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EXHIBIT 99.3
NON-SHARED COLLATERAL SECURITY AGREEMENT
Dated as of August 20, 2001
From
The Grantors referred to herein
as Grantors
to
BANK OF AMERICA, N.A.
as Collateral Agent
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T A B L E O F C O N T E N T S
SECTION PAGE
Section 1. Grant of Security......................................................... 2
Section 2. Security for Obligations.................................................. 6
Section 3. Grantors Remain Liable.................................................... 7
Section 4. Delivery and Control of Security Collateral............................... 7
Section 5. Maintaining the L/C Cash Collateral Account............................... 8
Section 6. Investing of Amounts in the L/C Cash Collateral Account................... 8
Section 7. Release of Amounts........................................................ 9
Section 8. Representations and Warranties............................................ 9
Section 9. Further Assurances........................................................ 13
Section 10. As to Equipment and Inventory............................................. 14
Section 11. Insurance................................................................. 14
Section 12. Place of Perfection; Records; Collection of Receivables................... 16
Section 13. As to Intellectual Property Collateral.................................... 16
Section 14. Voting Rights; Dividends; Etc............................................. 18
Section 15. As to the Assigned Agreements............................................. 20
Section 16. Payments Under the Assigned Agreements.................................... 20
Section 17. Transfers and Other Liens; Additional Shares.............................. 20
Section 18. Collateral Agent Appointed Attorney-in-Fact............................... 21
Section 19. Collateral Agent May Perform.............................................. 21
Section 20. The Collateral Agent's Duties............................................. 21
Section 21. Remedies.................................................................. 22
Section 22. Indemnity and Expenses.................................................... 25
Section 23. Amendments; Waivers; Additional Grantors; Etc. ........................... 25
Section 24. Notices; Etc.............................................................. 26
Section 25. Continuing Security Interest; Assignments under the Credit Agreement...... 26
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SECTION PAGE
Section 26. Release; Termination...................................................... 26
Section 27. Security Interest Absolute................................................ 27
Section 28. Execution in Counterparts................................................. 28
Section 29. The Mortgages............................................................. 28
Section 30. Governing Law............................................................. 28
Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Chief Executive Office and Federal Tax Identification Number
Schedule V - Patents, Trademarks and Trade Names, Copyrights and Licenses
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Intellectual Property Security Agreement
Exhibit D - Form of Intellectual Property Security Agreement Supplement
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NON-SHARED COLLATERAL SECURITY AGREEMENT
NON-SHARED COLLATERAL SECURITY AGREEMENT dated as of August 20,
2001 made by PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the
"BORROWER"), the other Persons listed on the signature pages hereof and the
Additional Grantors (as defined in Section 23) (the Borrower, the Persons so
listed and the Additional Grantors being, collectively, the "GRANTORS"), to Bank
of America, N.A., as collateral agent (together with any successor collateral
agent appointed pursuant to Article VII of the Credit Agreement (as hereinafter
defined), the "COLLATERAL AGENT") for the Secured Parties (as defined in the
Credit Agreement).
PRELIMINARY STATEMENTS.
(1) The Borrower has entered into an Amended and Restated Credit
Agreement dated as of August 20, 2001 (said Agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "CREDIT AGREEMENT") with the Lender Parties and the Agents (each
as defined therein).
(2) Pursuant to the Credit Agreement, the Grantors are entering
into this Agreement in order to grant to the Collateral Agent for the ratable
benefit of the Secured Parties a security interest in all of their right, title
and interest in and to the Collateral (as herein defined) now owned or hereafter
acquired.
(3) Each Grantor is the owner of the shares (the "INITIAL PLEDGED
SHARES") of stock set forth opposite such Grantor's name on and as otherwise
described in Part I of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "INITIAL PLEDGED DEBT") set forth opposite
such Grantor's name on and as otherwise described in Part II of Schedule I
hereto and issued by the obligors named therein.
(4) The Borrower has authorized the Collateral Agent to open a
cash collateral account (the "L/C CASH COLLATERAL ACCOUNT"), with the Collateral
Agent at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
in the name of the Collateral Agent and under the sole control and dominion of
the Collateral Agent and subject to the terms of this Agreement.
