EXHIBIT 10.14
(FORM OF ARL SECURITY AGREEMENT)
ARL SECURITY AGREEMENT
THIS ARL SECURITY AGREEMENT (this "ARL Security Agreement"), dated as of
June 28, 2002, is made by AMERICAN REIMBURSEMENT, LLC, a Delaware limited
liability company, as grantor ("ARL"), in favor of PRIVATE INVESTMENT BANK
LIMITED, Nassau, Bahamas, as secured party ("PIBL"), for the benefit of the
holders of the Amended Debentures (as defined below).
W I T N E S S E T H:
WHEREAS, Med issued to PIBL, with PIBL acting in its name but on behalf of
certain clients of PIBL, certain subordinated debentures, dated as of December
28, 2001, in the aggregate principal amount of $70,000,000 (collectively, the
"ORIGINAL DEBENTURES");
WHEREAS, in order to extend the maturity of the Original Debentures to June
28, 2004 and modify other terms and conditions of the Original Debentures, MED
and PIBL have agreed to enter into five (5) amended debentures (the "AMENDED
DEBENTURES"), in the aggregate principal amount of $57,500,000; and
WHEREAS, ARL has agreed to enter into that certain ARL Guaranty, dated as
of even date herewith (the "GUARANTY"), in favor of PIBL, pursuant to which,
among other things, ARL has agreed to guaranty the payment obligations of MED
under the Amended Debentures; and
WHEREAS, the Guaranty is to be secured by a first priority, perfected
security interest in all ARL Debenture Collateral (as described below), and ARL
has agreed to pledge and grant a security interest in such collateral pursuant
to the terms of this ARL Security Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by ARL, ARL hereby agrees as follows:
1. DEFINITIONS.
"AMENDMENT AGREEMENT" shall mean that certain Amendment Agreement,
dated as of even date herewith, by and among Med, ARL, PIBL, TEGCO Investments,
LLC, a Delaware limited liability company and the Med Subsidiaries. Each
capitalized term used in this ARL Security Agreement that is not otherwise
defined herein shall have the meaning accorded to such term in the Amendment
Agreement.
"ARL COLLECTION ACCOUNT" means that certain collection account,
bearing account number 3293007778 established by or on behalf of ARL at the
Depositary Bank.
"HOLDER" shall mean PIBL or any other holder of one or more of the
Amended Debentures, from time to time, and "Holders" means all of such parties
taken together.
"NCFE" shall mean National Century Financial Enterprises, an Ohio
corporation.
"PERSON" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"SELLERS OVERRIDE" means the percentage amount due to the seller that
sold the relevant ARL Accounts to ARL pursuant to one or more receivables
purchase agreements.
"SERVICING COSTS" means reasonable and documented servicing and
administrative fees and costs of collection on such accounts, such Servicing
Costs not to exceed five percent (5%) of the gross collection proceeds from the
relevant ARL Accounts.
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2. OBLIGATIONS. The term "Obligations", as used herein, shall mean all
obligations owing to PIBL or the holders of the Amended Debentures arising under
or in connection with the Amended Debentures, whether under the Amendment
Agreement or any other Modification Document, whether such obligations are
matured or unmatured, including interest on any such Obligations, whether
accruing before or after any bankruptcy or insolvency case or proceeding
involving ARL or any other Person and also including (if interest on any portion
of such obligations ceases to accrue by operation of law by reason of the
commencement of such case or proceeding) such interest as would have accrued on
any such portion of such obligations if such case or proceeding had not
commenced.
The Obligations of ARL set forth herein constitute the full recourse
obligations of ARL, enforceable against ARL to the full extent of all its assets
and properties.
