GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT (this "Agreement") made as of this 26th
day of June 2002, between MTS PACKAGING SYSTEMS, INC., MEDICATION MANAGEMENT
TECHNOLOGY, INC., CLEARWATER MEDICAL SERVICES, INC., MEDICAL TECHNOLOGY
LABORATORIES, INC., MEDICATION MANAGEMENT SYSTEMS, INC., SYSTEMS PROFESSIONALS,
INC., CART-XXXX, INC., VANGARD PHARMACEUTICAL PACKAGING, INC. LIFESERV
TECHNOLOGIES, INC., PERFORMANCE PHARMACY SYSTEMS, INC., AND MTS SALES &
MARKETING, INC., each a Florida corporation (collectively, the "Debtors" and
each a "Debtor"), and EUREKA, I, L.P., as Collateral Agent under the Purchase
Agreement (in such capacity together with its successors in such capacity, the
"Collateral Agent").
WHEREAS, MEDICAL TECHNOLOGY SYSTEMS, INC. (the "Company") has entered into
the Securities Purchase Agreement, dated the date hereof, with EUREKA I, L.P.,
as investor (the "Investor"), and the Collateral Agent (herein, as amended or
modified from time to time, the "Purchase Agreement"), providing, subject to the
terms and conditions thereof, for purchase from the Company by the Investor of,
among other things, $4,000,000 aggregate principal amount of Notes (as defined
in the Purchase Agreement);
WHEREAS, pursuant to the Guaranty (as defined in the Purchase Agreement)
Debtors have guaranteed all of the Company's obligations to the Collateral Agent
and/or the Noteholders under the Purchase Agreement, this Notes and the other
Transaction Documents (as defined in the Purchase Agreement); and
WHEREAS, the parties hereto wish to provide for the terms and conditions
upon which the Liabilities shall be secured;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. SECURITY INTEREST.
X. Xxxxx of Security Interest to Collateral Agent. As security for the
payment or other satisfaction of all Liabilities, each Debtor hereby grants
and assigns to the Collateral Agent for the benefit of the Collateral Agent
and the Noteholders a continuing lien and security interest in the
following property of each Debtor, whether now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located: (a)
all Accounts and all Goods whose sale, lease or other disposition by the
Company has given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, the Company; (b) all Chattel Paper,
Instruments, Documents and General Intangibles (including, without
limitation, all patents, patent applications, trademarks, trademark
applications, tradenames, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer
lists, tax refund claims, claims against carriers and shippers, guarantee
claims, contracts rights, payment intangibles, security interests, security
deposits and rights to indemnification); (c) all Inventory; (d) all Goods
(other than Inventory), including, without limitation, Equipment, vehicles
and Fixtures; (e) all Investment Property; (f) all Deposit Accounts, bank
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accounts, deposits and cash; (g) all Letter of Credit Rights, (h) all
Commercial Tort Claims, (i) all ownership interests in the issued and
outstanding capital stock or other equity interests in each of its
Subsidiaries, (j) any other property of such Debtor now or hereafter in the
possession, custody or control of the Collateral Agent or the Noteholders
or any agent or any parent, affiliate or subsidiary of Collateral Agent or
the Noteholders or any participant with Collateral Agent or the Noteholders
in the loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise); and (k) all
additions and accessions to, substitutions for, and replacements, products
and all Proceeds of the foregoing property, including, without limitation,
proceeds of all insurance policies insuring the foregoing property, and all
of such Debtor's books and records relating to any of the foregoing and to
such Debtor's business (collectively, the "Collateral"). The capitalized
terms "Account," "Account Debtor," "Chattel Paper," "Commercial Tort
Claims," "Deposit Accounts," "Documents," "Electronic Chattel Paper,"
"Equipment," "Fixtures," "General Intangibles," "Goods," "Instruments,"
"Inventory," "Investment Property," "Letter-of-Credit Rights," "Proceeds"
and "Tangible Chattel Paper" shall have the respective meanings assigned to
such terms, as of the date of this Agreement, in the Pennsylvania Uniform
Commercial Code, as the same may be in effect from time to time.
Capitalized terms not defined herein shall have the meaning assigned such
term in the Purchase Agreement or in the Guaranty.
