PLEDGE AND SECURITY AGREEMENT
Exhibit 10.2
THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time to time, the
“Security Agreement”) is entered into as of October 18, 2006 by and between MGI PHARMA,
INC., a Minnesota corporation (the “Company”), MGI GP, Inc., a Delaware corporation
(“MGI GP”), MGI OM, Inc., a Delaware corporation (“MGI OM”), MGI PHARMA Biologics,
Inc., a Delaware corporation, ProQuest Pharmaceuticals, Inc., a Delaware corporation, MGI Products,
Inc., a Maryland corporation, MGI MSL, LLC, a Maryland corporation, and MGI (Canada), Inc., a
Delaware corporation and GPI IP, LLC, a Delaware limited liability company (each a
“Grantor”, and collectively, the “Grantors”), and JPMorgan Chase Bank, N.A., in its
capacity as administrative agent (the “Administrative Agent”) for the lenders party to the
Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Grantorsd, the Administrative Agent and the Lenders are entering into a Credit Agreement
dated as of the date hereof (as it may be amended or modified from time to time, the “Credit
Agreement”). Each Grantor is entering into this Security Agreement in order to induce the
Lenders to enter into and extend credit to the Company, MGI GP and MGI OM (collectively, the
“Borrowers” and each a “Borrower”) under the Credit Agreement and to secure either
the Obligations or the Secured Obligations guaranteed pursuant to Article X of the Credit
Agreement.
ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Lenders, hereby agree
as follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.
1.2. Terms Defined in UCC. Terms defined in the UCC which are not otherwise defined
in this Security Agreement are used herein as defined in the UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in
addition to the terms defined in the Preliminary Statement, the following terms shall have the
following meanings:
“Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Article” means a numbered article of this Security Agreement, unless another document
is specifically referenced.
“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.
“Closing Date” means the date of the Credit Agreement.
“Collateral” shall have the meaning set forth in Article II.
“Collateral Access Agreement” means any landlord waiver or other agreement, in form
and substance satisfactory to the Administrative Agent, between the Administrative Agent and any
third party (including any bailee, consignee, customs broker, or other similar Person) in
possession of any
Collateral or any landlord of any Loan Party for any real property where any Collateral is
located, as such landlord waiver or other agreement may be amended, restated, or otherwise modified
from time to time.
“Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).
“Collateral Report” means any certificate (including any Borrowing Base Certificate),
report or other document delivered by any Grantor to the Administrative Agent or any Lender with
respect to the Collateral pursuant to any Loan Document.
“Collection Account” shall have the meaning set forth in Section 7.2.
“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section
9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
“Copyrights” means, with respect to any Person, all of such Person’s right, title, and
interest in and to the following: (a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of
any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or
payable under any of the foregoing, including, without limitation, damages or payments for past or
future infringements for any of the foregoing; (d) the right to xxx for past, present, and future
infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
“Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Deposit Account Control Agreement” means an agreement, in form and substance
satisfactory to the Administrative Agent, among any Loan Party, a banking institution holding such
Loan Party’s funds, and the Administrative Agent with respect to collection and control of all
deposits and balances held in a deposit account maintained by any Loan Party with such banking
institution.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Documents” shall have the meaning set forth in Article 9 of the UCC.
“Equipment” shall have the meaning set forth in Article 9 of the UCC.
“Event of Default” means an event described in Section 5.1.
“Excluded General Intangibles” means all General Intangibles that are not Revolving
General Intangibles.
“Excluded Payments” shall have the meaning set forth in Section 4.6(d)(iii).
“Excluded Securities” shall mean the Securities listed on Exhibit G.
“Excluded Securities Accounts” shall mean the securities accounts listed on
Exhibit H.
“Exhibit” refers to a specific exhibit to this Security Agreement, unless another
document is specifically referenced.
“Fixtures” shall have the meaning set forth in Article 9 of the UCC.
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“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.
“Goods” shall have the meaning set forth in Article 9 of the UCC.
“Instruments” shall have the meaning set forth in Article 9 of the UCC.
“Inventory” shall have the meaning set forth in Article 9 of the UCC and shall include
without limitation all Drugs and Drug Product Candidates.
“Investment Property” shall have the meaning set forth in Article 9 of the UCC.
“Lenders” means the lenders party to the Credit Agreement and their successors and
assigns.
“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.
“Licenses” means, with respect to any Person, all of such Person’s right, title, and
interest in and to (a) any and all licensing agreements or similar arrangements in and to its
Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof, and (c) all rights to xxx for past, present, and
future breaches.
“Lock Boxes” shall have the meaning set forth in Section 7.1(b).
“Patents” means, with respect to any Person, all of such Person’s right, title, and
interest in and to: (a) any and all patents and patent applications; (b) all inventions and
improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals,
extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof; (e) all rights to xxx
for past, present, and future infringements thereof; and (f) all rights corresponding to any of the
foregoing throughout the world.
“Permitted Liens” means any Lien permitted pursuant to Section 6.02 of the Credit
Agreement.
“Pledged Collateral” means all Instruments and Pledged Investment Property of the
Grantors, whether or not physically delivered to the Administrative Agent pursuant to this Security
Agreement.
“Pledged Equity Interests” shall mean (i) the Equity Interests of each domestic
Subsidiary of the Company and (ii) 65% of the Equity Interests of each foreign Subsidiary of the
Company.
“Pledged Investment Property” means (a) the Pledged Equity Interests and (b)
Investment Property, including Securities (other than Excluded Securities) and the Pledged
Securities Accounts.
“Pledged Securities Accounts” means all securities accounts of the Grantors, and all
Investment Property of the Grantors with respect to all financial assets credited thereto, other
than Excluded Securities Accounts.
“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money which are General Intangibles or which
are otherwise included as Collateral.
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“Required Secured Parties” means (a) prior to an acceleration of the Obligations under
the Credit Agreement, the Required Lenders, (b) after an acceleration of the Obligations under the
Credit Agreement but prior to the date upon which the Credit Agreement has terminated by its terms
and all of the obligations thereunder have been paid in full, Lenders holding in the aggregate at
least
662/3% of the total of the Aggregate Credit Exposure, and (c) after the Credit Agreement has
terminated by its terms and all of the Obligations thereunder have been paid in full (whether or
not the Obligations under the Credit Agreement were ever accelerated), Lenders holding in the
aggregate at least 662/3% of the aggregate net early termination payments and all other amounts then
due and unpaid from any Grantor to the Lenders under Swap Agreements, as determined by the
Administrative Agent in its reasonable discretion.
“Revolving General Intangibles” means (a) all equity interests of limited liability
companies, including the equity interests of any Subsidiary, and (b) all General Intangibles
(including payment intangibles), to the extent evidencing, relating to, or constituting Proceeds
of, any Accounts or Inventory or arising from, relating to or supporting the sale of Inventory;
provided that, by way of clarification, Copyrights, Licenses, Patents and Trademarks shall not be
considered Revolving General Intangibles.
“Scheduled Payments” shall have the meaning set forth in Section 4.6(d)(iii).
“Section” means a numbered section of this Security Agreement, unless another document
is specifically referenced.
“Securities Account Control Agreement” shall have the meaning set forth in Section
4.5.
“Security” has the meaning set forth in Article 8 of the UCC.
“State Street” shall have the meaning set forth in Section 4.5.
“State Street Control Agreement” shall have the meaning set forth in Section 4.5.
“Stock Rights” means all dividends, instruments or other distributions and any other
right or property which the Grantors shall receive or shall become entitled to receive for any
reason whatsoever with respect to, in substitution for or in exchange for any Equity Interest
constituting Collateral, any right to receive an Equity Interest and any right to receive earnings,
in which the Grantors now have or hereafter acquire any right, issued by an issuer of such Equity
Interest.
“Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.
“Trademarks” means, with respect to any Person, all of such Person’s right, title, and
interest in and to the following: (a) all trademarks (including service marks), trade names, trade
dress, and trade styles and the registrations and applications for registration thereof and the
goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and
payments now or hereafter due or payable with respect thereto, including, without limitation,
damages, claims, and payments for past and future infringements thereof; (e) all rights to xxx for
past, present, and future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights corresponding to any of the
foregoing throughout the world.
“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State
of New York or of any other state the laws of which are required as a result thereof to be applied
in connection with the attachment, perfection or priority of, or remedies with respect to,
Administrative Agent’s or any Lender’s Lien on any Collateral.
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The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.
ARTICLE II.