(5) It is a condition precedent to the making of Advances by the
Lender Parties and the issuance of Letters of Credit by the Issuing Bank under
the Credit Agreement that the Grantors shall have granted the assignment and
security interest and made the pledge and assignment contemplated by this
Agreement.
(6) Each Grantor will derive substantial direct and indirect
benefit from the transactions contemplated by the Loan Documents.
(7) Terms used herein and not otherwise defined herein are used
in this Agreement as defined in the Credit Agreement. Further, unless otherwise
defined in this Agreement or in the Credit Agreement, terms defined in Article 8
or Revised Article 9 of the Uniform Commercial Code in effect in the State of
New York ("N.Y. UNIFORM COMMERCIAL
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CODE") and/or in the Federal Book Entry Regulations (as defined below) are used
in this Agreement as such terms are defined in such Article 8 or 9 and/or the
Federal Book Entry Regulations. "UCC" means the Uniform Commercial Code as in
effect, from time to time, in the state of New York, provided that, if
perfection or the effect of perfection or non-perfection or the priority of any
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("TREASURY/RESERVE AUTOMATED DEBT ENTRY SYSTEM (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and issue Letters of Credit under the
Credit Agreement, each Grantor hereby agrees with the Collateral Agent for the
ratable benefit of the Secured Parties as follows:
Section 1. Grant of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties a security interest in, such Grantor's right, title and interest in and
to the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by such Grantor, wherever located, and
whether now or hereafter existing or arising (collectively, the "COLLATERAL"):
(a) all equipment in all of its forms, all fixtures and all parts
thereof and all accessions thereto (any and all such equipment,
fixtures, parts and accessions being the "EQUIPMENT");
(b) all inventory in all of its forms (including, but not limited
to raw materials and work in process therefor, finished goods thereof
and materials used or consumed in the manufacture, production,
preparation or shipping thereof, goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an
interest or right as consignee) and goods that are returned to or
repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "INVENTORY");
(c) all accounts, chattel paper, instruments, deposit accounts,
general intangibles and other obligations of any kind, whether or not
arising out of or in connection with the sale or lease of goods or the
rendering of services and whether or not earned by performance, and all
rights now or hereafter existing in and to all security agreements,
leases and other contracts securing or otherwise relating to any such
accounts, chattel paper, instruments, deposit accounts, general
intangibles or obligations
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(any and all such accounts, chattel paper, instruments, deposit
accounts, general intangibles and obligations, to the extent not
referred to in clause (d), (e) or (f) below, being the "RECEIVABLES",
and any and all such security agreements, leases and other contracts
being the "RELATED CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Shares and the certificates, if
any, representing the Initial Pledged Shares, and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the Initial Pledged Shares;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the Initial Pledged Debt;
(iii) all additional shares of stock from time to time
acquired by such Grantor in any manner (other than any shares
held by such Grantor in any HMO Subsidiary or Insurance
Subsidiary for which approval for the pledge of such shares has
not been granted as set forth in Section 5.01(i) of the Credit
Agreement) (such shares, together with the Initial Pledged
Shares, being the "PLEDGED SHARES"), and the certificates, if
any, representing such additional shares, and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such shares;
(iv) all additional indebtedness from time to time owed to
such Grantor (such indebtedness, together with the Initial
Pledged Debt, being the "PLEDGED DEBT") and the instruments, if
any, evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such indebtedness; and
(v) all other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities
accounts, (D) commodity contracts and (E) commodity accounts) in
which such Grantor has now, or acquires from time to time
hereafter, any right, title or interest in any manner, and the
certificates or instruments, if any, representing or evidencing
such investment property, and all dividends, interest,
distributions, value, cash, instruments and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such investment
property;
(e) each of the agreements listed on Schedule II hereto, as such
agreements may be amended, amended and restated, supplemented or
otherwise modified from time to time (collectively, the "ASSIGNED
AGREEMENTS"), including, without limitation, (i) all
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rights of such Grantor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (ii) all rights of such Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to the Assigned Agreements, (iii) claims of such Grantor for
damages arising out of or for breach of or default under the Assigned
Agreements and (iv) the right of such Grantor to terminate the Assigned
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder (all such Collateral being
the "AGREEMENT COLLATERAL");
(f) the following (collectively, the "ACCOUNT COLLATERAL"):
(i) the L/C Cash Collateral Account, all financial assets
from time to time credited to the L/C Cash Collateral Account
(including, without limitation, all Cash Equivalents from time to
time credited to the L/C Cash Collateral Account), and all
