EXHIBIT 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement"),
dated as of July 21, 2004, is by and among the parties identified as "Grantors"
on the signature pages hereto and such other parties as may become Grantors
hereunder after the date hereof (individually a "Grantor", and collectively the
"Grantors") and BANK OF AMERICA, N.A., as collateral agent (in such capacity,
the "Collateral Agent") for the holders of the Secured Obligations referenced
below.
W I T N E S S E T H
WHEREAS, $60 million in credit facilities had been established in favor of
the Borrower pursuant to that credit agreement, dated as of June 5, 1997, among
the Borrower, the guarantors identified therein, the banks identified therein
and Bank of America, N.A., as agent;
WHEREAS, the Borrower requested, and the Lenders agreed pursuant to the
terms of that Amended and Restated Credit Agreement, dated as of June 13, 2002
(as amended, modified and supplemented, the "Existing Credit Agreement"), to
amend and restate the credit agreement in order to incorporate certain
modifications, including, among other things, an increase in the aggregate size
of the credit facilities;
WHEREAS, the Borrower has requested certain modifications to the existing
credit facilities, including, among other things, an increase in the aggregate
size of the credit facilities;
WHEREAS, the Lenders have agreed to make the requested modifications to
the existing credit facilities pursuant to the terms of the Second Amended and
Restated Credit Agreement, dated as of the date hereof (as amended, modified and
supplemented, the "Credit Agreement"), by and among the Borrower, the
Guarantors, the Lenders and the Collateral Agent; and
WHEREAS, this Security Agreement is given in amendment to, restatement of
and substitution for the security agreement provided in the Existing Credit
Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions and Interpretive Provisions.
(a) Capitalized terms used and not otherwise defined herein shall have
the meanings provided in the Credit Agreement. In addition, the following terms,
which are defined in the UCC as in effect in the State of New York on the date
hereof, are used herein as so defined: Accession, Account, As-Extracted
Collateral, Chattel Paper, Commercial Tort Claim, Commingled Goods, Consumer
Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm
Products, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment
Property, Letter-of-Credit Right, Manufactured Home, Proceeds, Software,
Standing Timber, Supporting Obligation and Tangible Chattel Paper.
(b) As used herein:
"Collateral" has the meaning provided in Section 2 hereof.
"Copyright License" means any written agreement, naming any Grantor
as licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 6.9 of the Credit
Agreement.
"Copyrights" means (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright Office
including, without limitation, any thereof referred to in Schedule 6.9 of
the Credit Agreement, and (b) all renewals thereof including, without
limitation, any thereof referred to in Schedule 6.9 of the Credit
Agreement.
"Patent License" means any agreement providing for the grant by or
to a Grantor of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitation, any thereof referred
to in Schedule 6.9 of the Credit Agreement.
"Patents" means (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any letters patent referred to in Schedule 6.9 of the Credit
Agreement, and (b) all applications for letters patent of the United
States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any thereof
referred to in Schedule 6.9 of the Credit Agreement.
"Secured Obligations" means, without duplication, (i) all of the
obligations of the Credit Parties to the Lenders (including the Swingline
Lender and the Issuing Lender), the Administrative Agent and the
Collateral Agent, whenever arising, under the Credit Agreement or any of
the other Credit Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with respect to any
Credit Party, regardless of whether such interest is an allowed claim
under any Debtor Relief Law), whether now existing or hereafter arising,
due or to become due, direct or indirect, absolute or contingent,
howsoever evidenced, created, held or acquired, whether primary,
secondary, direct, contingent, or joint and several, as such obligations
may be amended, modified, increased, extended, renewed or replaced from
time to time, (ii) all of the obligations owing by the Credit Parties to
the Lenders or any affiliate of a Lender, whenever arising, under any
Hedging Agreement to the extent permitted under the Credit Agreement,
(iii) all obligations under any Treasury Management Agreement between any
Credit Party and any Lender or Affiliate of a Lender and (iv) all costs
and expenses incurred in connection with enforcement and collection of the
Secured Obligations, including reasonable attorneys' fees actually
incurred but excluding the allocated cost of internal counsel.
"Trademark License" means any written agreement providing for the
grant by or to a Grantor of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 6.9 of the Credit
Agreement.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any state
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule 6.9 of the Credit Agreement, and (b) all renewals thereof.
"UCC" means the Uniform Commercial Code.
"Work" means any work that is subject to copyright protection
pursuant to Title 17 of the United States Code.
