Agent
licensed to practice law in such foreign jurisdiction,
addressing with respect to such Pledged Interests the matters
reasonably requested by the Administrative Agent.
(iii) The pledge, assignment and delivery of its
Pledged Interests (along with undated stock powers executed in
blank, financing statements and other agreements referred to
in this SECTION 11(F)) to the Administrative Agent for the
benefit of the Secured Parties pursuant to this Security
Agreement (or any Security Joinder Agreement) creates or
continues, as applicable, a valid and perfected first priority
security interest in such Pledged Interests in favor of the
Administrative Agent for the benefit of the Secured Parties,
subject to Permitted Liens, securing the payment of the
Secured Obligations, assuming, in the case of the Pledged
Interests which constitute certificated "securities" under the
UCC, continuous and uninterrupted possession by or on behalf
of the Administrative Agent. The Grantor will at its own cost
and expense defend the Secured Parties' right, title and
security interest in and to the Collateral against the claims
and demands of all persons whomsoever, other than Permitted
Liens.
12. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Each Grantor will keep the Collateral continuously insured
against such risks and in such amounts as are customarily insured
against by businesses of like size and type engaged in the same or
similar operations and consistent with Grantor's past practices,
including:
(i) casualty insurance on the Inventory and the
Equipment in an amount not less than the full insurable value
thereof, against loss or damage by theft, fire, lightning and
other hazards ordinarily included under uniform broad form
standard extended coverage policies, limited only as may be
provided in the standard broad form of extended coverage
endorsement at the time in use in the states in which the
Collateral is located;
(ii) comprehensive general liability insurance
against claims for bodily injury, death or property damage
occurring with or about such Collateral (such coverage to
include provisions waiving subrogation against the Secured
Parties), with the Administrative Agent and the Lenders as
additional insureds thereunder as their interests may appear;
(iii) liability insurance with respect to the
operation of its facilities under the workers' compensation
laws of the states in which such Collateral is located; and
(iv) business interruption insurance.
20
(b) Each insurance policy obtained in satisfaction of the
requirements of SECTION 12(A):
(i) may be provided by blanket policies now or
hereafter maintained by each or any Grantor or by the
Borrower;
(ii) shall be issued by such insurer (or insurers) as
shall be financially responsible and of recognized standing;
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the
waiver of subrogation clause, the deductible amount, if any,
and the standard mortgagee endorsement clause) as are
generally considered standard provisions for the type of
insurance involved;
(iv) shall provide for at least thirty (30) days'
prior written notice to the Administrative Agent of any
cancellation or substantial modification, termination or lapse
in coverage by the insurer, except for non-payment of premium,
as to which such policies shall provide for at least ten (10)
days' prior written notice to the Administrative Agent;
(v) without limiting the generality of the foregoing,
all insurance policies where applicable under SECTION 12(A)(I)
carried on the Collateral shall name the Administrative Agent,
for the benefit of the Secured Parties, as loss payee and the
Administrative Agent and Lenders as parties insured thereunder
as their interests may appear in respect of any claim for
payment.
(c) Prior to expiration of any such policy, such Grantor shall
furnish the Administrative Agent with evidence reasonably satisfactory
to the Administrative Agent that the policy or certificate has been
renewed or replaced or is no longer required by this Security
Agreement.
(d) Each Grantor hereby makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated
by the Administrative Agent), for the benefit of the Secured Parties,
as such Grantor's true and lawful attorney (and agent-in-fact) for the
purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item or payment for the proceeds of such policies
of insurance and for making all determinations and decisions with
respect to such policies of insurance, which appointment is coupled
with an interest and is irrevocable; provided, however, that the powers
pursuant to such appointment shall be exercisable only upon the
occurrence and during the continuation of an Event of Default.
(e) In the event such Grantor shall fail to maintain, or fail
to cause to be maintained, the full insurance coverage required
hereunder or shall fail to keep any of its Collateral in good repair
and good operating condition, ordinary wear and tear excepted and
except as otherwise provided in the Credit Agreement, the
Administrative Agent may
21
(but shall be under no obligation to), without waiving or releasing any
Secured Obligation or Default or Event of Default by such Grantor
hereunder, contract for the required policies of insurance and pay the
premiums on the same or make any required repairs, renewals and
replacements; and all sums so disbursed by the Administrative Agent,
including reasonable attorneys' fees, court costs, expenses and other
charges related thereto, shall be payable on demand by such Grantor to
the Administrative Agent, shall be additional Secured Obligations
secured by the Collateral, and (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.