dividends, interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such financial
assets;
(ii) all deposit accounts of such Grantor from time to
time, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing
such deposit accounts;
(iii) all notes, certificates of deposit, checks and other
instruments from time to time delivered to or otherwise possessed
by the Collateral Agent for or on behalf of such Grantor,
including, without limitation, those delivered or possessed in
substitution for or in addition to any or all of the then
existing Account Collateral; and
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
then existing Account Collateral;
(g) the following (collectively, the "INTELLECTUAL PROPERTY
COLLATERAL"):
(i) all United States, international and foreign patents,
patent applications and statutory invention registrations,
including, without limitation, the patents and patent
applications set forth in Schedule V hereto (as such Schedule V
may be supplemented from time to time by supplements to this
Agreement, each such supplement being in substantially the form
of Exhibit D hereto (an "IP SECURITY AGREEMENT SUPPLEMENT"),
executed and delivered by such Grantor to the Collateral Agent
from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and
reexaminations thereof, all inventions therein, all rights
therein provided by international treaties or conventions and all
improvements thereto, and all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto (the
"PATENTS");
(ii) all trademarks (including, without limitation,
service marks), certification marks, collective marks, trade
dress, logos, domain names, product
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configurations, trade names, business names, corporate names and
other source identifiers, whether or not registered, whether
currently in use or not, including, without limitation, all
common law rights and registrations and applications for
registration thereof, including, without limitation, the
trademark registrations and trademark applications set forth in
Schedule V hereto (as such Schedule V may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Grantor to the Collateral Agent from time to
time), and all other marks registered in the U.S. Patent and
Trademark Office or in any office or agency of any State or
Territory of the United States or any foreign country (but
excluding any United States intent-to-use trademark application
prior to the filing and acceptance of a Statement of Use or an
Amendment to allege use in connection therewith to the extent
that a valid security interest may not be taken in such an
intent-to-use trademark application under applicable law), and
all rights therein provided by international treaties or
conventions, all reissues, extensions and renewals of any of the
foregoing, together in each case with the goodwill of the
business connected therewith and symbolized thereby, and all
rights corresponding thereto throughout the world and all other
rights of any kind whatsoever of such Grantor accruing thereunder
or pertaining thereto (the "TRADEMARKS");
(iii) all copyrights, copyright applications, copyright
registrations and like protections in each work of authorship,
whether statutory or common law, whether published or
unpublished, any renewals or extensions thereof, all copyrights
of works based on, incorporated in, derived from, or relating to
works covered by such copyrights, including, without limitation,
the copyright registrations and copyright applications set forth
in Schedule V hereto (as such Schedule V may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Grantor to the Collateral Agent from time to
time), together with all rights corresponding thereto throughout
the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto (the
"COPYRIGHTS");
(iv) all confidential and proprietary information,
including, without limitation, know-how, trade secrets,
manufacturing and production processes and techniques,
inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and
supplier lists and information (the "TRADE SECRETS");
(v) all computer software programs and databases
(including, without limitation, source code, object code and all
related applications and data files), firmware, and documentation
and materials relating thereto, and all rights with respect to
the foregoing, together with any and all options, warranties,
service contracts, program services, test rights, maintenance
rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model
conversions of any of the foregoing (the "COMPUTER SOFTWARE");
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(vi) all license agreements, permits, authorizations and
franchises, whether with respect to the Patents, Trademarks,
Copyrights, Trade Secrets or Computer Software, or with respect
to the patents, trademarks, copyrights, trade secrets, computer
software or other proprietary right of any other Person,
including, without limitation, the material license agreements
set forth in Schedule V hereto (as such Schedule V may be
supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time), and all income, royalties
and other payments now or hereafter due and/or payable with
respect thereto, subject, in each case, to the terms of such
license agreements, permits, authorizations and franchises, (the
"LICENSES"); and
(vii) any and all claims for damages for past, present and
future infringement, misappropriation or breach with respect to
the Patents, Trademarks, Copyrights, Trade Secrets, Computer
Software or Licenses, with the right, but not the obligation, to
▇▇▇ for and collect, or otherwise recover, such damages;
(h) all proceeds of, collateral for and supporting obligations
relating to, any and all of the Collateral (including, without
limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (g) of
this Section 1 and this clause (h)) and, to the extent not otherwise
included, all (i) payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral and (ii) cash.