GRANT OF SECURITY INTEREST
GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Lenders, a security interest in all of its right, title and interest
in, to and under all of the following personal property, whether now owned by or owing to, or
hereafter acquired by or arising in favor of such Grantor, and whether owned or consigned by or to,
or leased from or to, such Grantor, and regardless of where located (all of which will be
collectively referred to as the “Collateral”), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Revolving General Intangibles;
(v) all Instruments;
(vi) all Inventory;
(vii) all Pledged Investment Property;
(viii) all cash or cash equivalents;
(ix) all letters of credit, Letter-of-Credit Rights and Supporting Obligations;
(x) all Deposit Accounts with any bank or other financial institution;
(xi) and all accessions to, substitutions for and replacements, proceeds (including Stock
Rights), insurance proceeds and products of the foregoing, together with all books and records,
customer lists, credit files, computer files, programs, printouts and other computer materials and
records related thereto and any General Intangibles at any time evidencing or relating to any of
the foregoing;
to secure the prompt and complete payment and performance of the Secured Obligations.
Notwithstanding the foregoing, if on October ___, 2007 or on any six month anniversary thereafter,
(a) Average Liquidity for the prior fiscal quarter exceeds $110,000,000 and (b) Liquidity on each
of the prior 15 Business Days exceeds $110,000,000, Administrative Agent shall terminate the
perfection of its security interest in Inventory hereunder (but not its security interest therein)
by filing UCC partial releases to its financing statements covering the Collateral in the
applicable jurisdictions; provided that if at any time after such termination, Liquidity fails at
any time to equal at least $110,000,000, each Grantor hereby authorizes Administrative Agent to
file any financing statement or amendment of a financing statement (in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable) as the Administrative
Agent in its sole discretion deems necessary or desirable to perfect Administrative Agent’s
security interest in such Grantor’s Inventory.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Administrative Agent and the Lenders that:
3.1. Title, Perfection and Priority. Such Grantor has good and valid rights in or the
power to transfer the Collateral and title to the Collateral with respect to which it has purported
to grant a security interest hereunder, free and clear of all Liens except for Liens permitted
under Section 4.1(e), and has full power and authority to grant to the Administrative Agent the
security interest in such Collateral pursuant hereto. Subject to Article II above, when financing
statements have been filed in the appropriate offices against such Grantor in the locations listed
on Exhibit E, the Administrative Agent will have a fully perfected first priority security
interest in that Collateral of such Grantor in which a security interest may be perfected by
filing, subject only to Liens permitted under Section 4.1(e).
3.2. Type and Jurisdiction of Organization, Organizational and Identification Numbers.
The type of entity of such Grantor, its state of organization, the organizational number issued to
it by its state of organization and its federal employer identification number as of the date
hereof are set forth on Exhibit A.
3.3. Principal Location. Such Grantor’s mailing address and the location of its place
of business (if it has only one) or its chief executive office (if it has more than one place of
business as of the date hereof), are disclosed in Exhibit A; as of the date hereof, such
Grantor has no other places of business except those set forth in Exhibit A.
3.4. Collateral Locations. As of the date hereof, all of such Grantor’s locations
where Collateral is located are listed on Exhibit A. All of said locations are owned by
such Grantor except for locations (i) which are leased by the Grantor as lessee and designated in
Part VII(b) of Exhibit A and (ii) at which Inventory is held in a public warehouse
or is otherwise held by a bailee or on consignment as designated in Part VII(c) of
Exhibit A.
3.5. Deposit Accounts. All of such Grantor’s Deposit Accounts as of the date hereof
are listed on Exhibit B.
3.6. Exact Names. Such Grantor’s name in which it has executed this Security
Agreement is the exact name as it appears in such Grantor’s organizational documents as of the date
hereof, as amended, as filed with such Grantor’s jurisdiction of organization. Except as set forth
on Exhibit A, as of the date hereof such Grantor has not, during the past five years, been
known by or used any other corporate or fictitious name, or been a party to any merger or
consolidation, or been a party to any acquisition.
3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor, individually in an amount in excess of
$500,000. All action by such Grantor necessary or desirable to protect and perfect the
Administrative Agent’s Lien on each item listed on Exhibit C (including the delivery of all
originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly
taken. The Administrative Agent will have a fully perfected first priority security interest in the
Collateral listed on Exhibit C, subject only to Liens permitted under Section 4.1(e).
3.8. Accounts.
(a) The names of the obligors, amounts owing, due dates and other information with respect to
its Accounts are and will be correctly stated in all material respects in all records of such
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Grantor relating thereto and in all invoices and Collateral Reports with respect thereto
furnished to the Administrative Agent by such Grantor from time to time. As of the time when each
Eligible Account arises, such Grantor shall be deemed to have represented and warranted that such
Eligible Account and all records relating thereto, are genuine and in all respects what they
purport to be.
(b) With respect to its Accounts, except as specifically disclosed on the most recent
Collateral Report, (i) all Accounts are Eligible Accounts (it being understood that Accounts that
are not Eligible Accounts shall be disclosed by category and not individually); (ii) all Accounts
represent bona fide sales of Inventory or rendering of services to Account Debtors in the ordinary
course of such Grantor’s business and are not evidenced by a judgment, Instrument or Chattel Paper;
(iii) there are no setoffs, claims or disputes existing or asserted with respect thereto and such
Grantor has not made any agreement with any Account Debtor for any extension of time for the
payment thereof, any compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a discount or
allowance allowed by such Grantor in the ordinary course of its business for prompt payment and
disclosed to the Administrative Agent; (iv) to such Grantor’s knowledge, there are no facts, events
or occurrences which in any way impair the validity or enforceability thereof or could reasonably
be expected to reduce the amount payable thereunder as shown on such Grantor’s books and records
and any invoices, statements and Collateral Reports with respect thereto; (v) such Grantor has not
received any notice of proceedings or actions which are threatened or pending against any Account
Debtor which might result in any adverse change in such Account Debtor’s financial condition; and
(vi) such Grantor has no knowledge that any Account Debtor is unable generally to pay its debts as
they become due.
(c) In addition, with respect to all of its Accounts, (i) the amounts shown on all invoices,
statements and Collateral Reports with respect thereto are actually and absolutely owing to such
Grantor as indicated thereon and are not in any way contingent; (ii) no payments after the
Liquidity Event have been or shall be made thereon except payments immediately delivered to a
Collateral Deposit Account as required pursuant to Section 7.1; and (iii) to such Grantor’s
knowledge, all Account Debtors have the capacity to contract.
3.9. Inventory. With respect to any of its Inventory scheduled or listed on the most
recent Collateral Report, (a) such Inventory that represents finished goods (other than Inventory
in transit) is located at one of such Grantor’s locations set forth on Exhibit A, (b) no
Inventory that represents finished goods (other than Inventory in transit) in excess of $2,000,000
is now, or shall at any time or times hereafter be stored at any other location except as permitted
by Section 4.1(g), (c) such Grantor has good, indefeasible and merchantable title to such Inventory
and such Inventory is not subject to any Lien or security interest or document whatsoever except
for the Lien granted to the Administrative Agent, for the benefit of the Administrative Agent and
Lenders, and except for Permitted Liens, (d) such Inventory is of good and merchantable quality,
free from any defects, (e) such Inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the payment of any monies
to any third party upon such sale or other disposition except for the licensing agreements
identified on Schedule 3.12 to the Credit Agreement and immaterial licensing agreements entered in
the ordinary course of business, (f) such Inventory has been produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended (as applicable) and in material compliance
with all FDA Laws, as amended, and all rules, regulations and orders thereunder and (g) the
completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent
following an Event of Default shall not require the consent of any Person (other than the Food and
Drug Administration, other Governmental Authorities responsible for the regulation of any Drug and
licensor party to any licensing agreement identified on Schedule 3.12 to the Credit Agreement or
any immaterial license agreement or similar agreement containing a license or sublicense entered
into by a Grantor in the ordinary course of business)
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and shall not constitute a breach or default under any contract or agreement to which such
Grantor is a party or to which such property is subject.
3.10. Filing Requirements. None of the Collateral owned by it is of a type for which
security interests or liens may be perfected by filing under any federal statute.
3.11. No Financing Statements, Security Agreements. No financing statement or
security agreement describing all or any portion of the Collateral which has not lapsed or been
terminated naming such Grantor as debtor has been filed or is of record in any jurisdiction except
(a) for financing statements or security agreements naming the Administrative Agent on behalf of
the Lenders as the secured party and (b) as permitted by Section 4.1(e).