(c) Interpretive Provisions. The terms and provisions of Section 1.2 of
the Credit Agreement (as the same may be amended or modified as provided
therein) are incorporated herein by reference to the same extent and with the
same effect as if fully set forth herein.
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2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Grantor hereby grants to the Collateral Agent, for the benefit of the
holders of the Secured Obligations, a continuing security interest in, and a
right to set off against, any and all right, title and interest of such Grantor
in and to the following (collectively, the "Collateral"), whether now owned or
existing or owned, acquired, or arising hereafter:
(a) all Accounts;
(b) all cash and currency;
(c) all Chattel Paper;
(d) those Commercial Tort Claims identified on Schedule 2(d)
attached hereto;
(e) all Copyrights;
(f) all Copyright Licenses;
(g) all Deposit Accounts;
(h) all Documents;
(i) all Equipment;
(j) all Fixtures;
(k) all General Intangibles (other than any Capital Stock in the
Excluded Subsidiary);
(l) all Instruments;
(m) all Inventory;
(n) all Investment Property;
(o) all Letter-of-Credit Rights;
(p) all Patents;
(q) all Patent Licenses;
(r) all Software;
(s) all Supporting Obligations;
(t) all Trademarks;
(u) all Trademark Licenses;
(v) all other personal property of such Grantor of whatever type
or description (other than any Capital Stock in the Excluded Subsidiary);
and
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(w) to the extent not otherwise included, all Accessions and all
Proceeds of any and all of the foregoing.
Notwithstanding anything to the contrary contained herein, the
security interests granted under this Security Agreement shall not extend
to (i) any property that is subject to a Lien securing purchase money
Indebtedness permitted under the Credit Agreement pursuant to documents
that prohibit such Grantor from granting any other Liens in such property,
(ii) any lease, license or other contract if the grant of a security
interest in such lease, license or contract in the manner contemplated by
this Security Agreement, under the terms thereof and under applicable law,
is prohibited and would result in the termination thereof; provided in
each case that any such limitation on the security interests granted
hereunder shall only apply to the extent that (A) after commercially
reasonable efforts not involving the expenditure of money, consent from
the relevant party or parties has not been obtained and (B) any such
prohibition could not be rendered ineffective pursuant to the UCC or any
other applicable law (including any Debtor Relief Law) or principles of
equity or (iii) any Excluded Property.
The Grantors and the Collateral Agent, on behalf of the holders of the
Secured Obligations, hereby acknowledge and agree that the security interest
created hereby in the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or hereafter arising
and (ii) is not to be construed as an assignment of any Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of the
Grantors shall remain liable under each of the Accounts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account. Neither the Collateral Agent nor any holder of the Secured
Obligations shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Security
Agreement or the receipt by the Collateral Agent or any holder of the Secured
Obligations of any payment relating to such Account pursuant hereto, nor shall
the Collateral Agent or any holder of the Secured Obligations be obligated in
any manner to perform any of the obligations of a Grantor under or pursuant to
any Account (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts that may
have been assigned to it or to which it may be entitled at any time or times.
(b) Once during each calendar year or at any time after the occurrence
and during the continuation of an Event of Default, the Collateral Agent shall
have the right, but not the obligation, to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Grantors shall furnish all such assistance and information as
the Collateral Agent may require in connection with such test verifications. At
any time and from time to time, upon the Collateral Agent's request and at the
expense of the Grantors, the Grantors shall cause independent public accountants
or others satisfactory to the Collateral Agent to furnish to the Collateral
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts. The Collateral Agent in its own name or in the
name of others may communicate with account debtors on the Accounts to verify
with them to the Collateral Agent's satisfaction the existence, amount and terms
of any Accounts.
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4. Representations and Warranties. Each Grantor hereby represents and
warrants to the Collateral Agent, for the benefit of the holders of the Secured
Obligations, that so long as any of the Secured Obligations remains outstanding
and until all of the commitments relating thereto have been terminated:
(a) Legal Name; State of Incorporation; Chief Executive Office. As
of the date hereof:
(i) Each Grantor's exact legal name, state of incorporation
or formation and chief executive office as of the Closing Date is
(and for the four months prior to the Closing Date was) as set forth
on Schedule 6.19(c) of the Credit Agreement.
(ii) Other than as set forth on Schedule 4(a)(ii) attached
hereto, no Grantor has been party to a merger, consolidation or
other change in structure or used any tradename in the four months
prior to the Closing Date.
(iii) All of the Collateral of the Grantor is (and for the
four months prior to the Closing Date was) at the locations set
forth on Schedule 6.20(b) of the Credit Agreement.