Notwithstanding the foregoing provisions of this Section 1, the grant of a
security interest as provided herein shall not extend to, and the term
"Collateral" shall not include, as to any Grantor: (1) any accounts, contracts,
licenses or other general intangibles of such Grantor, or any permits,
instruments, or chattel paper of such Grantor, if and to the extent such
account, contract, license, general intangible, permit, instrument or chattel
paper contains restrictions on assignments and the creation of Liens, or under
which such an assignment or Lien would cause a default to occur under such
account, contract, license, general intangible, permit, instrument or chattel
paper (other than to the extent that any such term would be rendered ineffective
pursuant to Sections 9-407 or 9-408 of Revised Article 9 of the New York Uniform
Commercial Code); provided that immediately upon the ineffectiveness, lapse or
termination of any such provision, the Collateral shall include, and such
Grantor shall be deemed to have granted a security interest in, all such right,
title and interests as if such provision had never been in effect; (2) any
intent to use application at the U.S. Patent and Trademark Office with respect
to intellectual property to the extent an assignment for security purposes would
void the same; (3) more than 66% of the outstanding voting stock of any CFC; and
(4) any governmental permit or franchise that prohibits Liens on or collateral
assignments of such permit or franchise.
Section 2. Security for Obligations. This Agreement secures, in
the case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "SECURED
OBLIGATIONS"), it
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being understood that for so long as the 7% Senior Notes (as defined in the
Credit Agreement) are outstanding, the Secured Obligations of any of
RxSolutions, Inc., PacifiCare Behavioral Health, Inc., and Secure Horizons USA
Inc. shall be limited to the maximum amount permitted under the indenture
relating to the 7% Senior Notes issued by PacifiCare Health Plan Administrators,
Inc.
Section 3. Grantors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in such Grantor's Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured Party
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, upon the occurrence and during the continuance of a Default, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 14(a); provided, however that the exercise of any
such rights by the Collateral Agent with respect to Pledged Shares or Pledged
Debt issued by any HMO Subsidiary or Insurance Subsidiary shall be subject to
obtaining the prior written approval of the applicable HMO Regulator or
Insurance Regulator where such approval is required for the Collateral Agent to
exercise such rights under the applicable Governmental Rules. In addition, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Security Collateral for certificates or
instruments of smaller or larger denominations.
(b) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof either (i) to register the
Collateral Agent as the registered owner, for the purpose of security, of such
security or (ii) to agree in an authenticated record with such Grantor and the
Collateral Agent that such issuer will comply with instructions with respect to
such security originated by the Collateral Agent without further consent of such
Grantor, such authenticated record to be in form and substance reasonably
satisfactory to the Collateral Agent.
(c) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes a security entitlement,
such Grantor will cause the securities intermediary with respect to such
security entitlement either (i) to identify in its records the Collateral Agent
as the entitlement holder of such security entitlement against such securities
intermediary or (ii) to agree in an authenticated record with such Grantor and
the Collateral Agent that such securities intermediary will comply with
entitlement orders (that is,
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notifications communicated to such securities intermediary directing transfer or
redemption of the financial asset to which such Grantor has a security
entitlement) originated by the Collateral Agent without further consent of such
Grantor, such authenticated record to be in form and substance reasonably
satisfactory to the Collateral Agent (such agreement being a "SECURITIES ACCOUNT
CONTROL AGREEMENT").