B. Possessory Collateral. Promptly after the receipt by any Debtor of
any portion of the Collateral evidenced by an agreement, Instrument or
Document, including, without limitation, any Tangible Chattel Paper or any
Investment Property consisting of certificated securities, such Debtor
shall deliver the original thereof to the Collateral Agent together with an
appropriate endorsement or other specific evidence of assignment thereof to
the Collateral Agent (in form and substance acceptable to the Collateral
Agent). If an endorsement or assignment of any such items shall not be made
for any reason, the Collateral Agent is hereby irrevocably authorized, as
such Debtor's attorney and the Collateral Agent-in-fact, to endorse or
assign the same on such Debtor's behalf.
C. Electronic Chattel Paper. To the extent that a Debtor obtains or
maintains any Electronic Chattel Paper, such Debtor shall create, store and
assign the record or records comprising the Electronic Chattel Paper in
such a manner that (a) a single authoritative copy of the record or records
exists which is unique, identifiable and, except as otherwise provided in
clauses (d), (e) and (f) below, unalterable, (b) the authoritative copy
identifies the Collateral Agent as the assignee of the record or records,
(c) the authoritative copy is communicated to and maintained by the
Collateral Agent or its designated custodian, (d) copies or revisions that
add or change an identified assignee of the authoritative copy can only be
made with the participation of the Collateral Agent, (e) each copy of the
authoritative copy and any copy of a copy is readily identifiable as a copy
that is not the authoritative copy and (f) any revision of the
authoritative copy is readily identifiable as an authorized or unauthorized
revision.
2. INTERCREDITOR AGREEMENT.
The priority of the security interests granted hereby, the exercise by the
Collateral Agent of any of its rights or remedies hereunder, and the covenants
of the Company contained herein (in each case whether or not so expressed) are
subject in all respects to the Intercreditor Agreement (as such term is defined
in the Purchase Agreement). Any reference to property in the possession of, or
to property pledged or to be pledged to, the Collateral Agent will be deemed to
refer to, or to be satisfied by, property in the possession of or pledged to the
"Senior Lender" under the Intercreditor Agreement. The security interests
created in favor of the Collateral Agent hereunder are subordinate and junior to
security interests created in favor of the Senior Lender (as such term is
defined in the Intercreditor Agreement).
3. LIABILITIES DEFINED.
The term "Liability" or "Liabilities" shall mean the indebtedness and
liabilities of each Debtor to the Collateral Agent and/or the Noteholders under
the Guaranty, this Agreement, the Notes, the Purchase Agreement and the Security
Documents (as defined in the Purchase Agreement), including but not limited to
all obligations to perform acts or refrain from taking any action and any
obligations of Debtors owing to the Collateral Agent and/or the Noteholders.
4. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until an Event of Default shall have occurred, each Debtor shall have the
right, except as otherwise provided in this Agreement, in the ordinary course of
Debtor's business, to: (a) sell, lease or furnish under contracts of service any
of Debtor's inventory normally held by Debtor for any such purpose; and (b) use
and consume any raw materials, work in process or other materials normally held
by Debtor for such purpose; provided, however, that a sale in the ordinary
course of business shall not include any transfer or sale in satisfaction,
partial or complete, of a debt owed by Debtor. The Collateral Agent through its
officers, employees or agents, shall have the right, at any time and from time
to time in the Collateral Agent's name, in the name of a nominee of the
Collateral Agent or in any Debtor's name, after the occurrence of an Event of
Default, to verify the validity, amount or any other matter relating to any
Debtor's accounts, by mail, telephone, telegraph or otherwise. Debtors shall
reimburse the Collateral Agent, on demand, for all costs, fees and expenses
incurred by the Collateral Agent in this regard.
5. WARRANTIES AND COVENANTS.
Each Debtor warrants and agrees that:
A. All of the Collateral is and will at all times be owned by each
Debtor free and clear of all liens and security interests, except for (i)
the security interests granted hereunder and (ii) Permitted Liens.