(b) Ownership. Each Grantor is the legal and beneficial owner of
its Collateral and has the right to pledge, sell, assign or transfer the
same.
(c) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Collateral Agent, for the benefit
of the holders of the Secured Obligations, in the Collateral of such
Grantor and, when properly perfected by filing, shall constitute a valid
perfected security interest in such Collateral, to the extent such
security interest can be perfected by filing under the UCC, free and clear
of all Liens except for Permitted Liens.
(d) Types of Collateral. None of the Collateral consists of, or is
the Accessions or the Proceeds of, As-Extracted Collateral, Consumer
Goods, Farm Products, Manufactured Homes, or Standing Timber.
(e) Accounts. (i) Each Account of the Grantors and the papers and
documents relating thereto are genuine and in all material respects what
they purport to be, (ii) each Account arises out of (A) a bona fide sale
of goods sold and delivered by such Grantor (or is in the process of being
delivered) or (B) services theretofore actually rendered by such Grantor
to, the account debtor named therein, (iii) no Account of a Grantor is
evidenced by any Instrument or Chattel Paper unless such Instrument or
Chattel Paper has been theretofore endorsed over and delivered to, or
submitted to the control of, the Collateral Agent and (iv) no surety bond
was required or given in connection with any Account of a Grantor or the
contracts or purchase orders out of which they arose.
(f) Copyrights, Patents and Trademarks. All Copyrights, Copyright
Licenses, Patents, Patent Licenses, registered Trademarks, Trademark
applications and Trademark Licenses owned by any Grantor in its own name
are set forth on Schedule 6.9 of the Credit Agreement.
5. Covenants. Each Grantor covenants that, so long as any of the
Secured Obligations remains outstanding and until all of the commitments
relating thereto have been terminated, such Grantor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral
or any interest therein, except (i) as permitted under the Credit
Agreement and (ii) no Grantor shall be required to defend or maintain any
Trademark, Trademark License, Copyright, Copyright License,
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Patent or Patent Licens, if, in the reasonable business judgment of such
Grantor such action would not be advisable.
(b) Preservation of Collateral. Keep the Collateral in good order,
condition and repair and not use the Collateral in violation of the
provisions of this Security Agreement or any other agreement relating to
the Collateral or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Tangible Chattel Paper/Documents. If any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Tangible Chattel Paper, or if any
property constituting Collateral shall be stored or shipped subject to a
Document, such Grantor shall ensure that such Instrument, Tangible Chattel
Paper or Document is either in the possession of such Grantor at all times
or, if requested by the Collateral Agent, is immediately delivered to the
Collateral Agent, duly endorsed in a manner satisfactory to the Collateral
Agent. Such Grantor shall ensure that any Collateral consisting of
Tangible Chattel Paper is marked with a legend acceptable to the
Collateral Agent indicating the Collateral Agent's security interest in
such Tangible Chattel Paper.
(d) Change in Structure, Location or Type. Not change its name or
state of formation or be party to a merger, consolidation or other change
in structure or use any tradename without providing written notice to the
Collateral Agent within thirty (30) days thereof.
(e) Inspection. Upon reasonable notice, and during reasonable
hours, at all times allow the Collateral Agent or its representatives to
visit and inspect the Collateral as set forth in Section 7.10 of the
Credit Agreement.
(f) Authorization. Authorize the Collateral Agent to prepare and
file such financing statements (including renewal statements), amendments
and supplements or such other instruments as the Collateral Agent may from
time to time reasonably deem necessary or appropriate in order to perfect
and maintain the security interests granted hereunder in accordance with
the UCC.