(f) Each Grantor agrees that to the extent that it shall fail
to maintain, or fail to cause to be maintained, the full insurance
coverage required by SECTION 12(A), it shall in the event of any loss
or casualty pay promptly to the Administrative Agent, for the benefit
of the Secured Parties, to be held in a separate account for
application in accordance with the provisions of SECTIONS 12(H), such
amount as would have been received as Net Proceeds (as hereinafter
defined) by the Administrative Agent, for the benefit of the Secured
Parties, under the provisions of SECTION 12(H) had such insurance been
carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of SECTIONS 12(A)(II) and 12(A)(III) shall be applied by
such Grantor toward satisfaction of the claim or liability with respect
to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect to
the Collateral pursuant to the provisions of SECTION 12(A)(I) hereof
shall, so long as no Event of Default shall have occurred and be
continuing, be paid to such Grantor and applied as provided in the
Credit Agreement. At all times during which an Event of Default shall
have occurred and be continuing, the Administrative Agent shall be
entitled to receive direct and immediate payment of the proceeds of
such insurance and such Grantor shall take all action as the
Administrative Agent may reasonably request to accomplish such payment.
Notwithstanding the foregoing, in the event such Grantor shall receive
any such proceeds upon the occurrence and during the continuance of an
Event of Default, such Grantor shall immediately deliver such proceeds
to such Administrative Agent for the benefit of the Secured Parties as
additional Collateral, and pending such delivery shall hold such
proceeds in trust for the benefit of the Secured Parties and keep the
same segregated from its other funds.
(i) "NET PROCEEDS" when used with respect to any insurance
proceeds shall mean the gross proceeds from such proceeds, award or
other amount, less all taxes, fees and expenses (including attorneys'
fees) incurred in the realization thereof.
(j) In case of any material damage to, destruction or loss of,
or claim or proceeding against, all or any material part of the
Collateral pledged hereunder by a Grantor, such Grantor shall give
prompt notice thereof to the Administrative Agent. Each such notice
shall describe generally the nature and extent of such damage,
destruction, loss, claim or proceeding. Subject to SECTION 12(D), each
Grantor is hereby
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authorized and empowered to adjust or compromise any loss under any
such insurance other than losses relating to claims made directly
against any Secured Party as to which the insurance described in
SECTION 12(A)(II) OR (III) is applicable.
(k) The provisions contained in this Security Agreement
pertaining to insurance shall be cumulative with any additional
provisions imposing additional insurance requirements with respect to
the Collateral or any other property on which a Lien is conferred under
any Security Instrument.
13. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. If an Event of Default
occurs and is continuing, the Administrative Agent shall have the following
rights and remedies on behalf of the Secured Parties in addition to any rights
and remedies set forth elsewhere in this Security Agreement or the other Loan
Documents, all of which may be exercised with or, if allowed by law, without
notice to a Grantor:
(a) All of the rights and remedies of a secured party under
the UCC or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the
extent permitted by law, in addition to any other rights and remedies
contained in this Security Agreement or any other Loan Document;
(b) The right to foreclose the Liens and security interests
created under this Security Agreement by any available judicial
procedure or without judicial process;
(c) The right to (i) enter upon the premises of a Grantor
through self-help and without judicial process, without first obtaining
a final judgment or giving such Grantor notice or opportunity for a
hearing on the validity of the Administrative Agent's claim and without
any obligation to pay rent to such Grantor, or any other place or
places where any Collateral is located and kept, and remove the
Collateral therefrom to the premises of the Administrative Agent or any
agent of the Administrative Agent, for such time as the Administrative
Agent may desire, in order effectively to collect or liquidate the
Collateral, (ii) require such Grantor or any bailee or other agent of
such Grantor to assemble the Collateral and make it available to the
Administrative Agent at a place to be designated by the Administrative
Agent that is reasonably convenient to both parties, and (iii) notify
any or all Persons party to a Qualifying Control Agreement or who
otherwise have possession of or control over any Collateral of the
occurrence of an Event of Default and other appropriate circumstances,
and exercise control over and take possession or custody of any or all
Collateral in the possession, custody or control of such other Persons;
(d) The right to (i) exercise all of a Grantor's rights and
remedies with respect to the collection of Accounts, Chattel Paper,
Instruments, Supporting Obligations and General Intangibles
(collectively, "PAYMENT COLLATERAL"), including the right to demand
payment thereof and enforce payment, by legal proceedings or otherwise;
(ii) settle, adjust, compromise, extend or renew all or any Payment
Collateral or any legal proceedings pertaining thereto; (iii) discharge
and release all or any Payment Collateral; (iv) take control, in any
manner, of any item of payment or proceeds referred to in
23
SECTION 7 above; (v) prepare, file and sign a Grantor's name on any
Proof of Claim in bankruptcy, notice of Lien, assignment or
satisfaction of Lien or similar document in any action or proceeding
adverse to any obligor under any Payment Collateral or otherwise in
connection with any Payment Collateral; (vi) endorse the name of a
Grantor upon any chattel paper, document, instrument, invoice, freight
xxxx, xxxx of lading or similar document or agreement relating to any
Collateral; (vii) use the information recorded on or contained on a
Grantor's internet website or otherwise in any data processing
equipment and computer hardware and software relating to any Collateral
to which a Grantor has access; (viii) open such Grantor's mail and
collect any and all amounts due to such Grantor from any Account
Debtors or other obligor in respect of Payment Collateral; (ix) take