3.12. Pledged Collateral.
(a) Exhibit D sets forth a complete and accurate list of all Pledged Collateral owned
by such Grantor. Such Grantor is the direct, sole beneficial owner and sole holder of record of
the Pledged Collateral listed on Exhibit D as being owned by it, free and clear of any
Liens, except for the security interest granted to the Administrative Agent for the benefit of the
Lenders hereunder. Such Grantor further represents and warrants that (i) all Pledged Collateral
owned by it constituting Pledged Equity Interests has been (to the extent such concepts are
relevant with respect to such Pledged Collateral) duly authorized, validly issued, are fully paid
and non-assessable, (ii) with respect to any certificates delivered to the Administrative Agent
representing an Equity Interest, either such certificates are Securities as defined in Article 8 of
the UCC as a result of actions by the issuer or otherwise, or, if such certificates are not
Securities, such Grantor has so informed the Administrative Agent so that the Administrative Agent
may take steps to perfect its security interest therein as a General Intangible, (iii) all such
Pledged Collateral held by a securities intermediary is covered by a Securities Account Control
Agreement among such Grantor, the securities intermediary and the Administrative Agent pursuant to
which the Administrative Agent has Control and (iv) to the best of such Grantor’s knowledge, all
Pledged Collateral which represents Indebtedness owed to such Grantor has been duly authorized,
authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and
binding obligation of such issuer and such issuer is not in default thereunder.
(b) In addition, (i) to the best of such Grantor’s knowledge, none of the Pledged Collateral
owned by it has been issued or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject,
(ii) there are existing no options, warrants, calls or commitments of any character whatsoever
relating to Pledged Equity Interests or which obligate the issuer of any Pledged Equity Interest to
issue additional Equity Interests, and (iii) no consent, approval, authorization, or other action
by, and no giving of notice, filing with, any governmental authority or any other Person is
required for the pledge by such Grantor of such Pledged Collateral pursuant to this Security
Agreement or for the execution, delivery and performance of this Security Agreement by such
Grantor, or for the exercise by the Administrative Agent of the voting or other rights provided for
in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to
this Security Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
(c) Except as set forth in Exhibit D, such Grantor owns 100% of the issued and
outstanding Equity Interests which constitute Pledged Equity Interests owned by it and none of the
Pledged Collateral which represents Indebtedness owed to such Grantor is subordinated in right of
payment to other Indebtedness or subject to the terms of an indenture.
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ARTICLE IV.
COVENANTS
COVENANTS
From the date of this Security Agreement, and thereafter until this Security Agreement is
terminated, each Grantor agrees that:
4.1. General.
(a) Collateral Records. Such Grantor will maintain complete and accurate books and
records with respect to the Collateral owned by it, and furnish to the Administrative Agent such
reports relating to such Collateral as the Administrative Agent shall from time to time request in
accordance with the Credit Agreement.
(b) Authorization to File Financing Statements; Ratification. Such Grantor hereby
authorizes the Administrative Agent to file, and if requested will deliver to the Administrative
Agent, all financing statements and other documents and take such other actions as may from time to
time be requested by the Administrative Agent in order to maintain a first perfected security
interest in and, if applicable, Control of, the Collateral owned by such Grantor. Any financing
statement filed by the Administrative Agent may be filed in any filing office in any UCC
jurisdiction and shall indicate such Grantor’s Collateral by any description which reasonably
approximates the description contained in this Security Agreement, and contain any other
information required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether such Grantor is an
organization, the type of organization and any organization identification number issued to such
Grantor.
(c) Further Assurances. Such Grantor will, if so requested by the Administrative
Agent, furnish to the Administrative Agent, as often as the Administrative Agent requests,
statements and schedules further identifying and describing the Collateral owned by it and such
other reports and information in connection with its Collateral as the Administrative Agent may
reasonably request, all in such detail as the Administrative Agent may specify. Such Grantor also
agrees to take any and all actions necessary to defend title to the Collateral against all persons
and to defend the security interest of the Administrative Agent in its Collateral and the priority
thereof against any Lien not expressly permitted hereunder.
(d) Disposition of Collateral. Such Grantor will not sell, lease or otherwise dispose
of the Collateral owned by it except for dispositions specifically permitted pursuant to Section
6.05 of the Credit Agreement.
(e) Liens. Such Grantor will not create, incur, or suffer to exist any Lien on the
Collateral owned by it except (i) the security interest created by this Security Agreement, and
(ii) other Permitted Liens.
(f) Other Financing Statements. Such Grantor will not authorize the filing of any
financing statement naming it as debtor covering all or any portion of the Collateral owned by it,
except in connection with Permitted Liens. Such Grantor acknowledges that it is not authorized to
file any financing statement or amendment or termination statement with respect to any financing
statement without the prior written consent of the Administrative Agent, subject to such Grantor’s
rights under Section 9-509(d)(2) of the UCC.
(g) Locations. Such Grantor will not, except in compliance with Section 4.14 hereof,
(i) maintain any Collateral owned by it at any location other than those locations listed on
Exhibit A, (ii) otherwise change, or add to, such locations without the Administrative
Agent’s prior written consent,
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or (iii) change its principal place of business or chief executive office from the location
identified on Exhibit A.
(h) Compliance with Terms. Such Grantor will perform and comply in all material
respects with all obligations in respect of the Collateral owned by it and all agreements to which
it is a party or by which it is bound relating to such Collateral.
4.2. Receivables.
(a) Certain Agreements on Receivables. Such Grantor will not make or agree to make
any discount, credit, rebate or other reduction in the original amount owing on a Receivable or
accept in satisfaction of a Receivable less than the original amount thereof, except that, (i)
pursuant to written contracts with its customers or (ii) otherwise prior to the occurrence of an
Event of Default, such Grantor may reduce the amount of Accounts arising from the sale of Inventory
in accordance with its present policies and in the ordinary course of business, including the
Borrowers’ policy of providing chargeback credit to certain of its distributors.
(b) Collection of Receivables. Except as otherwise provided in this Security
Agreement, such Grantor will collect and enforce, at such Grantor’s sole expense, all amounts due
or hereafter due to such Grantor under the Receivables owned by it in accordance with its present
policies and in the ordinary course of business.
(c) Delivery of Invoices. Such Grantor will deliver to the Administrative Agent
promptly upon its request in its Permitted Discretion duplicate invoices with respect to each
Account owned by it.
(d) Disclosure of Counterclaims on Receivables. If (i) any discount, credit or
agreement to make a rebate or to otherwise reduce the amount owing on any Receivable in excess of
$5,000,000 owned by such Grantor exists (other than rebates or reductions in accordance with its
present policies, including the Borrowers’ policy of providing chargeback credit to certain of its
distributors) or (ii) if, to the knowledge of such Grantor, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened with respect to any such
Receivable in excess of $5,000,000, such Grantor will promptly disclose such fact to the
Administrative Agent in writing, if the same occurs after the Liquidity Event. After the Liquidity
Event, such Grantor shall send the Administrative Agent a copy of each credit memorandum in excess
of $1,000,000 as soon as issued, and such Grantor shall promptly report each credit memo and each
of the facts required to be disclosed to the Administrative Agent in accordance with this
Section 4.2(d) on the Borrowing Base Certificates submitted by it.
(e) Electronic Chattel Paper. Upon request by the Administrative Agent, such Grantor
shall take all steps necessary to grant the Administrative Agent Control of all electronic chattel
paper in excess of $500,000 in accordance with the UCC and all “transferable records” as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
4.3. Inventory and Equipment.
(a) Maintenance of Goods. Such Grantor will do all things necessary to maintain,
preserve, protect and keep its Inventory in good repair and working and saleable condition, except
for damaged or defective goods arising in the ordinary course of such Grantor’s business.
(b) Returned Inventory. If an Account Debtor returns any Inventory to such Grantor
when no Event of Default exists, then such Grantor shall promptly determine the reason for such
return
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and shall issue a credit memorandum to the Account Debtor in the appropriate amount. Such
Grantor shall promptly report to the Administrative Agent any return involving an amount in excess
of $500,000. Each such report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns Inventory to such
Grantor when an Event of Default exists, such Grantor, upon the request of the Administrative
Agent, shall: (i) hold the returned Inventory in trust for the Administrative Agent; (ii) segregate
all returned Inventory from all of its other property; (iii) dispose of the returned Inventory
solely according to the Administrative Agent’s written instructions; and (iv) not issue any credits
or allowances with respect thereto without the Administrative Agent’s prior written consent. All
returned Inventory shall be subject to the Administrative Agent’s Liens thereon.