(g) Perfection of Security Interest. Authorize or execute and
deliver to the Collateral Agent such agreements, assignments or
instruments (including affidavits, notices, reaffirmations and amendments
and restatements of existing documents, as the Collateral Agent may
reasonably request) and do all such other things as the Collateral Agent
may reasonably deem necessary or appropriate (i) to assure to the
Collateral Agent the effectiveness and priority of its security interests
hereunder, including (A) such financing statements (including renewal
statements), amendments and supplements or such other instruments as the
Collateral Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in
accordance with the UCC, (B) with regard to Copyrights, a Notice of Grant
of Security Interest in Copyrights for filing with the United States
Copyright Office in the form of Schedule 5(f)(i) attached hereto, (C) with
regard to Patents, a Notice of Grant of Security Interest in Patents for
filing with the United States Patent and Trademark Office in the form of
Schedule 5(f)(ii) attached hereto and (D) with regard to Trademarks, a
Notice of Grant of Security Interest in Trademarks for filing with the
United States Patent and Trademark Office in the form of Schedule
5(f)(iii) attached hereto, (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the
Collateral Agent of its rights and interests hereunder. To that end, each
Grantor agrees that the Collateral Agent may file one or more financing
statements (with collateral descriptions broader and/or less specific than
the description of the Collateral contained herein) disclosing the
Collateral Agent's security interest in any or all of the Collateral of
such Grantor without such Grantor's signature thereon, and further each
Grantor also hereby irrevocably makes, constitutes and appoints the
Collateral Agent, its nominee or any other Person whom the Collateral
Agent may designate, as
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such Grantor's attorney-in-fact with full power and for the limited
purpose to sign in the name of such Grantor any such financing statements
(including renewal statements), amendments and supplements, notices or any
similar documents that in the Collateral Agent's reasonable discretion
would be necessary or appropriate in order to perfect and maintain
perfection of the security interests granted hereunder, such power, being
coupled with an interest, being and remaining irrevocable so long as the
Secured Obligations remain unpaid and until the commitments relating
thereto shall have been terminated. Each Grantor hereby agrees that a
carbon, photographic or other reproduction of this Security Agreement or
any such financing statement is sufficient for filing as a financing
statement by the Collateral Agent without notice thereof to such Grantor
wherever the Collateral Agent may in its sole discretion desire to file
the same (the Collateral Agent shall give prompt notice to the Borrower
after any such filing but the failure to give such notice shall not affect
the validity of such filing). In the event for any reason the law of any
jurisdiction other than New York becomes or is applicable to the
Collateral of any Grantor or any part thereof, or to any of the Secured
Obligations, such Grantor agrees to authorize and/or execute and deliver
all such instruments and to do all such other things as the Collateral
Agent in its sole discretion reasonably deems necessary or appropriate to
preserve, protect and enforce the security interests of the Collateral
Agent under the law of such other jurisdiction (and, if a Grantor shall
fail to do so promptly upon the request of the Collateral Agent, then the
Collateral Agent may execute any and all such requested documents on
behalf of such Grantor pursuant to the power of attorney granted
hereinabove). If any Collateral is in the possession or control of a
Grantor's agents and the Collateral Agent so requests, such Grantor agrees
to notify such agents in writing of the Collateral Agent's security
interest therein and, upon the Collateral Agent's request, instruct them
to hold all such Collateral for the account of the holders of the Secured
Obligations and subject to the Collateral Agent's instructions. Each
Grantor agrees to mark its books and records to reflect the security
interest of the Collateral Agent in the Collateral.
(h) Control. Execute and deliver all agreements, assignments,
instruments or other documents as the Collateral Agent shall reasonably
request for the purpose of obtaining and maintaining control within the
meaning of the UCC with respect to any Collateral consisting of Deposit
Accounts, Investment Property, Letter-of-Credit Rights and Electronic
Chattel Paper.
(i) Treatment of Accounts. Not grant or extend the time for
payment of any Account, or compromise or settle any Account for less than
the full amount thereof, or release any Person or property, in whole or in
part, from payment thereof, or allow any credit or discount thereon, other
than as normal and customary in the ordinary course of a Grantor's
business or as required by law.
(j) Insurance. Insure, repair and replace the Collateral of such
Grantor as set forth in the Credit Agreement. All insurance proceeds shall
be subject to the security interest of the Collateral Agent hereunder.
(k) Commercial Tort Claims.
(i) Promptly notify the Collateral Agent in writing of the
initiation of any Commercial Tort Claim before any Governmental
Authority by or in favor of such Grantor or any of its Subsidiaries.
(ii) Execute and deliver such statements, documents and
notices and do and cause to be done all such things as the
Collateral Agent may reasonably deem necessary or appropriate, or as
are required by law, to create, perfect and maintain the Collateral
Agent's security interest in any Commercial Tort Claim.