over such Grantor's post office boxes or make other arrangements as the
Administrative Agent, on behalf of the Secured Parties, deems necessary
to receive such Grantor's mail, including notifying the post office
authorities to change the address for delivery of such Grantor's mail
to such address as the Administrative Agent, on behalf of the Secured
Parties, may designate; (x) notify any or all Account Debtors or other
obligor on any Payment Collateral that such Payment Collateral has been
assigned to the Administrative Agent for the benefit of the Secured
Parties and that Administrative Agent has a security interest therein
for the benefit of the Secured Parties (provided that the
Administrative Agent may at any time give such notice to an Account
Debtor that is a department, agency or authority of the United States
government); each Grantor hereby agrees that any such notice, in the
Administrative Agent's sole discretion, may (but need not) be sent on
such Grantor's stationery, in which event such Grantor shall co-sign
such notice with the Administrative Agent if requested to do so by the
Administrative Agent; and (xi) do all acts and things and execute all
documents necessary, in Administrative Agent's sole discretion, to
collect the Payment Collateral; and
(e) The right to sell all or any Collateral in its then
existing condition, or after any further manufacturing or processing
thereof, at such time or times, at public or private sale or sales,
with such notice as may be required by law and in a commercially
reasonable manner, in lots or in bulk, for cash or on credit, with or
without representations and warranties, all as the Administrative
Agent, in its sole discretion, may deem advisable. The Administrative
Agent shall have the right to conduct such sales on a Grantor's
premises or elsewhere and shall have the right to use a Grantor's
premises without charge for such sales for such time or times as the
Administrative Agent may see fit. The Administrative Agent may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral
from time to time by an announcement at the time and place of such
postponed or adjourned sale, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each
Grantor agrees that the Administrative Agent has no obligation to
preserve rights to the Collateral against prior parties or to marshal
any Collateral for the benefit of any Person. The Administrative Agent
for the benefit of the Secured Parties is hereby granted an irrevocable
fully paid license or other right (including each Grantor's rights
under any license or any franchise agreement), each of which shall
remain in full force and effect until the Facility Termination Date, to
use, without charge, each of the labels, patents, copyrights, names,
trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature owned or licensed by any Grantor, as it
pertains to the Collateral, in completing production of, advertising
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for sale and selling any Collateral. If any of the Collateral shall
require repairs, maintenance, preparation or the like, or is in process
or other unfinished state, the Administrative Agent shall have the
right, but shall not be obligated, to perform such repairs,
maintenance, preparation, processing or completion of manufacturing for
the purpose of putting the same in such saleable form as the
Administrative Agent shall deem appropriate, but the Administrative
Agent shall have the right to sell or dispose of the Collateral without
such processing and no Grantor shall have any claim against the
Administrative Agent for the value that may have been added to such
Collateral with such processing. In addition, each Grantor agrees that
in the event notice is necessary under applicable law, written notice
mailed to such Grantor in the manner specified herein ten (10) days
prior to the date of public sale of any of the Collateral or prior to
the date after which any private sale or other disposition of the
Collateral will be made shall constitute commercially reasonable notice
to such Grantor. All notice is hereby waived with respect to any of the
Collateral which threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Administrative Agent may
purchase all or any part of the Collateral at public or, if permitted
by law, private sale, free from any right of redemption which is hereby
expressly waived by such Grantor and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the
Secured Obligations. Each Grantor recognizes that the Administrative
Agent may be unable to effect a public sale of certain of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and
applicable state law, and may be otherwise delayed or adversely
affected in effecting any sale by reason of present or future
restrictions thereon imposed by governmental authorities ("AFFECTED
COLLATERAL"), and that as a consequence of such prohibitions and
restrictions the Administrative Agent may be compelled (i) to resort to
one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire Affected Collateral
for their own account, for investment and not with a view to the
distribution or resale thereof, or (ii) to seek regulatory approval of
any proposed sale or sales, or (iii) to limit the amount of Affected
Collateral sold to any Person or group. Each Grantor agrees and
acknowledges that private sales so made may be at prices and upon terms
less favorable to such Grantor than if such Affected Collateral was
sold either at public sales or at private sales not subject to other
regulatory restrictions, and that the Administrative Agent has no
obligation to delay the sale of any Affected Collateral for the period
of time necessary to permit the Grantor or any other Person to register
or otherwise qualify them under or exempt them from any applicable
restriction, even if such Grantor or other Person would agree to
register or otherwise qualify or exempt such Affected Collateral so as
to permit a public sale under the Securities Act or applicable state
law. Each Grantor further agrees, to the extent permitted by applicable
law, that the use of private sales made under the foregoing
circumstances to dispose of Affected Collateral shall be deemed to be
dispositions in a commercially reasonable manner. Each Grantor hereby
acknowledges that a ready market may not exist for Affected Collateral
that is not traded on a national securities exchange or quoted on an
automated quotation system, and agrees and acknowledges that in such
event the Affected Collateral may be sold for an amount less than a pro
rata share of the fair market value of such entity's assets minus its
liabilities.