(c) Inventory Report. Promptly after the Administrative Agent’s request such Grantor,
at its own expense, shall deliver to the Administrative Agent a copy of each report delivered to
KPMG (or any other outside auditor) related to its Inventory to enable such auditor to audit such
Grantor’s financial statements.
(d) Equipment. Such Grantor shall promptly inform the Administrative Agent of any
additions to or deletions from its Equipment which could be expected to have a Material Adverse
Effect.
4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such Grantor
will (a) deliver to the Administrative Agent immediately upon execution of this Security Agreement
the originals of all Chattel Paper in an amount in excess of $500,000, Securities and Instruments
constituting Collateral owned by it (if any then exist), except that Grantors need not delivery
original Securities of Inactive Subsidiaries until the occurrence of the Liquidity Event, (b) hold
in trust for the Administrative Agent upon receipt and promptly thereafter deliver to the
Administrative Agent any such Chattel Paper, Securities and Instruments constituting Collateral,
(c) upon the Administrative Agent’s request, deliver to the Administrative Agent (and thereafter
hold in trust for the Administrative Agent upon receipt and immediately deliver to the
Administrative Agent) any Document evidencing or constituting Collateral and (d) upon the
Administrative Agent’s request, deliver to the Administrative Agent a duly executed amendment to
this Security Agreement, in the form of Exhibit F hereto (the “Amendment”),
pursuant to which such Grantor will pledge such additional Collateral. Such Grantor hereby
authorizes the Administrative Agent to attach each Amendment to this Security Agreement and agrees
that all additional Collateral owned by it set forth in such Amendments shall be considered to be
part of the Collateral.
4.5. Uncertificated Pledged Collateral. Such Grantor will permit the Administrative
Agent from time to time to cause the appropriate issuers (and, if held with a securities
intermediary, such securities intermediary) of uncertificated securities or other types of Pledged
Collateral owned by it not represented by certificates to xxxx their books and records with the
numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral
not represented by certificates and all rollovers and replacements therefor to reflect the Lien of
the Administrative Agent granted pursuant to this Security Agreement. With respect to any Pledged
Collateral owned by it, such Grantor will take any actions necessary to cause (a) the issuers of
uncertificated securities which are Pledged Investment Property and (b) any securities intermediary
which is the holder of any such Pledged Investment Property, to cause the Administrative Agent to
have and retain Control over such Pledged Investment Property. Without limiting the foregoing,
such Grantor will, with respect to any such Pledged Investment Property held with a securities
intermediary, cause such securities intermediary to enter into a control agreement covering the
applicable Pledged Investment Property (each a “Securities Account Control Agreement”) with the
Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent,
giving the Administrative Agent Control. At any time Availability is less than $50,000,000,
Administrative Agent shall provide notice to the applicable securities intermediaries that all
Pledged Securities Accounts at such securities intermediary shall be blocked and the applicable
securities intermediary shall act only upon the instruction of Administrative Agent with respect to
such securities accounts. At any time that Administrative Agent provides a Notice of Exclusive
Control (as defined in
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that certain Securities Account Control Agreement, dated as of the date hereof, among State
Street Bank and Trust Company (“State Street”), Administrative Agent, the Company and certain other
parties thereto (the “State Street Control Agreement”)) under the State Street Control Agreement,
all Investment Property of the Loan Parties held at State Street shall be immediately transferred
to a securities account at Chase. Each Loan Party agrees from time to time to execute and deliver
to Administrative Agent all agreements, documents or instruments necessary for Administrative Agent
to effect the transfer of such Investment Property without the consent or approval of any other
Person.
4.6. Pledged Collateral.
(a) Changes in Capital Structure of Issuers. Except as permitted under the Credit
Agreement, such Grantor will not (i) to the extent within the control of such Grantor, permit or
suffer any issuer of an Equity Interest constituting Pledged Equity Interests owned by it to
dissolve, merge, liquidate, retire any of its Equity Interests or other Instruments or Securities
evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets
(except for Permitted Liens and sales of assets permitted pursuant to Section 4.1(d)) or
merge or consolidate with any other entity, or (ii) vote any such Pledged Equity Interests in favor
of any of the foregoing.
(b) Issuance of Additional Securities. To the extent within the control of such
Grantor, such Grantor will not permit or suffer the issuer of any Pledged Equity Interests owned by
it to issue additional Equity Interests, any right to receive the same or any right to receive
earnings, except to such Grantor.
(c) Registration of Pledged Equity Interests. After the occurrence and during the
continuance of an Event of Default, such Grantor will permit any registerable Pledged Collateral
owned by it to be registered in the name of the Administrative Agent or its nominee at any time at
the option of the Required Secured Parties.
(d) Exercise of Rights in Pledged Collateral.
(i) Without in any way limiting the foregoing and subject to clause (ii) below, such Grantor
shall have the right to exercise all voting rights or other rights relating to the Pledged
Collateral owned by it for all purposes not inconsistent with this Security Agreement, the Credit
Agreement or any other Loan Document; provided however, that no vote or other right shall be
exercised or action taken which would have the effect of impairing the rights of the Administrative
Agent in respect of such Pledged Collateral.
(ii) Such Grantor will permit the Administrative Agent or its nominee at any time after the
occurrence and during the continuance of an Event of Default, without notice, to exercise all
voting rights or other rights relating to the Pledged Collateral owned by it, including, without
limitation, exchange, subscription or any other rights, privileges, or options pertaining to any
Pledged Investment Property as if it were the absolute owner thereof.
(iii) Such Grantor shall be entitled to collect and receive for its own use all cash dividends
and interest paid in respect of the Pledged Investment Property owned by it to the extent not in
violation of the Credit Agreement other than any of the following distributions and
payments (collectively referred to as the “Excluded Payments”): (A) dividends and interest
paid or payable other than in cash in respect of such Pledged Equity Interests, and instruments and
other property received, receivable or otherwise distributed in respect of, or in exchange for, any
Pledged Collateral; (B) dividends and other distributions paid or payable in cash in respect of
such Pledged Equity Interests in connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or paid-in capital of an issuer; and (C)
cash paid, payable or otherwise distributed, in respect of principal of,
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or in redemption of, or in exchange for, such Pledged Equity Interests; provided however, that
until actually paid, all rights to such distributions shall remain subject to the Lien created by
this Security Agreement; and
(iv) All Excluded Payments, whenever paid or made, shall be delivered to the Administrative
Agent to hold as Pledged Collateral and shall, if received by such Grantor, be received in trust
for the benefit of the Administrative Agent, be segregated from the other property or funds of such
Grantor, and be forthwith delivered to the Administrative Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
4.7. Intellectual Property.
Such Grantor shall notify the Administrative Agent promptly if it knows of any event relating
to any Patent, Trademark or Copyright (now or hereafter existing), which could reasonably be
expected to have a Material Adverse Effect.
4.8. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary of a
letter of credit in excess of $500,000 (excluding any letter of credit that is a supporting
obligation with respect to any Account) or a letter of credit that is a supporting obligation with
respect to any Account, it shall promptly, and in any event within five Business Days after
becoming a beneficiary, notify the Administrative Agent thereof and, if requested by the
Administrative Agent, agrees to use best efforts to cause the issuer and/or confirmation bank to
(i) consent to the assignment of any Letter-of-Credit Rights to the Administrative Agent and (ii)
agree to direct all payments thereunder to a Deposit Account subject to a Deposit Account Control
Agreement for application to the Secured Obligations, in accordance with Section 2.18 of the Credit
Agreement, all in form and substance reasonably satisfactory to the Administrative Agent.
4.9. Federal, State or Municipal Claims. Such Grantor will promptly notify the
Administrative Agent of any Collateral which constitutes a claim against the United States
government or any state or local government or any instrumentality or agency thereof, the
assignment of which claim is restricted by federal, state or municipal law.
4.10. No Interference. Such Grantor agrees that it will not interfere with the
permitted exercise of any right, power and remedy of the Administrative Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or
the permitted exercise or beginning of the permitted exercise by the Administrative Agent of any
one or more of such rights, powers or remedies.
4.11. Insurance.
(a) In the event any Collateral is located in any area that has been designated by the Federal
Emergency Management Agency as a “Special Flood Hazard Area”, such Grantor shall purchase and
maintain flood insurance on such Collateral (including any personal property which is located on
any real property leased by such Loan Party within a “Special Flood Hazard Area”). The amount of
flood insurance required by this Section shall at a minimum comply with applicable law, including
the Flood Disaster Protection Act of 1973, as amended.