B. The office where each Debtor keeps its books, records and accounts
(or copies thereof) concerning the Collateral, such Debtor's principal
place of business and all of Debtor's other places of business, locations
of Collateral and post office boxes are as set forth in Exhibit A; each
Debtor shall promptly (but in no event less than ten (10) days prior
thereto) advise the Collateral Agent in writing of the proposed opening of
any new place of business, the closing of any existing place of business,
any change in the location of such Debtor's books, records and accounts (or
copies thereof) or the opening or closing of any post office box of such
Debtor.
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C. The Collateral, including, without limitation, all equipment, is
and shall be kept only at the addresses set forth on the first page of this
Agreement or on Exhibit A, and at other locations within the continental
United States of which has been advised by each Debtor in writing. None of
the Collateral will be removed from such location without prior written
notice to the Collateral Agent.
D. Each Debtor shall keep the Collateral properly housed and insure
the Collateral at all times against all hazards reasonably specified by the
Collateral Agent, including but not limited to fire, theft and risks
covered by extended coverage insurance. Said policies of insurance shall be
reasonably satisfactory to the Collateral Agent as to form, amount and
insurer. All policies shall provide for at least thirty (30) days prior
written notice to the Collateral Agent of cancellation or non-renewal and
shall contain an endorsement, in form and substance acceptable to the
Collateral Agent, showing loss under such policies payable to the
Collateral Agent as contemplated by the Intercreditor Agreement. The
Collateral Agent may act as attorney-in-fact for each Debtor in making,
adjusting and settling any claims under any such insurance policies with
respect to the Collateral. Each Debtor hereby assigns to the Collateral
Agent, for its benefit and for the benefit of the Noteholders, all of such
Debtor's right, title and interest to any insurance policies insuring the
Collateral, including all rights to receive the proceeds of insurance, and
directs all insurers to pay all such proceeds directly to the Collateral
Agent and authorizes the Collateral Agent to endorse such Debtor's name on
any instrument for such payment. In addition, each Debtor will maintain at
such Debtor's expense, such public liability and third party property
damage insurance as shall be acceptable to the Collateral Agent. Each such
policy shall contain an endorsement showing the Collateral Agent as an
additional insured thereunder and providing that the insurance company
shall give the Collateral Agent at least 30 days prior written notice
before any such policy shall be altered or cancelled. Each Debtor shall
furnish certificates, policies or endorsements to the Collateral Agent as
proof of all such insurance described above, together with evidence of
payment of premiums, and if such Debtor fails to do so, the Collateral
Agent, upon prior notice to such Debtor, is authorized but not required to
obtain such insurance at such Debtor's expense.
E. No Debtor will sell, lease, transfer, assign or otherwise dispose
of any of the Collateral or any interest therein without the prior written
consent of the Collateral Agent in each instance or as otherwise permitted
in this Agreement or the Purchase Agreement and the Security Agreement with
the Company.
F. Each Debtor will notify the Collateral Agent of any destruction of,
or any substantial damage to, any portion of the Collateral material to the
operations of such Debtor.
G. Each Debtor will not permit any liens or security interests to
attach to any of the Collateral, except those specified in Section 5.A
hereof.
H. Each Debtor will pay when due all taxes, license fees and
assessments relating to the Collateral which, if unpaid, could result in a
lien on the Collateral, subject to the terms of the Purchase Agreement.
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I. Each Debtor shall be liable to the Collateral Agent and/or the
Noteholders for any expenditures by the Collateral Agent and/or the
Noteholders for the maintenance and preservation of the Collateral,
including but not limited to taxes, levies, insurance and repairs, and for
the repossession, holding, preparation for sale, and the sale or other
disposition, of the Collateral (including reasonable attorneys' and
accountants' fees and expenses actually incurred), as well as all damages
for breach of warranty, misrepresentation, or breach of covenant by such
Debtor, and all such liabilities shall be included in the definition of
Liabilities herein, shall be secured by the security interest granted
herein, and shall be payable upon demand.
J. Each Debtor will execute financing statements and any other
documents required by the Collateral Agent (and pay the cost of filing or
recording the same in all public offices deemed necessary or desirable by
the Collateral Agent) and do such other acts and things as the Collateral
Agent may deem necessary in its reasonable discretion, to perfect or
maintain the security interest granted herein and the priority thereof or
to effectuate the purposes of this Agreement. Each Debtor irrevocably
hereby makes, constitutes and appoints the Collateral Agent (and all person
designated by the Collateral Agent for that purpose) as such Debtor's true
and lawful attorney and the Collateral Agent-in-fact to execute such
financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect the
Collateral Agent's and the Noteholders' security interest in the
Collateral.