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The net cash proceeds resulting from the collection, liquidation, sale,
or other disposition of the Collateral shall be applied first to the expenses
(including all reasonable attorneys' fees) of retaking, holding, storing,
processing and preparing for sale, selling, collecting, liquidating and the
like, and then to the satisfaction of all Secured Obligations in accordance with
the terms of SECTION 8.03 of the Credit Agreement. Each Grantor shall be liable
to the Administrative Agent, for the benefit of the Secured Parties, and shall
pay to the Administrative Agent, for the benefit of the Secured Parties, on
demand any deficiency which may remain after such sale, disposition, collection
or liquidation of the Collateral.
14. ATTORNEY-IN-FACT. Each Grantor hereby appoints the Administrative
Agent as the Grantor's attorney-in-fact for the purposes of carrying out the
provisions of this Security Agreement and taking any action and executing any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest; PROVIDED, that the Administrative Agent shall have and may
exercise rights under this power of attorney only upon the occurrence and during
the continuance of an Event of Default. Without limiting the generality of the
foregoing, upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right and power
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
(c) to endorse such Grantor's name on any checks, notes,
drafts or any other payment relating to or constituting proceeds of the
Collateral which comes into the Administrative Agent's possession or
the Administrative Agent's control, and deposit the same to the account
of the Administrative Agent, for the benefit of the Secured Parties, on
account and for payment of the Secured Obligations.
(d) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent, for the benefit of the
Secured Parties, with respect to any of the Collateral;
(e) to execute, in connection with any sale or other
disposition of Collateral provided for herein, any endorsement,
assignments, or other instruments of conveyance or transfer with
respect thereto; and
(f) to receive, endorse and collect all checks and other
orders for the payment of money made payable to any Grantor
representing any dividend, interest payment, principal payment or other
distribution payable or distributable in respect to the Collateral or
any part thereof and to give full discharge for the same.
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15. REINSTATEMENT. The granting of a security interest in the
Collateral and the other provisions hereof shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Secured
Obligations is rescinded or must otherwise be returned by any Secured Party or
is repaid by any Secured Party in whole or in part in good faith settlement of a
pending or threatened avoidance claim, whether upon the insolvency, bankruptcy
or reorganization of any Grantor or any other Loan Party or otherwise, all as
though such payment had not been made. The provisions of this SECTION 15 shall
survive repayment of all of the Secured Obligations and the termination or
expiration of this Security Agreement in any manner, including but not limited
to termination upon occurrence of the Facility Termination Date.
14. CERTAIN WAIVERS BY THE GRANTORS. Each Grantor waives to the extent
permitted by applicable law (a) any right to require any Secured Party or any
other obligee of the Secured Obligations to (x) proceed against any Person or
entity, including without limitation any Loan Party, (y) proceed against or
exhaust any Collateral or other collateral for the Secured Obligations, or (z)
pursue any other remedy in its power; (b) any defense arising by reason of any
disability or other defense of any other Person, or by reason of the cessation
from any cause whatsoever of the liability of any other Person or entity, (c)
any right of subrogation, and (d) any right to enforce any remedy which any
Secured Party or any other obligee of the Secured Obligations now has or may
hereafter have against any other Person and any benefit of and any right to
participate in any collateral or security whatsoever now or hereafter held by
the Administrative Agent for the benefit of the Secured Parties. Each Grantor
authorizes each Secured Party and each other obligee of the Secured Obligations
without notice (except notice required by applicable law) or demand and without
affecting its liability hereunder or under the Loan Documents from time to time
to: (i) take and hold security, other than the Collateral herein described, for
the payment of such Secured Obligations or any part thereof, and exchange,
enforce, waive and release the Collateral herein described or any part thereof
or any such other security; and (ii) apply such Collateral or other security and
direct the order or manner of sale thereof as such Secured Party or obligee in
its discretion may determine.
The Administrative Agent may at any time deliver (without
representation, recourse or warranty) the Collateral or any part thereof to a
Grantor and the receipt thereof by such Grantor shall be a complete and full
acquittance for the Collateral so delivered, and the Administrative Agent shall
thereafter be discharged from any liability or responsibility therefor.
17. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to any
of the Pledged Interests shall be subject to the pledge hereunder,
PROVIDED, HOWEVER, that cash dividends paid to a Grantor as record
owner of the Pledged Interests, to the extent permitted by the Credit
Agreement to be declared and paid, may be retained by such Grantor so
long as no Event of Default shall have occurred and be continuing, free
from any Liens hereunder.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, the registration of the Collateral in the
name of a Grantor as record and beneficial owner shall not be changed
and such Grantor shall be entitled to exercise all voting and other
rights and powers pertaining to the Collateral for all purposes not
inconsistent with the terms of the Loan Documents.