(b) All insurance policies required hereunder and under Section 5.09 of the Credit Agreement
shall name the Administrative Agent (for the benefit of the Administrative Agent and the Lenders)
as an additional insured or as lender’s loss payee, as applicable, and shall contain loss payable
clauses, through endorsements in form and substance satisfactory to the Administrative Agent, which
provide that: (i) all proceeds thereunder with respect to any Collateral shall be payable solely to
the
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Administrative Agent; (ii) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy; and (iii) such policy and loss payable
or mortgagee clauses may be canceled, amended, or terminated only upon at least thirty days prior
written notice given to the Administrative Agent.
(c) All premiums on any such insurance shall be paid when due by such Grantor, and copies of
the policies delivered to the Administrative Agent. If such Grantor fails to obtain any insurance
as required by this Section, the Administrative Agent at the direction of the Required Secured
Parties may obtain such insurance at the Borrowers’ expense. By purchasing such insurance, the
Administrative Agent shall not be deemed to have waived any Default arising from the Grantor’s
failure to maintain such insurance or pay any premiums therefor.
4.12. Collateral Access Agreements. After an Event of Default, such Grantor shall use
commercially reasonable efforts to obtain a Collateral Access Agreement, from the lessor of each
leased property, mortgagee of owned property or bailee or consignee with respect to any warehouse,
processor or converter facility or other location where Collateral is stored or located, which
agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee, bailee or consignee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance to the
Administrative Agent.
4.13. Deposit Account Control Agreements. Such Grantor shall comply with Article VII
relating to Deposit Account Control Agreements.
4.14. Change of Name or Location; Change of Fiscal Year. Such Grantor shall not (a)
change its name as it appears in official filings in the state of its incorporation or
organization, (b) change its state of incorporation or organization, (c) change its organization
identification number, if any, issued by its state of incorporation or organization, (d) change its
federal employer identification number, or (e) change the type of entity that it is, unless in each
case, the Administrative Agent shall have received at least thirty (30) days prior written notice
of such change and such Grantor shall have taken any reasonable action required by the
Administrative Agent in connection therewith (including any action to maintain the validity,
perfection and priority of any Liens in favor of the Administrative Agent, on behalf of Lenders, in
any Collateral). Subject to Section 4.12, such Grantor shall not change its chief executive
office, principal place of business, mailing address, or corporate offices, or the location of its
records concerning the Collateral as set forth in this Security Agreement, in each case, unless (i)
the Administrative Agent shall have received written notice of such change not later than thirty
(30) days prior to such change and (ii) any new location shall be in the continental U.S.; provided
that, such Grantor shall take any reasonable action requested by the Administrative Agent in
connection with such change (including any action to maintain the validity, perfection and priority
of any Liens in favor of the Administrative Agent, on behalf of Lenders, in any Collateral). Such
Grantor shall not move any of its distribution centers or warehouse locations for finished goods
for sale in the United States outside of the continental United States. Such Grantor shall not
change its fiscal year which currently ends on December 31.
ARTICLE V.
EVENTS OF DEFAULT AND REMEDIES
EVENTS OF DEFAULT AND REMEDIES
5.1. Events of Default. The occurrence of any one or more of the following events
shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by or on behalf of any Grantor under or in connection
with this Security Agreement shall be materially false as of the date on which made.
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(b) The breach by any Grantor of any of the terms or provisions of Article IV or
Article VII.
(c) The breach by any Grantor (other than a breach which constitutes an Event of Default under
any other Section of this Article V) of any of the terms or provisions of this Security Agreement
which is not remedied within thirty (30) days after such breach; provided, however, that so long as
such breaching Grantor is diligently seeking solution of such breach, Administrative Agent may in
its sole discretion extend such thirty (30) day period to sixty (60) days.
(d) The occurrence of any “Event of Default” under, and as defined in, the Credit Agreement.
(e) Any Equity Interest which is included within the Collateral shall at any time constitute a
Security or the issuer of any such Equity Interest shall take any action to have such interests
treated as a Security unless (i) all certificates or other documents constituting such Security
have been delivered to the Administrative Agent and such Security is properly defined as such under
Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer
thereof or otherwise, or (ii) the Administrative Agent has entered into a control agreement with
the issuer of such Security or with a securities intermediary relating to such Security and such
Security is defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a
result of actions by the issuer thereof or otherwise.
5.2. Remedies.
(a) Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent may, exercise any or all of the following rights and remedies:
(i) those rights and remedies provided in this Security Agreement, the Credit Agreement, or
any other Loan Document; provided that, this Section 5.2(a) shall not be understood to limit any
rights or remedies available to the Administrative Agent and the Lenders prior to an Event of
Default;
(ii) those rights and remedies available to a secured party under the UCC (whether or not the
UCC applies to the affected Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a
debtor is in default under a security agreement;
(iii) if not previously sent pursuant to Section 4.5, give notice of sole control or any other
instruction under any Deposit Account Control Agreement, Securities Account Control Agreement or
other control agreement with any securities intermediary and take any action therein with respect
to such Collateral;
(iv) without notice (except as specifically provided in Section 8.1 or elsewhere herein),
demand or advertisement of any kind to any Grantor or any other Person, enter the premises of any
Grantor where any Collateral is located (through self-help and without judicial process) to
collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options
to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof
in one or more parcels at public or private sale or sales (which sales may be adjourned or
continued from time to time with or without notice and may take place at any Grantor’s premises or
elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and
upon such other terms as the Administrative Agent may deem commercially reasonable; and
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(v) concurrently with written notice to the applicable Grantor, transfer and register in its
name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting and all other rights as a
holder with respect thereto, to collect and receive all cash dividends, interest, principal and
other distributions made thereon and to otherwise act with respect to the Pledged Collateral as
though the Administrative Agent was the outright owner thereof.
(b) The Administrative Agent, on behalf of the Lenders, may comply with any applicable state
or federal law requirements in connection with a disposition of the Collateral and compliance will
not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.
(c) The Administrative Agent shall have the right upon any such public sale or sales and, to
the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of
the Administrative Agent and the Lenders, the whole or any part of the Collateral so sold, free of
any right of equity redemption, which equity redemption the Grantor hereby expressly releases.
(d) Until the Administrative Agent is able to effect a sale, lease, or other disposition of
Collateral, the Administrative Agent shall have the right to hold or use Collateral, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by the Administrative Agent. The Administrative
Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of the Administrative Agent’s remedies (for the benefit of the
Administrative Agent and Lenders), with respect to such appointment without prior notice or hearing
as to such appointment.
(e) Notwithstanding the foregoing, neither the Administrative Agent nor the Lenders shall be
required to (i) make any demand upon, or pursue or exhaust any of their rights or remedies against,
any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment
of the Secured Obligations or to pursue or exhaust any of their rights or remedies with respect to
any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or
any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in
any particular order, or (iii) effect a public sale of any Collateral.
(f) Each Grantor recognizes that the Administrative Agent may be unable to effect a public
sale of any or all the Pledged Collateral and may be compelled to resort to one or more private
sales thereof in accordance with clause (a) above. Each Grantor also acknowledges that any
private sale may result in prices and other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall
not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale
being private. The Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit any Grantor or the issuer of the
Pledged Collateral to register such securities for public sale under the Securities Act of 1933, as
amended, or under applicable state securities laws, even if the applicable Grantor and the issuer
would agree to do so.
5.3. Grantor’s Obligations Upon Default. Upon the request of the Administrative Agent
after the occurrence of and during the continuation of a Default, each Grantor will:
(a) assemble and make available to the Administrative Agent the Collateral and all books and
records relating thereto at any place or places specified by the Administrative Agent, whether at a
Grantor’s premises or elsewhere;
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(b) permit the Administrative Agent, by the Administrative Agent’s representatives and agents,
to enter, occupy and use any premises where all or any part of the Collateral, or the books and
records relating thereto, or both, are located, to take possession of all or any part of the
Collateral or the books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct sales of the
Collateral, without any obligation to pay the Grantor for such use and occupancy; and
(c) at its own expense, cause the independent certified public accountants then engaged by
each Grantor to prepare and deliver to the Administrative Agent and each Lender, at any time, and
from time to time, promptly upon the Administrative Agent’s request, the following reports with
respect to the applicable Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.