3. SECURITY. As security for the prompt and complete payment and
performance of the Obligations when due, ARL hereby delivers, pledges and grants
a first priority, perfected security interest to PIBL in all of ARL's right,
title and interest (whether now owned and existing or hereafter arising or
acquired) in all present and future assets of ARL (collectively, the "ARL
DEBENTURE COLLATERAL"), consisting of:
(a) Medical accounts receivable owned by ARL (collectively, the
"ARL ACCOUNTS") having an aggregate face value of not less than $100,000,000, as
identified on an itemized schedule attached as an exhibit to the Amendment
Agreement, with all collections on the ARL Accounts, net of Servicing Costs and
the Sellers Override, being directed to the ARL Collection Account to be used
exclusively for payments on the Amended Debentures;
(b) All servicing, collateral and collection arrangements relating
to the ARL Accounts, with the documentation related thereto specifying that the
Holders or their designated agent shall be the sole beneficiary of such ARL
Accounts; PROVIDED that such security interest shall not apply to the portion of
the Servicing Costs that are payable to NCFE and its affiliates in connection
with the ARL Accounts nor to the servicing, collateral and collection
arrangements with NCFE and its affiliates related thereto; and
(c) Any other assets that are now or may in the future be acquired
or otherwise held by ARL on or after the date of the Amendment Agreement
(including without limitation, all accounts, cash, chattel paper, contract
rights, copyrights, deposit accounts, documents, documents of title, electronic
chattel paper, equipment, fixtures, furnishings, franchises, general
intangibles, goods, guarantees, intellectual property, inventory, instruments,
investment property, letter of credit rights, licenses, merchandise, patents,
payment intangibles, permits, supporting obligations, trade secrets, trademarks,
tradenames, and cash or non-cash proceeds of any of the foregoing, in each case,
as applicable, as such terms are defined in or understood for the purposes of
the Uniform Commercial Code as in effect in Delaware).
Terms used in the foregoing definition of ARL Debenture Collateral, that
are not otherwise defined therein, shall have the meanings provided in the
Uniform Commercial Code as in effect in the State of Delaware.
ARL will not (i) change its name or identity, (ii) establish any other
location other than the address set forth beneath its signature hereto where it
expects to maintain inventory and/or equipment or (iii) change its principal
place of business or the place where its records concerning the ARL Debenture
Collateral are kept from the address set forth beneath its signature hereto,
unless ARL shall have given PIBL at least thirty (30) days' prior written notice
thereof and shall have taken all action (or made arrangements to take such
action substantially simultaneously with such change if it is impossible to take
such action in advance) necessary or reasonably requested by PIBL to amend such
financing statement or continuation statement as PIBL may deem appropriate or
otherwise to maintain perfection of PIBL's security interest in the ARL
Debenture Collateral.
ARL hereby irrevocably constitutes and appoints PIBL and any agent or
representative thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the
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place and stead of ARL and in the name of ARL or in its own name, from time to
time in ARL's discretion, for the purpose of carrying out the terms of this ARL
Security Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this ARL Security Agreement, and,
without limiting the generality of the foregoing, hereby gives PIBL the power
and right, on behalf of ARL, without notice to or assent by ARL to do the
following: (i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any ARL Debenture
Collateral and, in the name of ARL or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other Instruments for the payment of moneys due under any ARL Debenture
Collateral and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by PIBL for the
purpose of collecting any and all such moneys due under any ARL Debenture
Collateral whenever payable; (ii) to direct any party liable for any payment
under any of the ARL Debenture Collateral to make payment of any and all moneys
due, and to become due thereunder, directly to PIBL or as PIBL shall direct;
(iii) to receive payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, in respect of or arising out of any
ARL Debenture Collateral; and (iv) generally to sell, transfer, pledge, make any
agreement with respect or otherwise deal with any of the ARL Debenture
Collateral as fully and completely as though PIBL were the absolute owner
thereof for all purposes, and to do, at PIBL's option and ARL's expense, at any
time, or from time to time, all acts and things which PIBL reasonably deems
necessary to protect, preserve or realize upon the ARL Debenture Collateral and
PIBL's lien therein, in order to effect the intent of this ARL Security
Agreement, all as fully and effectively as ARL might do. ARL hereby ratifies, to
the extent permitted by law, all that said attorneys shall lawfully do or cause
to be done by virtue hereof. The power of attorney granted pursuant to this
section is a power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full.