6. Advances by Holders of the Secured Obligations. On failure of any
Grantor to perform any of the covenants and agreements contained herein, the
Collateral Agent may, at its sole option and in its sole
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discretion, perform the same and in so doing may expend such sums as the
Collateral Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential Lien,
expenditures made in defending against any adverse claim and all other
expenditures that the Collateral Agent or the holders of the Secured Obligations
may make for the protection of the security hereof or that may be compelled to
make by operation of law. All such sums and amounts so expended shall be
repayable by the Grantors on a joint and several basis (subject to Section 25
hereof) promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Revolving Loans that are Base Rate Loans. No such
performance of any covenant or agreement by the Collateral Agent or the holders
of the Secured Obligations on behalf of any Grantor, and no such advance or
expenditure therefor, shall relieve the Grantors of any default under the terms
of this Security Agreement, the other Credit Documents or any other documents
relating to the Secured Obligations. The holders of the Secured Obligations may
make any payment hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien,
title or claim except to the extent such payment is being contested in good
faith by a Grantor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
7. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, the Collateral Agent and the holders of the
Secured Obligations shall have, in addition to the rights and remedies provided
herein, in the Credit Documents, in any other documents relating to the Secured
Obligations, or by law (including, without limitation, levy of attachment and
garnishment), the rights and remedies of a secured party under the UCC of the
jurisdiction applicable to the affected Collateral and, further, the Collateral
Agent may, with or without judicial process or the aid and assistance of others,
(i) enter on any premises on which any of the Collateral may be located and,
without resistance or interference by the Grantors, take possession of the
Collateral, (ii) dispose of any Collateral on any such premises, (iii) require
the Grantors to assemble and make available to the Collateral Agent at the
expense of the Grantors any Collateral at any place and time designated by the
Collateral Agent that is reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Grantors hereby
waives to the fullest extent permitted by law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at public or private
sale, by one or more contracts, in one or more parcels, for cash, upon credit or
otherwise, at such prices and upon such terms as the Collateral Agent deems
advisable, in its sole discretion (provided such prices and terms shall be
commercially reasonable and otherwise subject to any and all mandatory legal
requirements). Each of the Grantors acknowledges that any private sale
referenced above may be at prices and on terms less favorable to the seller than
the prices and terms that might have been obtained at a public sale and agrees
that such private sale shall be deemed to have been made in a commercially
reasonable manner. Neither the Collateral Agent's compliance with applicable law
nor its disclaimer of warranties relating to the Collateral shall be considered
to adversely affect the commercial reasonableness of any sale. In addition to
all other sums due the Collateral Agent and the holders of the Secured
Obligations with respect to the Secured Obligations, the Grantors shall pay the
Collateral Agent and each of the holders of the Secured Obligations all
reasonable documented costs and expenses incurred by the Collateral Agent or any
such holder of the Secured Obligations, including, but not limited to,
reasonable attorneys' fees actually incurred (excluding the allocated cost of
internal counsel) and court costs, in obtaining or liquidating the Collateral,
in enforcing payment of the Secured Obligations, or in the prosecution or
defense of any action or proceeding by or against the Collateral Agent or the
holders of the Secured Obligations or the Grantors concerning any matter arising
out of or connected with this Security Agreement, any Collateral or the Secured
Obligations, including, without limitation, any of the foregoing arising in,
arising under or related to a case under any
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Debtor Relief Law. To the extent the rights of notice cannot be legally waived
hereunder, each Grantor agrees that any requirement of reasonable notice shall
be met if such notice is personally served on or mailed, postage prepaid, to the
Borrower in accordance with the notice provisions of Section 11.1 of the Credit
Agreement at least ten Business Days before the time of sale or other event
giving rise to the requirement of such notice. The Collateral Agent and the
holders of the Secured Obligations shall not be obligated to make any sale or
other disposition of the Collateral regardless of notice having been given. To
the extent permitted by law, any holder of the Secured Obligations may be a
purchaser at any such sale. To the extent permitted by applicable law, each of
the Grantors hereby waives all of its rights of redemption with respect to any
such sale. Subject to the provisions of applicable law, the Collateral Agent and
the holders of the Secured Obligations may postpone or cause the postponement of
the sale of all or any portion of the Collateral by announcement at the time and
place of such sale, and such sale may, without further notice, to the extent
permitted by law, be made at the time and place to which the sale was postponed,
or the Collateral Agent and the holders of the Secured Obligations may further
postpone such sale by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an Event of
Default and during the continuation thereof, whether or not the Collateral Agent
has exercised any or all of its rights and remedies hereunder, each Grantor will
promptly upon request of the Collateral Agent instruct all account debtors to
remit all payments in respect of Accounts to a mailing location selected by the