5.4. Grant of Intellectual Property License. For the purpose of enabling the
Administrative Agent to exercise the rights and remedies under this Article V at such time
as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each
Grantor hereby, to the extent permitted by applicable law and not otherwise prohibited pursuant to
any license, sublicense or agreement entered into by such Grantor relating to any Drug or Drug
Product Candidate, (a) grants to the Administrative Agent, for the benefit of the Administrative
Agent and the Lenders, an irrevocable, nonexclusive license (exercisable without payment of royalty
or other compensation to any Grantor) to use, license or sublicense any intellectual property
rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or printout thereof and
(b) irrevocably agrees that the Administrative Agent may sell any of such Grantor’s Inventory
directly to any person, including without limitation persons who have previously purchased the
Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of
the Administrative Agent’s rights under this Security Agreement, may sell Inventory which bears any
Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright
or Patent owned by or licensed to such Grantor and the Administrative Agent may finish any work in
process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as
provided herein.
ARTICLE VI.
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
6.1. Account Verification. The Administrative Agent may at any time, in the
Administrative Agent’s own name, in the name of a nominee of the Administrative Agent, or in the
name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account
Debtors of any such Grantor, parties to contracts with any such Grantor and obligors in respect of
Instruments of any such Grantor to verify with such Persons, to the Administrative Agent’s
satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other Receivables.
6.2. Authorization for Secured Party to Take Certain Action.
(a) Each Grantor irrevocably authorizes the Administrative Agent at any time and from time to
time in the sole discretion of the Administrative Agent and appoints the Administrative Agent as
its attorney in fact (i) to execute on behalf of such Grantor as debtor and to file financing
statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to
maintain the perfection and priority of the Administrative Agent’s security interest in the
Collateral, (ii) during the continuation of an Event of Default, to collect any cash proceeds of
the Collateral, (iii) to file a carbon, photographic or other reproduction of this Security
Agreement or any financing statement with respect to
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the Collateral as a financing statement and to file any other financing statement or amendment
of a financing statement (which does not add new collateral or add a debtor) in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Administrative Agent’s security interest in the Collateral, (iv)
to contact and enter into one or more agreements with the issuers of uncertificated securities
which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be
necessary or advisable to give the Administrative Agent Control over such Pledged Collateral, (v)
to apply the proceeds of any Collateral received by the Administrative Agent to the Secured
Obligations as provided in Section 7.3, (vi) as provided in Section 2.04 of the Credit Agreement,
to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such
Liens as are specifically permitted hereunder), (vii) to contact Account Debtors for Account
verification, (viii) to endorse any and all checks, drafts, and other instruments for the payment
of money relating to the Receivables, and (ix) to do all other acts and things necessary to carry
out this Security Agreement; and such Grantor agrees to reimburse the Administrative Agent on
demand for any reasonable payment made or any expense incurred by the Administrative Agent in
connection with any of the foregoing; provided that, this authorization shall not relieve such
Grantor of any of its obligations under this Security Agreement or under the Credit Agreement.
(b) From and after an Event of Default and during continuation thereof, each Grantor
irrevocably authorizes the Administrative Agent at any time and from time to time the sole
discretion of Administrative Agent and appoints the Administrative Agent as its attorney in fact
(i) to contact Account Debtors for any reason (other than Account verification), (ii) to demand
payment or enforce payment of the Receivables in the name of the Administrative Agent or such
Grantor, (iii) to sign such Grantor’s name on any invoice or xxxx of lading relating to the
Receivables, drafts, against any Account Debtor of the Grantor, assignments and verifications of
Receivables, (iv) to exercise all of such Grantor’s rights and remedies with respect to the
collection of the Receivables and any other Collateral, (v) to settle, adjust, compromise, extend
or renew the Receivables, (vi) to settle, adjust or compromise any legal proceedings brought to
collect Receivables, (vii) to prepare, file and sign such Grantor’s name on a proof of claim in
bankruptcy or similar document against any Account Debtor of such Grantor, (viii) to prepare, file
and sign such Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables, and (ix) to change the address for delivery of mail
addressed to such Grantor to such address as the Administrative Agent may designate and to receive,
open and dispose of all mail addressed to such Grantor; and such Grantor agrees to reimburse the
Administrative Agent on demand for any reasonable payment made or any expense incurred by the
Administrative Agent in connection with any of the foregoing; provided that, this authorization
shall not relieve such Grantor of any of its obligations under this Security Agreement or under the
Credit Agreement.
(c) All acts of said attorney or designee are hereby ratified and approved. The powers
conferred on the Administrative Agent, for the benefit of the Administrative Agent and Lenders,
under this Section 6.2 are solely to protect the Administrative Agent’s interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such
powers.
6.3. Proxy. FROM AND AFTER AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT, EACH
GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS ITS PROXY AND
ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL,
INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN
ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE ADMINISTRATIVE
AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING
GIVING OR WITHHOLDING WRITTEN
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CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF)
BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF).
EACH GRANTOR HEREBY ACKNOWLEDGES THAT THE PROXY APPOINTMENT AS ATTORNEY-IN-FACT UNDER THIS SECTION
6.5 IS ASSIGNABLE BY ADMINISTRATIVE AGENT AFTER THE OCCURRENCE OF AND DURING THE CONTINUATION OF AN
EVENT OF DEFAULT.
6.4. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF THE ADMINISTRATIVE
AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH
SECTION 8.14. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE AGENT, NOR ANY
LENDER, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE
OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING
SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT
SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
ARTICLE VII.
COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
7.1. Deposit Accounts.
(a) On or before the Closing Date, each Grantor shall execute and deliver to the
Administrative Agent Deposit Account Control Agreements for each Deposit Account maintained by such
Grantor into which all cash, checks or other similar payments relating to or constituting payments
made in respect of Receivables will be deposited (each a “Collateral Deposit Account”),
which Collateral Deposit Accounts are identified as such on Exhibit B.
(b) After the Closing Date, before opening or replacing any Collateral Deposit Account, other
Deposit Account, or establishing a lockbox service account (“Lock Boxes”) with any bank or
financial institution, each Grantor shall notify Administrative Agent thereof and cause each bank
or financial institution in which it seeks to open (i) a Deposit Account, to enter into a Deposit
Account Control Agreement with the Administrative Agent in order to give the Administrative Agent
Control of such Deposit Account, or (ii) a Lock Box, to enter into a lock box agreement with the
Administrative Agent in order to give the Administrative Agent Control of the Lock Box. In the
case of Deposit Accounts or Lock Boxes maintained with Lenders, the terms of such letter shall be
subject to the provisions of the Credit Agreement regarding setoffs.
(c) Within thirty (30) days after the Liquidity Event, each Grantor shall close all Deposit
Accounts not maintained at Chase and establish Chase as its sole depository bank.
7.2. Collection of Receivables. At all times after the Liquidity Event, each Grantor
shall cause all funds deposited into any Collateral Deposit Account to be swept on a daily basis
into a blocked Deposit Account in the name of the Administrative Agent maintained with Chase (the
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“Collection Account”). The Administrative Agent shall hold and apply funds received
into the Collection Account as provided by the terms of Section 7.3. At no time after the
Liquidity Event shall any Grantor remove any item from a Lock Box or from a Collateral Deposit
Account without the Administrative Agent’s prior written consent. If any Grantor should refuse or
neglect to notify any Account Debtor to forward payments directly to a Lock Box subject to a Lock
Box Agreement, after notice from the Administrative Agent, the Administrative Agent shall be
entitled to make such notification directly to Account Debtor.
7.3. Application of Proceeds; Deficiency. All amounts deposited in the Collection
Account shall be deemed received by the Administrative Agent in accordance with Section 2.18 of the
Credit Agreement and shall, after having been credited in immediately available funds to the
Collection Account, be applied (and allocated) by Administrative Agent in accordance with Section
2.10(b) of the Credit Agreement; provided that, so long as no Liquidity Event has occurred and no
Event of Default has occurred and is continuing, any collections which are received into the
Collection Account shall be deposited into the Borrower Representative’s Funding Account rather
than being used to reduce amounts owing under the Credit Agreement. From and after an Event of
Default and during continuance thereof, the Administrative Agent shall require all other cash
proceeds of the Collateral, which are not required to be applied to the Obligations pursuant to
Section 2.11 of the Credit Agreement, to be deposited in a special non-interest bearing cash
collateral account with the Administrative Agent and held there as security for the Secured
Obligations. No Grantor shall have any control whatsoever over said cash collateral account. Any
such proceeds of the Collateral shall be applied in the order set forth in Section 2.18 of the
Credit Agreement unless a court of competent jurisdiction shall otherwise direct. The balance, if
any, after all of the Secured Obligations have been satisfied, shall be deposited by the
Administrative Agent into the Borrower Representative’s general operating account with Chase. The
Grantors shall remain liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Secured Obligations, including any attorneys’ fees and other
expenses incurred by Administrative Agent or any Lender to collect such deficiency.