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(c) Upon the occurrence and during the continuance of any
Default or Event of Default, all rights of the Grantors to receive and
retain cash dividends and other distributions upon the Collateral
pursuant to subsection (a) above shall cease and shall thereupon be
vested in the Administrative Agent for the benefit of the Secured
Parties, and each Grantor shall promptly deliver, or shall cause to be
promptly delivered, all such cash dividends and other distributions
with respect to the Pledged Interests to the Administrative Agent
(together, if the Administrative Agent shall request, with the
documents described in SECTIONS 5(C) and 11(G) hereof or other
negotiable documents or instruments so distributed) to be held by it
hereunder or, at the option of the Administrative Agent, to be applied
to the Secured Obligations. Pending delivery to the Administrative
Agent of such property, each Grantor shall keep such property
segregated from its other property and shall be deemed to hold the same
in trust for the benefit of the Secured Parties.
(d) Upon the occurrence and during the continuance of any
Default or Event of Default, at the option of the Administrative Agent,
all rights of each of the Grantors to exercise the voting or consensual
rights and powers which it is authorized to exercise pursuant to
subsection (b) above shall cease and the Administrative Agent may
thereupon (but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Administrative Agent or
its nominee or agent for the benefit of the Secured Parties and/or
exercise such voting or consensual rights and powers as appertain to
ownership of such Collateral, and to that end each Grantor hereby
appoints the Administrative Agent as its proxy, with full power of
substitution, to vote and exercise all other rights as a shareholder
with respect to such Pledged Interests hereunder upon the occurrence
and during the continuance of any Default or Event of Default, which
proxy is coupled with an interest and is irrevocable until the Facility
Termination Date, and each Grantor hereby agrees to provide such
further proxies as the Administrative Agent may request; PROVIDED,
HOWEVER, that the Administrative Agent in its discretion may from time
to time refrain from exercising, and shall not be obligated to
exercise, any such voting or consensual rights or such proxy.
18. CONTINUED POWERS. Until the Facility Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to the
Administrative Agent for the benefit of the Secured Parties hereunder shall
continue to exist and may be exercised by the Administrative Agent at any time
and from time to time irrespective of the fact that any of the Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that any part of the liability of any Grantor may have ceased.
19. OTHER RIGHTS. The rights, powers and remedies given to the
Administrative Agent for the benefit of the Secured Parties by this Security
Agreement shall be in addition to all rights, powers and remedies given to the
Administrative Agent or any Secured Party under any other Loan Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Administrative Agent in exercising any right, power or remedy hereunder shall
not be deemed to be a waiver of such right, power or remedy, and any single or
partial exercise of any right, power or remedy hereunder shall not preclude the
further exercise thereof; and every right, power and remedy of the Secured
Parties shall continue in full force and effect until such
28
right, power or remedy is specifically waived in accordance with the terms of
the Credit Agreement.
20. ANTI-MARSHALING PROVISIONS. The right is hereby given by each
Grantor to the Administrative Agent, for the benefit of the Secured Parties, to
make releases (whether in whole or in part) of all or any part of the Collateral
agreeable to the Administrative Agent without notice to, or the consent,
approval or agreement of other parties and interests, including junior lienors,
which releases shall not impair in any manner the validity of or priority of the
Liens and security interests in the remaining Collateral conferred hereunder,
nor release any Grantor from personal liability for the Secured Obligations.
Notwithstanding the existence of any other security interest in the Collateral
held by the Administrative Agent, for the benefit of the Secured Parties, the
Administrative Agent shall have the right to determine the order in which any or
all of the Collateral shall be subjected to the remedies provided in this
Security Agreement. Each Grantor hereby waives any and all right to require the
marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or in any other Loan Document.
21. ENTIRE AGREEMENT. This Security Agreement and each Security Joinder
Agreement, together with the Credit Agreement and other Loan Documents,
constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements and understandings, inducements, commitments or
conditions, express or implied, oral or written, except as contained in the Loan
Documents. The express terms hereof and of the Security Joinder Agreements
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof or thereof. Neither this Security
Agreement nor any Security Joinder Agreement nor any portion or provision hereof
or thereof may be changed, altered, modified, supplemented, discharged,
canceled, terminated, or amended orally or in any manner other than as provided
in the Credit Agreement.
22. THIRD PARTY RELIANCE. Each Grantor hereby consents and agrees that
all issuers of or obligors in respect of any Collateral, and all securities
intermediaries, warehousemen, bailees, public officials and other Persons having
any interest in, possession of, control over or right, privilege, duty or
discretion in respect of, any Collateral shall be entitled to accept the
provisions hereof and of the Security Joinder Agreements as conclusive evidence
of the right of the Administrative Agent, on behalf of the Secured Parties, to
exercise its rights hereunder or thereunder with respect to the Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by any Grantor or any other Person to any of such Persons.
23. BINDING AGREEMENT; ASSIGNMENT. This Security Agreement and each
Security Joinder Agreement, and the terms, covenants and conditions hereof and
thereof, shall be binding upon and inure to the benefit of the parties hereto,
and to their respective successors and assigns, except that no Grantor shall be
permitted to assign this Security Agreement, any Security Joinder Agreement or
any interest herein or therein or, except as expressly permitted herein or in
the Credit Agreement, in the Collateral or any part thereof or interest therein.