Collateral Agent. In addition, the Collateral Agent shall have the right to
enforce any Grantor's rights against its customers and account debtors, and the
Collateral Agent or its designee may notify any Grantor's customers and account
debtors that the Accounts of such Grantor have been assigned to the Collateral
Agent or of the Collateral Agent's security interest therein, and may (either in
its own name or in the name of a Grantor or both) demand, collect (including
without limitation by way of a lockbox arrangement), receive, take receipt for,
sell, sue for, compound, settle, compromise and give acquittance for any and all
amounts due or to become due on any Account, and, in the Collateral Agent's
discretion, file any claim or take any other action or proceeding to protect and
realize upon the security interest of the holders of the Secured Obligations in
the Accounts. Each Grantor acknowledges and agrees that the Proceeds of its
Accounts remitted to or on behalf of the Collateral Agent in accordance with the
provisions hereof shall be solely for the Collateral Agent's own convenience and
that such Grantor shall not have any right, title or interest in such Accounts
or in any such other amounts except as expressly provided herein. The Collateral
Agent and the holders of the Secured Obligations shall have no liability or
responsibility to any Grantor for acceptance of a check, draft or other order
for payment of money bearing the legend "payment in full" or words of similar
import or any other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Grantor hereby agrees to
indemnify the Collateral Agent and the holders of the Secured Obligations from
and against all liabilities, damages, losses, actions, claims, judgments, costs,
expenses, charges and reasonable attorneys' fees actually incurred (excluding
the allocated cost of internal counsel) suffered or incurred by the Collateral
Agent or the holders of the Secured Obligations (each, an "Indemnified Party")
because of the maintenance of the foregoing arrangements except as relating to
or arising out of the gross negligence or willful misconduct of an Indemnified
Party or its officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by a
Grantor, its directors, shareholders or creditors or an Indemnified Party or any
other Person or any other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, the
Collateral Agent shall have the right to enter and remain upon the various
premises of the Grantors without cost or charge to the Collateral Agent, and use
the same, together with materials, supplies, books and records of the Grantors
for the purpose of collecting and liquidating the Collateral, or for preparing
for sale and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise. In addition, the Collateral Agent may remove Collateral,
or any part thereof, from such premises and/or any records with respect thereto,
in order to effectively collect or liquidate such Collateral.
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(d) Nonexclusive Nature of Remedies. Failure by the Collateral Agent or
the holders of the Secured Obligations to exercise any right, remedy or option
under this Security Agreement, any other Credit Document, any other documents
relating to the Secured Obligations, or as provided by law, or any delay by the
Collateral Agent or the holders of the Secured Obligations in exercising the
same, shall not operate as a waiver of any such right, remedy or option. No
waiver hereunder shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Collateral Agent or the holders of
the Secured Obligations shall only be granted as provided herein. To the extent
permitted by law, neither the Collateral Agent, the holders of the Secured
Obligations shall be liable hereunder for any acts or omissions or for any error
of judgment or mistake of fact or law other than their gross negligence or
willful misconduct hereunder. The rights and remedies of the Collateral Agent
and the holders of the Secured Obligations under this Security Agreement shall
be cumulative and not exclusive of any other right or remedy that the Collateral
Agent or the holders of the Secured Obligations may have.
(e) Retention of Collateral. To the extent permitted under applicable
law, in addition to the rights and remedies hereunder, upon the occurrence of an
Event of Default, the Collateral Agent may, after providing the notices required
by Sections 9-620 and 9-621 of the UCC or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, accept or retain
all or any portion of the Collateral in satisfaction of the Secured Obligations.
Unless and until the Collateral Agent shall have provided such notices, however,
the Collateral Agent shall not be deemed to have accepted or retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale, collection
or realization are insufficient to pay all amounts to which the Collateral Agent
or the holders of the Secured Obligations are legally entitled, the Grantors
shall be jointly and severally liable for the deficiency (subject to Section 25
hereof), together with interest thereon at the default rate specified in Section
3.1 of the Credit Agreement for Revolving Loans that are Base Rate Loans,
together with the costs of collection and reasonable attorneys' fees actually
incurred (excluding the allocated cost of internal counsel). Any surplus
remaining after the full payment and satisfaction of the Secured Obligations
shall be returned to the Grantors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
8. Release of Collateral. Upon request, the Collateral Agent shall
promptly deliver to the Borrower (at the Borrower's expense) appropriate release
documentation to the extent the release of Collateral is permitted under, and on
the terms and conditions set forth in, the Credit Agreement; provided that any
such release, or the substitution of any of the Collateral for other Collateral,
will not alter, vary or diminish in any way the force, effect, lien, pledge or
security interest of this Security Agreement as to any and all Collateral not
expressly released or substituted, and this Security Agreement shall continue as
a first priority lien (subject to Permitted Liens) on any and all Collateral not
expressly released or substituted.
9. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of attorney contained
herein, each Grantor hereby designates and appoints the Collateral Agent, on
behalf of the holders of the Secured Obligations, and each of its designees or
agents, as attorney-in-fact of such Grantor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuation of an Event of Default:
(i) to demand, collect, settle, compromise and adjust, and give
discharges and releases concerning the Collateral, all as the Collateral
Agent may reasonably deem appropriate;
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(ii) to commence and prosecute any actions at any court for the
purposes of collecting any of the Collateral and enforcing any other right
in respect thereof;
(iii) to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Collateral
Agent may reasonably deem appropriate;
(iv) to receive, open and dispose of mail addressed to a Grantor
and endorse checks, notes, drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or documents evidencing
payment, shipment or storage of the goods giving rise to the Collateral on
behalf of and in the name of such Grantor, or securing, or relating to
such Collateral;
(v) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral;
(vi) to direct any parties liable for any payment in connection
with any of the Collateral to make payment of any and all monies due and
to become due thereunder directly to the Collateral Agent or as the
Collateral Agent shall direct;
(vii) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral;
(viii) to sell, assign, transfer, make any agreement in respect of,
or otherwise deal with or exercise rights in respect of, any Collateral or
the goods or services that have given rise thereto, as fully and
completely as though the Collateral Agent were the absolute owner thereof
for all purposes;
(ix) to adjust and settle claims under any insurance policy
relating thereto;
(x) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security
and pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Collateral Agent may reasonably deem
appropriate in order to perfect and maintain the security interests and
liens granted in this Security Agreement and in order to fully consummate
all of the transactions contemplated therein;
(xi) to institute any foreclosure proceedings that the Collateral
Agent may reasonably deem appropriate; and
(xii) to do and perform all such other acts and things as the
Collateral Agent may reasonably deem appropriate in connection with the
Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations shall remain
outstanding and until all of the commitments relating thereto shall have been
terminated. The Collateral Agent shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Collateral Agent in this Security Agreement, and shall
not be liable for any failure to do so or any delay in doing so. The Collateral
Agent shall not be liable for any act or omission or for any error of judgment
or any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Collateral Agent
solely to protect, preserve and realize upon its security interest in the
Collateral.
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(b) Performance by the Collateral Agent of Obligations. If any Grantor
fails to perform any agreement or obligation contained herein, the Collateral
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by the Grantors on a joint and several basis (subject to Section 25
hereof).
(c) The Collateral Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while being held by
the Collateral Agent hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that the Grantors shall be responsible for preservation of all rights in the
Collateral, and the Collateral Agent shall be relieved of all responsibility for
the Collateral upon surrendering it or tendering the surrender of it to the
Grantors. The Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Collateral Agent shall not have responsibility for taking
any necessary steps to preserve rights against any parties with respect to any
of the Collateral. In the event of a public or private sale of Collateral
pursuant to Section 7 hereof, the Collateral Agent shall have no obligation to
clean, repair or otherwise prepare the Collateral for sale.
10. Rights of Required Lenders. All rights of the Collateral Agent
hereunder, if not exercised by the Collateral Agent, may be exercised by the
Required Lenders.
11. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Collateral
Agent or any of the holders of the Secured Obligations in cash or its
equivalent, will be applied in reduction of the Secured Obligations in the order
set forth in the Credit Agreement or other document relating to the Secured
Obligations, and each Grantor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Collateral Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Collateral Agent's sole
discretion, notwithstanding any entry to the contrary upon any of its books and
records.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the Secured
Obligations remains outstanding and until all of the commitments relating
thereto have been terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this Security Agreement shall be
automatically terminated and the Collateral Agent and the holders of the Secured
Obligations shall forthwith release all of its liens and security interests
hereunder and shall, upon the request and at the expense of the Grantors,
authorize or execute and deliver all UCC termination statements and/or other
documents reasonably requested by the Grantors evidencing such termination.
Notwithstanding the foregoing, all releases and indemnities provided hereunder
shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the Secured Obligations is rescinded or must otherwise be
restored or returned by the Collateral Agent or any holder of the Secured
Obligations as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had not been
made; provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable costs
and expenses (including, without limitation, attorneys' fees actually incurred
(excluding the allocated cost of internal counsel) and
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disbursements) incurred by the Collateral Agent or any holder of the Secured
Obligations in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Secured Obligations.