ARTICLE VIII.
GENERAL PROVISIONS
GENERAL PROVISIONS
8.1. Waivers. Each Grantor hereby waives notice of the time and place of any public
sale or the time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under applicable law, any
notice made shall be deemed reasonable if sent to the Grantors, addressed as set forth in Article
IX, at least ten days prior to (i) the date of any such public sale or (ii) the time after which
any such private sale or other disposition may be made. To the maximum extent permitted by
applicable law, each Grantor waives all claims, damages, and demands against the Administrative
Agent or any Lender arising out of the repossession, retention or sale of the Collateral, except
such as arise solely out of the gross negligence or willful misconduct of the Administrative Agent
or such Lender as finally determined by a court of competent jurisdiction. To the extent it may
lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Administrative Agent or any Lender, any
valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all
rights or defenses it may have as a surety now or hereafter existing which, but for this provision,
might be applicable to the sale of any Collateral made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this Security Agreement, or otherwise.
Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
8.2. Limitation on Administrative Agent’s and Lenders’ Duty with Respect to the
Collateral. The Administrative Agent shall have no obligation to clean-up or otherwise prepare
the
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Collateral for sale. The Administrative Agent and each Lender shall use reasonable care with
respect to the Collateral in its possession or under its control. Neither the Administrative Agent
nor any Lender shall have any other duty as to any Collateral in its possession or control or in
the possession or control of any agent or nominee of the Administrative Agent or such Lender, or
any income thereon or as to the preservation of rights against prior parties or any other rights
pertaining thereto. To the extent that applicable law imposes duties on the Administrative Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it
is commercially reasonable for the Administrative Agent (i) to fail to incur expenses deemed
significant by the Administrative Agent to prepare Collateral for disposition or otherwise to
transform raw material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to
fail to exercise collection remedies against Account Debtors or other Persons obligated on
Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise
collection remedies against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same
business as such Grantor, for expressions of interest in acquiring all or any portion of such
Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of the types included
in the Collateral or that have the reasonable capacity of doing so, or that match buyers and
sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to
purchase insurance or credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative Agent a guaranteed
return from the collection or disposition of Collateral, or (xi) to the extent deemed appropriate
by the Administrative Agent, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section
8.2 is to provide non-exhaustive indications of what actions or omissions by the Administrative
Agent would be commercially reasonable in the Administrative Agent’s exercise of remedies against
the Collateral and that other actions or omissions by the Administrative Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 8.2. Without
limitation upon the foregoing, nothing contained in this Section 8.2 shall be construed to grant
any rights to any Grantor or to impose any duties on the Administrative Agent that would not have
been granted or imposed by this Security Agreement or by applicable law in the absence of this
Section 8.2.
8.3. Compromises and Collection of Collateral. The Grantors and the Administrative
Agent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors
with respect to certain of the Receivables, that certain of the Receivables may be or become
uncollectible in whole or in part and that the expense and probability of success in litigating a
disputed Receivable may exceed the amount that reasonably may be expected to be recovered with
respect to a Receivable. In view of the foregoing, each Grantor agrees that the Administrative
Agent may at any time and from time to time, if an Event of Default has occurred and is continuing,
compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount
as the Administrative Agent in its sole discretion shall determine or abandon any Receivable, and
any such action by the Administrative Agent shall be commercially reasonable so long as the
Administrative Agent acts in good faith based on information known to it at the time it takes any
such action.
8.4. Secured Party Performance of Debtor Obligations. Without having any obligation
to do so, the Administrative Agent may perform or pay any obligation which any Grantor has agreed
to perform or pay in this Security Agreement (subject to any cure periods set forth in Article V)
and the Grantors shall reimburse the Administrative Agent for any amounts paid by the
Administrative
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Agent pursuant to this Section 8.4. The Grantors’ obligation to reimburse the Administrative
Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.
8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees
that a breach of any of the covenants contained in Sections 4.1(d), 4.1(e), 4.4, 4.5, 4.6, 4.7,
4.8, 4.9, 4.11, 4.13, 4.14, 5.3, or 8.6 or in Article VII will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and Lenders have no adequate
remedy at law in respect of such breaches and therefore agrees, without limiting the right of the
Administrative Agent or the Lenders to seek and obtain specific performance of other obligations of
the Grantors contained in this Security Agreement, that the covenants of the Grantors contained in
the Sections referred to in this Section 8.5 shall be specifically enforceable against the
Grantors.
8.6. Dispositions Not Authorized. No Grantor is authorized to sell or otherwise
dispose of the Collateral except as set forth in Section 4.1(d) and notwithstanding any course of
dealing between any Grantor and the Administrative Agent or other conduct of the Administrative
Agent, no authorization to sell or otherwise dispose of the Collateral (except as set forth in
Section 4.1(d)) shall be binding upon the Administrative Agent or the Lenders unless such
authorization is in writing signed by the Administrative Agent with the consent or at the direction
of the Required Secured Parties.
8.7. No Waiver; Amendments; Cumulative Remedies. No delay or omission of the
Administrative Agent or any Lender to exercise any right or remedy granted under this Security
Agreement shall impair such right or remedy or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such right or remedy shall not
preclude any other or further exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of this Security
Agreement whatsoever shall be valid unless in writing signed by the Administrative Agent with the
concurrence or at the direction of the Lenders required under Section 9.02 of the Credit Agreement
and then only to the extent in such writing specifically set forth. All rights and remedies
contained in this Security Agreement or by law afforded shall be cumulative and all shall be
available to the Administrative Agent and the Lenders until the Secured Obligations have been paid
in full.
8.8. Limitation by Law; Severability of Provisions. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this Security Agreement
invalid, unenforceable or not entitled to be recorded or registered, in whole or in part. Any
provision in any this Security Agreement that is held to be inoperative, unenforceable, or invalid
in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to this end the provisions of this
Security Agreement are declared to be severable.
8.9. Reinstatement. This Security Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Grantor for liquidation or
reorganization, should any Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all or any significant part
of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is
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rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
8.10. Benefit of Agreement. The terms and provisions of this Security Agreement shall
be binding upon and inure to the benefit of the Grantors, the Administrative Agent and the Lenders
and their respective successors and assigns (including all persons who become bound as a debtor to
this Security Agreement), except that no Grantor shall have the right to assign its rights or
delegate its obligations under this Security Agreement or any interest herein, without the prior
written consent of the Administrative Agent. No sales of participations, assignments, transfers,
or other dispositions of any agreement governing the Secured Obligations or any portion thereof or
interest therein shall in any manner impair the Lien granted to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, hereunder.
8.11. Survival of Representations. All representations and warranties of the Grantors
contained in this Security Agreement shall survive the execution and delivery of this Security
Agreement.
8.12. Taxes and Expenses. Any taxes (including income taxes) payable or ruled payable
by Federal or State authority in respect of this Security Agreement shall be paid by the Grantors,
together with interest and penalties, if any. The Grantors shall reimburse the Administrative
Agent for any and all out-of-pocket expenses and internal charges (including reasonable attorneys’,
auditors’ and accountants’ fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Administrative Agent) paid or incurred by the
Administrative Agent in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and in the audit, analysis, administration,
collection, preservation or sale of the Collateral (including the expenses and charges associated
with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by
the Grantors in the performance of actions required pursuant to the terms hereof shall be borne
solely by the Grantors.
8.13. Headings. The title of and section headings in this Security Agreement are for
convenience of reference only, and shall not govern the interpretation of any of the terms and
provisions of this Security Agreement.
8.14. Termination. This Security Agreement shall continue in effect (notwithstanding
the fact that from time to time there may be no Secured Obligations outstanding) until (i) the
Credit Agreement has terminated pursuant to its express terms and (ii) all of the Secured
Obligations have been indefeasibly paid and performed in full (or with respect to any outstanding
Letters of Credit, a cash deposit or Supporting Letter of Credit has been delivered to the
Administrative Agent as required by the Credit Agreement) and no commitments of the Administrative
Agent or the Lenders which would give rise to any Secured Obligations are outstanding.
8.15. Entire Agreement. This Security Agreement embodies the entire agreement and
understanding between the Grantors and the Administrative Agent relating to the Collateral and
supersedes all prior agreements and understandings between the Grantors and the Administrative
Agent relating to the Collateral.
8.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8.17. CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY U.S.
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FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH GRANTOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS
TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE
OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN NEW YORK, NEW YORK.