K. Each Debtor will upon reasonable advance notice (and at all times
following the occurrence of an Event of Default without notice of any kind)
allow the Collateral Agent or its agents during normal business hours to
examine and inspect the Collateral as well as such Debtor's books and
records, and to make extracts and copies of them, such Debtor shall pay to
the Collateral Agent, on demand, all customary fees and out-of-pocket
expenses incurred by the Collateral Agent in connection with the foregoing.
L. Each Debtor will keep Debtor's equipment in good condition and
repair, reasonable wear and tear excepted.
M. Each Debtor will report, in form satisfactory to the Collateral
Agent, such information as the Collateral Agent may reasonably request
regarding the Collateral in a manner consistent with the terms of the
Purchase Agreement and the Security Agreement with the Company regarding
the Collateral; such reports shall be for such periods, shall reflect such
Debtor's records as at such time and shall be rendered with such frequency
as the Collateral Agent may reasonably designate. All information
heretofore or hereafter furnished by each Debtor to the Collateral Agent is
or will be true and correct in all material respects as of the date with
respect to which such information is or will be furnished.
N. Each Debtor's name is as set forth on the signature page of this
Agreement, and Debtor uses no other tradename or division name in the
operation of Debtor's business. Debtor will give prior notice to the
Collateral Agent of any intended change of Debtor's name, or the use of any
tradename or trade style, and will notify the Collateral Agent when such
change or use becomes effective.
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O. Each Debtor has the right and power and is duly authorized to enter
into and perform Debtor's Liabilities hereunder, and Debtor's execution,
performance and delivery of this Agreement does not and will not conflict
with the provisions of any statute, regulation, ordinance or rule of law,
or with the provisions of any agreement, contract or other document which
may now or hereafter be binding on Debtor.
P. Each Debtor shall, at the request of the Collateral Agent, indicate
on its records concerning the Collateral a notation, in form reasonably
satisfactory to the Collateral Agent, of the security interest of the
Collateral Agent hereunder, and such Debtor shall not maintain duplicates
or copies of such records at any address any other than such Debtor's
principal place of business.
6. EVENT OF DEFAULT.
"Event of Default" shall have the meaning set forth in the Purchase
Agreement.
7. RIGHTS AND REMEDIES.
During the continuance of an Event of Default, the Collateral Agent shall
have all rights and remedies provided by law, including but not limited to those
of a secured party under the Uniform Commercial Code as adopted in the
Commonwealth of Pennsylvania, in addition to the rights and remedies provided
herein. Upon the instruction of the Required Noteholders, and subject to the
terms of the Intercreditor Agreement, the Collateral Agent may require each
Debtor to assemble the Collateral and make it available to the Collateral Agent
at a place to be designated by the Collateral Agent and permit the Collateral
Agent to enter each Debtor's places of business and conduct a sale of the
Collateral at such location. If notice to any Debtor of intended disposition of
Collateral is required by law, ten (10) days notice shall constitute reasonable
notification. In the event the Collateral Agent institutes an action to recover
any Collateral or seeks recovery of any Collateral by way of prejudgment remedy
in an action against any Debtor, each Debtor waives the posting of any bond
which might otherwise be required. All of the Collateral Agent's rights and
remedies shall be cumulative and none are exclusive. While an Event of Default
is continuing, all payments made by or on behalf of any Debtor and all credits
due any Debtor under this Agreement and under any other agreement between any
Debtor and the Collateral Agent and/or the Noteholders may be applied to the
Liabilities in whatever order and amounts the Collateral Agent chooses.
8. FEES, COSTS AND CHARGES.
Each Debtor shall be obligated to reimburse the Collateral Agent and the
Noteholders, as part of the Liabilities, for all fees, costs or charges of any
kind actually incurred by the Collateral Agent in connection with the Guaranty
and this Agreement, including without limitation, any reasonable fees, costs or
charges incurred by the Collateral Agent and the Noteholders in enforcing its
rights and remedies under the Guaranty and this Agreement.