ARL waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by PIBL
upon this ARL Security Agreement or acceptance of this ARL Security Agreement,
and the Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this ARL Security Agreement.
ARL unconditionally waives, to the extent permitted by law: (a) all notice of
the creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by PIBL upon this ARL Security Agreement or acceptance
of this ARL Security Agreement (the Obligations being deemed conclusively to
have been created, contracted or incurred in reliance upon this ARL Security
Agreement); (b) all notices that may be required by statute, rule of law or
otherwise, now or hereafter in effect, including without limitation, any demand,
presentment, protest, proof or notice of nonpayment; (c) any requirement of
diligence on the part of any Person; and (d) any requirement of PIBL to take any
action whatsoever, to exhaust any remedies or to mitigate damages.
4. ASSIGNMENT BY PIBL. PIBL may, from time to time, whether before or
after any discontinuance of this ARL Security Agreement, at its sole discretion
and without notice to ARL, assign or transfer any or all of its portion of the
Obligations or any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Obligations
shall be and remain Obligations for the purposes of this ARL Security Agreement,
and each and every immediate and successive assignee or transferee of any of the
Obligations or of any interest therein shall, to the extent of such assignee's
or transferee's interest in the Obligations, be entitled to the benefits of this
ARL Security Agreement to the same extent as if such assignee or transferee were
PIBL, as appropriate.
5. NO WAIVER. No delay in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise of any right or
remedy shall preclude other or further exercise thereof or the exercise of any
other right or remedy; nor shall any modification or waiver of any of the
provisions of this ARL Security Agreement be binding upon PIBL except as
expressly set forth in a writing duly signed and delivered on its behalf. No
action permitted hereunder shall in any way affect or impair PIBL's rights or
ARL's obligations under this ARL Security Agreement. For the purposes of this
ARL Security Agreement, Obligations shall include all of the obligations
described in the definition thereof, notwithstanding any right or power of ARL
or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and
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no such claim or defense shall affect or impair the obligations of ARL
hereunder. ARL's obligations under this ARL Security Agreement shall be absolute
and unconditional irrespective of any circumstance whatsoever that might
constitute a legal or equitable discharge or defense of ARL. ARL hereby
acknowledges that there are no conditions to the effectiveness of this ARL
Security Agreement.
6. REPRESENTATIONS AND WARRANTIES. ARL hereby represents and warrants to
PIBL that:
(a) ARL has all requisite power and authority to execute, deliver
and perform its obligations under this ARL Security Agreement and such other
instruments or agreements relating thereto to which it is or may become a party;
(b) ARL has duly executed and delivered this ARL Security Agreement,
and this ARL Security Agreement is the legal, valid and binding obligation of
ARL, enforceable in accordance with its terms;
(c) the execution, delivery and performance of this ARL Security
Agreement by ARL does not conflict with, or constitute a violation under, any
law, regulation order, agreement or instrument to which ARL is a party or by
which ARL or its properties is bound.
7. EVENTS OF DEFAULT. An "Event of Default" shall exist under this ARL
Security Agreement if at any time: (a) any representation or warranty of made by
ARL under the Guaranty or this ARL Security Agreement shall have been false or
misleading in any material respect when made; (b) ARL shall fail to make any
payment hereunder upon demand therefor; (c) any "Event of Default" under any of
the Amended Debentures, as defined in the Amendment Agreement shall occur; or
(d) ARL shall fail to observe and perform in any material respect any covenant
or agreement made by ARL in the Guaranty or this ARL Security Agreement.