8.18. WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
8.19. Indemnity. Each Grantor hereby agrees to indemnify the Administrative Agent and
the Lenders, and their respective successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind and nature
(including, without limitation, all expenses of litigation or preparation therefor whether or not
the Administrative Agent or any Lender is a party thereto) imposed on, incurred by or asserted
against the Administrative Agent or the Lenders, or their respective successors, assigns, agents
and employees, other than due to the gross negligence or the willful misconduct of such Person (as
finally determined by a court of competent jurisdiction), in any way relating to or arising out of
this Security Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery,
lease, possession, use, operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not discoverable by the
Administrative Agent or the Lenders or any Grantor, and any claim for Patent, Trademark or
Copyright infringement).
8.20. Counterparts. This Security Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Security Agreement by signing any such counterpart.
ARTICLE IX.
NOTICES
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given under this
Security Agreement shall be sent by United States mail, telecopier, personal delivery or nationally
established overnight courier service, and shall be deemed received (a) when received, if sent by
hand or overnight courier service, or mailed by certified or registered mail notices or (b) when
sent, if sent by telecopier (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient), in each case addressed to the Grantors at the notice address set forth on
Exhibit A, and to the Administrative Agent and the Lenders at the addresses set forth in
accordance with Section 9.01 of the Credit Agreement.
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9.2. Change in Address for Notices. Each of the Grantors, the Administrative Agent
and the Lenders may change the address for service of notice upon it by a notice in writing to the
other parties.
ARTICLE X.
THE ADMINISTRATIVE AGENT
THE ADMINISTRATIVE AGENT
JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the Lenders hereunder
pursuant to Article VIII of the Credit Agreement. It is expressly understood and agreed by the
parties to this Security Agreement that any authority conferred upon the Administrative Agent
hereunder is subject to the terms of the delegation of authority made by the Lenders to the
Administrative Agent pursuant to the Credit Agreement, and that the Administrative Agent has agreed
to act (and any successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article VIII. Any successor Administrative Agent appointed pursuant
to Article VIII of the Credit Agreement shall be entitled to all the rights, interests and benefits
of the Administrative Agent hereunder.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Grantors and the Administrative Agent have executed this Security
Agreement as of the date first above written.
| GRANTORS: | ||||||
| MGI PHARMA, INC., a Minnesota corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Executive Vice President and Chief Financial Officer | ||||||
| MGI GP, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
Signature Page to Pledge and Security Agreement
| MGI OM, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| MGI PHARMA BIOLOGICS, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| PROQUEST PHARMACEUTICALS, INC., a Delaware corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| MGI PRODUCTS, INC., a Maryland corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| MGI MSL, LLC, a Maryland limited liability company | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| MGI (CANADA) INC., a Delaware corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
Signature Page to Pledge and Security Agreement
| GPI IP, LLC, a Delaware limited liability company | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Treasurer and Chief Financial Officer | ||||||
| JPMORGAN CHASE BANK, N.A., as Administrative Agent | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: Xxxxx Xxxxxxx | ||||||
| Title: Vice President | ||||||
Signature Page to Pledge and Security Agreement
EXHIBIT A
(See Sections 3.2, 3.3, 3.4, 3.9 and 9.1 of Security Agreement)
NOTICE ADDRESS FOR ALL GRANTORS
| c/o | ||||
| Attention: | ||||
| Facsimile: |
INFORMATION AND COLLATERAL LOCATIONS OF {Insert name of applicable Grantor}
| I. | Name of Grantor: | |
| II. | State of Incorporation or Organization: | |
| III. | Type of Entity: | |
| IV. | Organizational Number assigned by State of Incorporation or Organization: | |
| V. | Federal Identification Number: | |
| VI. | Place of Business (if it has only one) or Chief Executive Office (if more than one place of business) and Mailing Address: |
| Attention: | ||||
| VII. | Locations of Collateral: |
| (a) | Properties Owned by the Grantor: | ||
| (b) | Properties Leased by the Grantor (Include Landlord’s Name): | ||
| (c) | Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of Warehouse Operator or other Bailee or Consignee): |
Exhibit A — Page 1
INFORMATION AND COLLATERAL LOCATIONS OF {Insert name of applicable Grantor}
| I. | Name of Grantor: | |
| II. | State of Incorporation or Organization: | |
| III. | Type of Entity: | |
| IV. | Organizational Number assigned by State of Incorporation or Organization: | |
| V. | Federal Identification Number: |
VI. Place of Business (if it has only one) or Chief Executive Office (if more than one place of
business) and Mailing Address:
| Attention: | ||||
| VII. | Locations of Collateral: |
| (a) | Properties Owned by the Grantor: | ||
| (b) | Properties Leased by the Grantor (Include Landlord’s Name): | ||
| (c) | Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of Warehouse Operator or other Bailee or Consignee): |
[NOTE: ADD ADDITIONAL INFORMATION PAGE FOR EACH GRANTOR]
Exhibit A — Page 2
EXHIBIT B
(See Section 3.5 of Security Agreement)
DEPOSIT ACCOUNTS
| Check here if | Description of | |||||||||||||||
| Deposit Account is | Deposit Account | |||||||||||||||
| a Collateral Deposit | if not a Collateral | |||||||||||||||
| Name of Grantor | Name of Institution | Account Number | Account | Deposit Account | ||||||||||||
Exhibit B
EXHIBIT C
(See Section 3.7 of Security Agreement)
LETTER OF CREDIT RIGHTS
CHATTEL PAPER
Exhibit C
EXHIBIT D
(See Section 3.12 of Security Agreement and Definition of “Pledged Collateral”)
LIST OF PLEDGED COLLATERAL, SECURITIES AND OTHER INVESTMENT PROPERTY
STOCKS
| Percentage of | ||||||||||||||||||||
| Certificate | Number of | Outstanding | ||||||||||||||||||
| Name of Grantor | Issuer | Number(s) | Shares | Class of Stock | Shares | |||||||||||||||
BONDS
| Name of | ||||||||||||||||||||
| Grantor | Issuer | Number | Face Amount | Coupon Rate | Maturity | |||||||||||||||
GOVERNMENT SECURITIES
| Name of | ||||||||||||||||||||||||
| Grantor | Issuer | Number | Type | Face Amount | Coupon Rate | Maturity | ||||||||||||||||||
Exhibit D — Page 1
OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED)
(CERTIFICATED AND UNCERTIFICATED)
| Percentage Ownership | ||||||||||||
| Name of Grantor | Issuer | Description of Collateral | Interest | |||||||||
[Add description of custody accounts or arrangements with securities intermediary, if applicable]
Exhibit D — Page 2
EXHIBIT E
(See Section 3.1 of Security Agreement)
OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED
Exhibit E
EXHIBIT F
(See Section 4.4 of Security Agreement)
AMENDMENT
This
Amendment, dated , ___ is delivered pursuant to Section 4.4 of the Security
Agreement referred to below. All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Security Agreement. The undersigned hereby certifies that the
representations and warranties in Article III of the Security Agreement are and continue to be true
and correct. The undersigned further agrees that this Amendment may be attached to that certain
Pledge and Security Agreement, dated ___, ___, between the undersigned, as the
Grantors, and JPMorgan Chase Bank, N.A., as the Administrative Agent, (the “Security
Agreement”) and that the Collateral listed on Schedule I to this Amendment shall be and
become a part of the Collateral referred to in said Security Agreement and shall secure all Secured
Obligations referred to in said Security Agreement.
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Exhibit F
SCHEDULE I TO AMENDMENT
STOCKS
| Percentage of | ||||||||||
| Name of | Certificate | Number of | Outstanding | |||||||
| Grantor | Issuer | Number(s) | Shares | Class of Stock | Shares | |||||
BONDS
| Name of | ||||||||||
| Grantor | Issuer | Number | Face Amount | Coupon Rate | Maturity | |||||
GOVERNMENT SECURITIES
| Name of | ||||||||||||
| Grantor | Issuer | Number | Type | Face Amount | Coupon Rate | Maturity | ||||||
OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED)
(CERTIFICATED AND UNCERTIFICATED)
| Percentage Ownership | ||||||||||||
| Name of Grantor | Issuer | Description of Collateral | Interest | |||||||||
[Add description of custody accounts or arrangements with securities intermediary, if applicable]
Schedule I to Exhibit F
EXHIBIT G
EXCLUDED SECURITIES
Exhibit G
EXHIBIT H
EXCLUDED SECURITIES ACCOUNTS
Exhibit H