Without limiting the generality of the foregoing sentence of this SECTION 23,
any Lender may assign to one or more Persons, or grant to one or more Persons
participations in or to, all or any part of its rights and
29
obligations under the Credit Agreement (to the extent permitted by the Credit
Agreement); and to the extent of any such assignment or participation such other
Person shall, to the fullest extent permitted by law, thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or
otherwise, subject however, to the provisions of the Credit Agreement, including
ARTICLE IX thereof (concerning the Administrative Agent) and SECTION 10.07
thereof (concerning assignments and participations). All references herein to
the Administrative Agent and to the Secured Parties shall include any successor
thereof or permitted assignee, and any other obligees from time to time of the
Secured Obligations.
24. RELATED SWAP CONTRACTS. All obligations of each Grantor under or in
respect of Related Swap Contracts to which any Lender or its Affiliates is a
party shall be deemed to be Secured Obligations secured hereby, and each Lender
or Affiliate of a Lender party to any such Related Swap Contract shall be deemed
to be a Secured Party hereunder with respect to such Secured Obligations;
PROVIDED, HOWEVER, that such obligations shall cease to be Secured Obligations
at such time, prior to the Facility Termination Date, as such Person (or
Affiliate of such Person) shall cease to be a "LENDER" under the Credit
Agreement.
No Person who obtains the benefit of any Lien by virtue of the
provisions of this SECTION 24 shall have any right to notice of any action or to
consent to, direct or object to any action hereunder or under any other Loan
Document or otherwise in respect of the Collateral (including the release or
impairment of any Collateral) other than in its capacity as a Lender and only to
the extent expressly provided in the Loan Documents. Each Secured Party not a
party to the Credit Agreement who obtains the benefit of this Security Agreement
by virtue of the provisions of this SECTION 24 shall be deemed to have
acknowledged and accepted the appointment of the Administrative Agent pursuant
to the terms of the Credit Agreement, and that with respect to the actions and
omissions of the Administrative Agent hereunder or otherwise relating hereto
that do or may affect such Secured Party, the Administrative Agent and each of
its Related Parties shall be entitled to all the rights, benefits and immunities
conferred under ARTICLE IX of the Credit Agreement.
25. SEVERABILITY. The provisions of this Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof,
but this Security Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
26. COUNTERPARTS. This Security Agreement may be executed in any number
of counterparts each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Security
Agreement to produce or account for more than one such counterpart executed by
the Grantor against whom enforcement is sought. Without limiting the foregoing
provisions of this SECTION 26, the provisions of SECTION 10.02(B) of the Credit
Agreement shall be applicable to this Security Agreement.
27. TERMINATION. Subject to the provisions of SECTION 15, this Security
Agreement and each Security Joinder Agreement, and all obligations of the
Grantors hereunder (excluding those obligations and liabilities that expressly
survive such termination) shall terminate without
30
delivery of any instrument or performance of any act by any party on the
Facility Termination Date. Upon such termination of this Security Agreement, the
Administrative Agent shall, at the request and sole expense of the Grantors,
promptly deliver to the Grantors such termination statements and take such
further actions as the Grantors may reasonably request to terminate of record,
or otherwise to give appropriate notice of the termination of, any Lien
conferred hereunder.
28. NOTICES. Any notice required or permitted hereunder shall be given
(a) with respect to any Grantor, at the address for the giving of notice then in
effect under the Credit Agreement, and (b) with respect to the Administrative
Agent or a Lender, at the Administrative Agent's address indicated in SCHEDULE
10.02 of the Credit Agreement. All such addresses may be modified, and all such
notices shall be given and shall be effective, as provided in SCHEDULE 10.02 of
the Credit Agreement for the giving and effectiveness of notices and
modifications of addresses thereunder.
29. JOINDER; ADDITIONAL INTERESTS. Each Person who shall at any time
execute and deliver to the Administrative Agent a Security Joinder Agreement
substantially in the form attached as EXHIBIT A hereto shall thereupon
irrevocably, absolutely and unconditionally become a party hereto and obligated
hereunder as a Grantor and shall have thereupon pursuant to SECTION 2 hereof
granted a security interest in and collaterally assigned to the Administrative
Agent for the benefit of the Secured Parties all Collateral in which it has at
its Applicable Date or thereafter acquires any interest or the power to
transfer, and all references herein and in the other Loan Documents to the
Grantors or to the parties to this Security Agreement shall be deemed to include
such Person as a Grantor hereunder. Each Security Joinder Agreement shall be
accompanied by the Supplemental Schedules referred to therein, appropriately
completed with information relating to the Grantor executing such Security
Joinder Agreement and its property. Each of the applicable Schedules attached
hereto shall be deemed amended and supplemented without further action by such
information reflected on the Supplemental Schedules.