8. REMEDIES.
(a) In case an Event of Default shall occur and be continuing, the
Obligations shall become immediately due and payable and PIBL shall be entitled
to exercise all of PIBL's rights, powers and remedies (whether pursuant to
applicable law or this ARL Security Agreement) with respect thereto and for the
protection and enforcement of PIBL's rights in the ARL Debenture Collateral,
including, without limitation, the following:
(i) the right to receive all monies or other property which,
but for the occurrence of the Event of Default, ARL would have been entitled to
retain; and
(ii) to transfer registration of the ARL Debenture Collateral
into PIBL's name; and
(iii) to sell, assign or otherwise dispose of the ARL Debenture
Collateral, in the entirety or in separate lots, and generally in such manner,
at such time or times, at such place or places and on such terms as PIBL, in
compliance with any mandatory requirements of applicable law, may determine to
be commercially reasonable, and, to the extent permitted by any such
requirements of law, PIBL may bid (which may be a credit bid) for and become the
purchaser of the ARL Debenture Collateral (or any portion thereof), offered for
sale in accordance with this Section 8 without accountability to ARL, except
pursuant to subsection (b) below.
(b) The net proceeds of any disposition of any ARL Debenture
Collateral, after a payment of any accrued but unpaid servicing costs and the
Sellers Override, obtained pursuant to this section shall be applied as follows:
(i) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) incurred by PIBL in foreclosing on and
disposing of the ARL Debenture Collateral;
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(ii) next, any surplus then remaining to the payment of the
Obligations (whether matured or unmatured) in such order as PIBL may determine
in its sole discretion; and
(iii) thereafter, if no other Obligations are outstanding, any
surplus then remaining shall be paid to ARL or to such other person legally
entitled to same; it being understood that ARL will remain liable to PIBL to the
extent of any deficiency between the amount of the Obligations and the aggregate
of all amount realized from ARL Debenture Collateral.
9. COSTS, ETC. ARL agrees to pay all reasonable costs of PIBL, including,
without limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.
10. CUMULATIVE RIGHTS. PIBL's rights, powers and remedies under this ARL
Security Agreement shall be in addition to all rights, powers and remedies given
to PIBL under law, under the Amendment Agreement or otherwise, all of which
rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently.
11. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This ARL Security Agreement shall be
binding upon ARL and upon ARL's successors; and all references herein to ARL
shall be deemed to include any successor or successors, whether immediate or
remote, to such Person. ARL shall have no right to assign its obligations
hereunder. This ARL Security Agreement shall inure to the benefit of PIBL and
its successors, assigns and transferees.
(b) SEVERABILITY. Wherever possible each provision of this ARL
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable laws and regulations, but if any provision of this ARL
Security Agreement shall be prohibited by or invalid thereunder, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this ARL Security Agreement.
(c) SERVICE OF PROCESS. ARL AGREES THAT SERVICE OF PROCESS IN ANY
SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH BELOW OR AT SUCH OTHER ADDRESS
OF WHICH PIBL SHALL HAVE BEEN NOTIFIED IN WRITING, AND AGREES THAT NOTHING
HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
(d) NOTICES. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this ARL Security Agreement shall be in writing and shall be
deemed to have been duly given when addressed to the appropriate Person and
deposited in the U.S. Postal Service via registered mail. The initial address
for notices to ARL is set forth beneath its signature below.
(e) GOVERNING LAW. THIS ARL SECURITY AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
(f) WAIVER OF JURY TRIAL. GRANTOR, BY ITS EXECUTION AND DELIVERY OF
THIS ARL SECURITY AGREEMENT, AND LENDER, BY ACCEPTING THIS ARL SECURITY
AGREEMENT, EACH EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS ARL SECURITY AGREEMENT OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP
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EXISTING IN CONNECTION WITH THIS ARL SECURITY AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(g) COUNTERPARTS. This ARL Security Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but which
together shall be deemed to constitute a single document. Copies of this ARL
Security Agreement shall have the same effect and enforceability as the
original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, ARL has caused this ARL Security Agreement to be
executed and delivered as of the date first above written.
AMERICAN REIMBURSEMENT, LLC,
a Delaware limited liability company
By:
---------------------------------
Name:
Title:
Address:
Attn:
Telecopy:
PRIVATE INVESTMENT BANK LIMITED,
Nassau, Bahamas
By:
---------------------------------
Name:
Title:
Address:
Attn:
Telecopy:
[SIGNATURE PAGE TO ARL SECURITY AGREEMENT]
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