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9. MISCELLANEOUS.
Any failure or delay by the Collateral Agent or the Noteholders to require
strict performance by any Debtor of any of the provisions, warranties, terms and
conditions contained herein, in the Guaranty or in any other agreement, document
or instrument, shall not affect the Collateral Agent's or the Noteholders' right
to demand strict compliance and performance therewith, and any waiver of any
Event of Default shall not waive or affect any other Event of Default, whether
prior or subsequent thereto, and whether of the same or of a different type.
None of the warranties, conditions, provisions and terms contained herein, or in
the Guaranty or in any other agreement, document or instrument shall be deemed
to have been waived by any act or knowledge of the Collateral Agent or the
Noteholders, their agents, officers or employees, other than pursuant to an
instrument in writing, signed by an officer of the Collateral Agent or the
Noteholders, directed to Debtors and specifying such waiver.
A. Any notice under this Agreement shall be addressed to the parties
at their respective addresses set below, or to such other address as either
party designates to the other in the manner herein described.
B. In the event that any provision hereof shall be deemed to be
invalid by any court, such invalidity shall not affect the remainder of
this Agreement.
C. This Agreement shall be binding upon and for the benefit of the
parties hereto and their respective successors and assigns.
D. THE VALIDITY, INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. EACH DEBTOR
HEREBY CONSENTS TO THE JURISDICTION OF ALL COURTS IN PHILADELPHIA COUNTY,
PENNSYLVANIA.
E. EACH DEBTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY
OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED
TORTIOUS CONDUCT BY DEBTOR, THE COLLATERAL AGENT OR THE NOTEHOLDERS OR
WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE
RELATIONSHIP BETWEEN DEBTOR, THE COLLATERAL AGENT OR LENDER. IN NO EVENT
SHALL SECURED PARTY BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.
F. EACH DEBTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY COLLATERAL AGENT OF ITS RIGHTS TO REPOSSESS
THE COLLATERAL OF DEBTOR WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR HEARING (EXCEPT FOR
NOTICES REQUIRED BY LAW).
-S-1-
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on this ____ day of June 2002.
EUREKA I, L.P., as the Collateral Agent
By: EUREKA MANAGEMENT, L.P.,
its sole general partner
By: BERWIND CAPITAL PARTNERS, LLC,
its sole general partner
By:_______________________________
Xxxxxxxxx X. Xxxxx
President
Address: 000 Xxxxxxxx Xxxx,
Xxxxx 000,
Xxxxxxx, Xxxxxxxxxxxx 00000
MTS PACKAGING SYSTEMS, INC.
By: ____________________________________
Name/Title: _____________________________
Address: _______________________________
MEDICATION MANAGEMENT CLEARWATER MEDICAL SERVICES,
TECHNOLOGIES, INC. INC.
By: ______________________________ By: ______________________________
Name/Title: ______________________ Name/Title: ______________________
Address: ______________________ Address: _________________________
______________________ _________________________
-S-2-
MEDICAl TECHNOLOGY MEDICATION MANAGEMENT
LABORATORIES, INC. SYSTEMS, INC.
By: ______________________________ By: ______________________________
Name/Title: ______________________ Name/Title: ______________________
Address: ______________________ Address: _________________________
______________________ _________________________
SYSTEMS PROFESSIONALS, INC. CART-XXXX, INC.
By: ______________________________ By: ______________________________
Name/Title: ______________________ Name/Title: ______________________
Address: ______________________ Address: _________________________
______________________ _________________________
VANGARD PHARMACEUTICAL LIFESERV TECHNOLOGIES, INC.
PACKAGING, INC.
By: ______________________________ By: ______________________________
Name/Title: ______________________ Name/Title: ______________________
Address: ______________________ Address: _________________________
______________________ _________________________
PERFORMANCE PHARMACY MTS SALES & MARKETING, INC.
SYSTEMS, INC.
By: ______________________________ By: ______________________________
Name/Title: ______________________ Name/Title: ______________________
Address: ______________________ Address: _________________________
______________________ _________________________
EXHIBIT A
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