If any Grantor shall at any time acquire or hold any additional Pledged
Interests (any such shares being referred to herein as the "ADDITIONAL
INTERESTS"), such Grantor shall deliver to the Administrative Agent for the
benefit of the Secured Parties (i) a Security Agreement Supplement in the form
of EXHIBIT B hereto with respect to such Additional Interests duly completed and
executed by such Grantor and (ii) any other document required in connection with
such Additional Interests as described in SECTION 11(G). Each Grantor shall
comply with the requirements of this SECTION 29 concurrently with the
acquisition of any such Additional Interests or within the time period specified
elsewhere in the Credit Agreement with respect to such Additional Interests;
PROVIDED, HOWEVER, that the failure to comply with the provisions of this
SECTION 29 shall not impair the Lien on Additional Interests conferred
hereunder.
30. RULES OF INTERPRETATION. The rules of interpretation contained in
SECTIONS 1.02 and 1.05 of the Credit Agreement shall be applicable to this
Security Agreement and each Security Joinder Agreement and are hereby
incorporated by reference. All representations and warranties contained herein
shall survive the delivery of documents and any Credit Extensions referred to
herein or secured hereby.
31
31. GOVERNING LAW; WAIVERS.
(A) THIS SECURITY AGREEMENT AND EACH SECURITY JOINDER
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE; PROVIDED THAT (I) WITH RESPECT TO
THOSE INSTANCES IN WHICH THE APPLICABLE CHOICE OF LAWS RULES OF SUCH
STATE, INCLUDING SECTION 9-301 OF THE UCC, REQUIRE THAT THE MANNER OF
CREATION OF A SECURITY INTEREST IN SPECIFIC COLLATERAL OR THE MANNER OR
EFFECT OF PERFECTION OR NONPERFECTION OR THE RULES GOVERNING PRIORITY
OF SECURITY INTERESTS ARE TO BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION, THEN THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN
SUCH MATTERS, (II) EACH CONTROL AGREEMENT (INCLUDING EACH QUALIFYING
CONTROL AGREEMENT) APPLICABLE TO ANY SECURITIES ACCOUNT OR DEPOSIT
ACCOUNT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN
SUCH CONTROL AGREEMENT, OR OTHERWISE BY THE LAWS OF THE JURISDICTION
THAT GOVERN THE SECURITIES ACCOUNT OR DEPOSIT ACCOUNT TO WHICH SUCH
CONTROL AGREEMENT RELATES, AND (III) IN THOSE INSTANCES IN WHICH THE
LAWS OF THE JURISDICTION IN WHICH COLLATERAL IS LOCATED GOVERN MATTERS
PERTAINING TO THE METHODS AND EFFECT OF REALIZING ON COLLATERAL, SUCH
LAWS SHALL BE GIVEN EFFECT WITH RESPECT TO SUCH MATTERS.
(B) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE XXXXXX XX XXX XXXX, XXXXX XX XXX
XXXX, XXXXXX XXXXXX OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS SECURITY AGREEMENT OR A SECURITY JOINDER AGREEMENT, EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF
THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
(C) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED
IN SECTION 28
32
OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE
LAWS IN EFFECT IN THE STATE OF NEW YORK.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY
SECURITY JOINDER AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF
ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH GRANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE
JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY
REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE UNDER APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS SECURITY AGREEMENT OR ANY
SECURITY JOINDER AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY EXPRESSLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR
PROCEEDING.
(F) EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[SIGNATURE PAGES FOLLOW]
33
IN WITNESS WHEREOF, the parties have duly executed this Security
Agreement on the day and year first written above.
GRANTOR:
PEDIATRIX MEDICAL GROUP, INC.,
A FLORIDA CORPORATION
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Chief Financial Officer
----------------------------------
ALASKA NEONATOLOGY ASSOCIATES, INC.
ASSOCIATES IN NEONATOLOGY, INC.
AUGUSTA NEONATOLOGY ASSOCIATES, P.C.
BNA ACQUISITION COMPANY, INC.
CENTRAL OKLAHOMA NEONATOLOGY ASSOCIATES,
INC.
CNA ACQUISITION CORP.
FLORIDA REGIONAL NEONATAL ASSOCIATES,
INC.
FOOTHILL MEDICAL GROUP, INC.
FORT WORTH NEONATAL ASSOCIATES BILLING,
INC.
GNPA ACQUISITION COMPANY, INC.
MAGELLA HEALTHCARE CORPORATION
MAGELLA HEALTHCARE GROUP, X.X.
XXXXXXX MEDICAL ASSOCIATES BILLING, INC.
MAGELLA MEDICAL ASSOCIATES MIDWEST, P.C.
MAGELLA MEDICAL ASSOCIATES OF GEORGIA,
P.C.
MAGELLA MEDICAL GROUP, INC.
MAGELLA NEVADA, LLC
MAGELLA TEXAS, LLC
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
34
MNPC ACQUISITION COMPANY, INC.
MOUNTAIN STATES NEONATOLOGY, INC.
NACF ACQUISITION COMPANY, INC.
NEONATAL AND PEDIATRIC INTENSIVE CARE
MEDICAL GROUP, INC.
NEONATOLOGY ASSOCIATES BILLING, INC.