13. Amendments and Waivers. This Security Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Grantor, its successors and assigns, and shall inure, together with the rights
and remedies of the Collateral Agent and the holders of the Secured Obligations
hereunder, to the benefit of the Collateral Agent and the holders of the Secured
Obligations and their successors and permitted assigns; provided, however, that
none of the Grantors may assign its rights or delegate its duties hereunder
without the prior written consent of the requisite Lenders under the Credit
Agreement. To the fullest extent permitted by law, each Grantor hereby releases
the Collateral Agent and each holder of the Secured Obligations, their
respective successors and assigns and their respective officers, attorneys,
employees and agents, from any liability for any act or omission or any error of
judgment or mistake of fact or of law relating to this Security Agreement or the
Collateral, except for any liability arising from the gross negligence or
willful misconduct of the Collateral Agent or such holder, or their respective
officers, attorneys, employees or agents.
15. Notices. All notices required or permitted to be given under this
Security Agreement shall be given as provided in Section 11.1 of the Credit
Agreement.
16. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Security Agreement may be brought in the state
or federal courts located in Nashville, Tennessee or Charlotte, North Carolina,
and, by execution and delivery of this Security Agreement, each Grantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Nothing herein shall affect
the right of the Collateral Agent to commence legal proceedings or to otherwise
proceed against any Grantor in any other jurisdiction.
(b) Each Grantor hereby irrevocably waives any objection that it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Security Agreement brought
in the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
19. Waiver of Jury Trial. EACH PARTY TO THIS SECURITY AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY CREDIT DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
13
HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
20. Severability. If any provision of this Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit Documents and
the other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Grantors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the other documents relating to the Secured
Obligations, the delivery of the Notes and the extension of credit thereunder or
in connection therewith.
23. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Grantor), or by a
guarantee, endorsement or property of any other Person, then the Collateral
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and continuance of any Event of Default, and the
Collateral Agent shall have the right, in its sole discretion, to determine
which rights, security, liens, security interests or remedies the Collateral
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or the
Secured Obligations or any of the rights of the Collateral Agent or the holders
of the Secured Obligations under this Security Agreement, under any of the other
Credit Documents or under any other document relating to the Secured
Obligations.
24. Joint and Several Obligations of Grantors.
(a) Subject to subsection (c) of this Section 24, each of the Grantors
is accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the holders of the Secured
Obligations, for the mutual benefit, directly and indirectly, of each of the
Grantors and in consideration of the undertakings of each of the Grantors to
accept joint and several liability for the obligations of each of them.
(b) Subject to subsection (c) of this Section 24, each of the Grantors
jointly and severally hereby irrevocably and unconditionally accepts, not merely
as a surety but also as a co-debtor, joint and several liability with the other
Grantors with respect to the payment and performance of all of the Secured
Obligations arising under this Security Agreement, the other Credit Documents
and any other documents relating to the Secured Obligations, it being the
intention of the parties hereto that all the Secured Obligations shall be the
joint and several obligations of each of the Grantors without preferences or
distinction among them.
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(c) Notwithstanding any provision to the contrary contained herein, in
any other of the Credit Documents or in any other documents relating to the
Secured Obligations, the obligations of each Guarantor under the Credit
Agreement and the other Credit Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under Section 548 of the Bankruptcy Code or any other Debtor Relief
Law.
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Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
GRANTORS: ACCREDO HEALTH, INCOPORATED,
a Delaware corporation
By: /s/ THOMAS W. BELL, JR.
------------------------------------
Name: THOMAS W. BELL, JR.
Title: SR. VICE PRES.
ACCREDO HEALTH GROUP, INC.,
a Delaware corporation
ACCREDO HEALTH RESOURCES, INC. (NEW YORK),
a New York corporation
ACCREDO HEALTH SERVICES (INFUSION), INC.,
a Delaware corporation
BIO PARTNERS IN CARE, INC.,
a Missouri corporation
HEMOPHILIA HEALTH SERVICES, INC.,
a Tennessee corporation
HEMOPHILIA RESOURCES OF AMERICA, INC.,
a New Jersey corporation
HOME HEALTHCARE RESOURCES, INC.,
a Pennsylvania corporation
HOME HEALTHCARE RESOURCES, LIMITED,
a Pennsylvania corporation
HRA HOLDING CORP.,
a New Jersey corporation
NOVA FACTOR, INC.,
a Tennessee corporation
PHARMACARE RESOURCES, INC.,
a New York corporation
SOUTHERN HEALTH SYSTEMS, INC.,
a Tennessee corporation
By: /s/ JOEL R. KIMBROUGH
------------------------------------
Name: JOEL R. KIMBROUGH
Title: CFO
of each of the Guarantors
[Signature pages continue]
Accepted and agreed to as of the date first above written.
Bank of America, N.A.,
as Collateral Agent
By: /s/ KRISTINE THENNES
---------------------------------
Name: KRISTINE THENNES
Title: VICE PRESIDENT