NEONATAL SPECIALISTS, LTD.
NSPA ACQUISITION COMPANY, INC.
OBSTETRIX ACQUISITION COMPANY
OF ARIZONA, INC.
OBSTETRIX ACQUISITION COMPANY
OF COLORADO, INC.
OBSTETRIX MEDICAL GROUP OF ARIZONA, P.C.
OBSTETRIX MEDICAL GROUP OF CALIFORNIA,
A PROFESSIONAL CORPORATION
OBSTETRIX MEDICAL GROUP OF COLORADO, P.C.
OBSTETRIX MEDICAL GROUP OF
KANSAS AND MISSOURI, P.A.
OBSTETRIX MEDICAL GROUP OF PHOENIX, P.C.
OBSTETRIX MEDICAL GROUP OF
TEXAS BILLING, INC.
OBSTETRIX MEDICAL GROUP OF
WASHINGTON, INC., P.S.
OBSTETRIX MEDICAL GROUP, INC.
OZARK NEONATAL ASSOCIATES, INC.
PALM BEACH NEO ACQUISITIONS, INC.
PASCV ACQUISITION COMPANY, INC.
PEDIATRIX ACQUISITION COMPANY OF
OHIO, INC.
PEDIATRIX ACQUISITION COMPANY OF
WASHINGTON, INC.
PEDIATRIX FLORIDA LLC
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
35
PEDIATRIX MEDICAL GROUP NEONATOLOGY AND
PEDIATRIC INTENSIVE
CARE SPECIALISTS OF NEW YORK, P.C.
PEDIATRIX MEDICAL GROUP OF ARKANSAS, P.A.
PEDIATRIX MEDICAL GROUP OF CALIFORNIA,
A PROFESSIONAL CORPORATION
PEDIATRIX MEDICAL GROUP OF COLORADO, P.C.
PEDIATRIX MEDICAL GROUP OF DELAWARE, INC.
PEDIATRIX MEDICAL GROUP OF FLORIDA, INC.
PEDIATRIX MEDICAL GROUP OF GEORGIA, P.C.
PEDIATRIX MEDICAL GROUP OF ILLINOIS, P.C.
PEDIATRIX MEDICAL GROUP OF INDIANA, P.C.
PEDIATRIX MEDICAL GROUP OF KANSAS, P.A.
PEDIATRIX MEDICAL GROUP OF
KENTUCKY, P.S.C.
PEDIATRIX MEDICAL GROUP OF
LOUISIANA, L.L.C.
PEDIATRIX MEDICAL GROUP OF MICHIGAN, P.C.
PEDIATRIX MEDICAL GROUP OF MISSOURI, P.C.
PEDIATRIX MEDICAL GROUP OF
NEW MEXICO, P.C.
PEDIATRIX MEDICAL GROUP OF
NORTH CAROLINA, P.C.
PEDIATRIX MEDICAL GROUP OF OHIO CORP.
PEDIATRIX MEDICAL GROUP OF OKLAHOMA, P.C.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
36
PEDIATRIX MEDICAL GROUP OF
PENNSYLVANIA, P.C.
PEDIATRIX MEDICAL GROUP OF
PUERTO RICO, P.S.C.
PEDIATRIX MEDICAL GROUP OF SOUTH
CAROLINA, P.A.
PEDIATRIX MEDICAL GROUP OF
TENNESSEE, P.C.
PEDIATRIX MEDICAL GROUP OF TEXAS
BILLING, INC
PEDIATRIX MEDICAL GROUP OF WASHINGTON,
INC., P.S.
PEDIATRIX MEDICAL GROUP, INC.,
A UTAH CORPORATION
PEDIATRIX MEDICAL GROUP, P.A.
PEDIATRIX MEDICAL GROUP, P.C.,
A VIRGINIA CORPORATION
PEDIATRIX MEDICAL GROUP, P.C.,
A WEST VIRGINIA CORPORATION
PEDIATRIX MEDICAL MANAGEMENT, L.P.
PEDIATRIX MEDICAL SERVICES, INC.
PEDIATRIX OF MARYLAND, P.A.
PEDIATRIX SCREENING, INC.
PEDIATRIX TEXAS I LLC
PEDIATRIX VIRGINIA ACQUISITION
COMPANY, INC.
PERINATAL PEDIATRICS, P.A.
PMG ACQUISITION CORP.
PMGSC, P.A.
PNA ACQUISITION CO., INC.
XXXXXX MEDICAL GROUP OF NEVADA, LTD.
RPNA ACQUISITION COMPANY, INC.
XXXXX XXXXXXXXXXX XX.
XXXX ACQUISITION COMPANY, INC.
ST. XXXXXX NEONATOLOGY CONSULTANTS, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
37
TEXAS MATERNAL FETAL MEDICINE BILLING,
INC.
TEXAS NEWBORN SERVICES, INC.
TUCSON PERINATAL SERVICES, P.C.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
38
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative
Agent
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title: Assistant Vice President
----------------------------------
39