(d) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes a commodity contract, such
Grantor shall cause the commodity intermediary with respect to such commodity
contract to agree in an authenticated record with such Grantor and the
Collateral Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the Collateral
Agent without further consent of such Grantor, such authenticated record to be
in form and substance reasonably satisfactory to the Collateral Agent (such
agreement being a "COMMODITY ACCOUNT CONTROL AGREEMENT", and all such
authenticated records, together with all Securities Account Control Agreements
being, collectively, "CONTROL AGREEMENTS").
(e) No Grantor will change or add any securities intermediary or
commodity intermediary that maintains any securities account or commodity
account in which any of the Collateral is credited or carried, or change or add
any such securities account or commodity account, in each case without first
complying with the above provisions of this Section 4 in order to perfect the
security interest granted hereunder in such Collateral.
The Collateral Agent shall not provide any directions to, or deliver any
instructions or entitlement orders to any issuer, securities intermediary or
commodity intermediary pursuant to this Section 4 unless an Event of Default has
occurred and is continuing. Furthermore, the Collateral Agent shall promptly
rescind such direction, instruction or entitlement order and notify such parties
at any time when no Default has occurred and is continuing.
Section 5. Maintaining the L/C Cash Collateral Account. So long
as any Advance or any other Obligation of any Loan Party under any Loan Document
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment under the Credit Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account
with the Collateral Agent or another commercial bank acceptable to the
Collateral Agent (the Collateral Agent or any bank with which the L/C
Cash Collateral Account is being maintained being a "COLLATERAL BANK").
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the L/C Cash Collateral Account, and except
as otherwise provided by the provisions of Sections 7 and 21, that no
amount (including interest on Cash Equivalents credited thereto) will be
paid or released to or for the account of, or withdrawn by or for the
account of, the Borrower or any other Person from the L/C Cash
Collateral Account.
Section 6. Investing of Amounts in the L/C Cash Collateral
Account. The Collateral Agent will, subject to the provisions of Sections 7 and
21, from time to time direct the
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applicable Collateral Bank to (a) invest amounts received with respect to the
L/C Cash Collateral Account in such Cash Equivalents credited the L/C Cash
Collateral Account, as the Borrower may select and the Collateral Agent may
approve and (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents credited to the L/C
Cash Collateral Account, as the Borrower may select and the Collateral Agent may
approve. Interest and proceeds that are not invested or reinvested in Cash
Equivalents as provided above shall be deposited and held in a deposit account
with the applicable Collateral Bank in the name of the Collateral Agent and
under the sole control and dominion of the Collateral Agent, such deposit
account to be deemed to constitute part of the L/C Cash Collateral Account. In
addition, the Collateral Agent shall have the right at any time to direct the
applicable Collateral Bank to exchange such Cash Equivalents for similar Cash
Equivalents of smaller or larger determinations, or for other Cash Equivalents,
credited to the L/C Cash Collateral Account.
Section 7. Release of Amounts. So long as no Event of Default
shall have occurred and be continuing, the Collateral Agent will direct the
applicable Collateral Bank to pay and release to the Borrower or at its order
or, at the request of the Borrower, to the Administrative Agent to be applied to
the Obligations of the Borrower under the Loan Documents, such amount, if any,
as is then on deposit in the L/C Cash Collateral Account, to the extent
permitted to be released under the terms of the Credit Agreement and the other
Loan Documents.
Section 8. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a) Such Grantor's exact legal name, as defined in Section
9-503(a) of the UCC, is correctly set forth on the signature pages of
this Agreement. Such Grantor is an organization of the type specified on
the signature pages of this Agreement and is organized under the laws of
the jurisdiction specified on the signature pages of this Agreement.
(b) All of the Equipment and Inventory (other than Equipment and
Inventory constituting mobile goods and Equipment and Inventory in
transit in the ordinary course of business) of such Grantor are located
at the places specified therefor in Schedule III hereto, as such
Schedule III may be amended from time to time pursuant to Section 10(a).
The chief executive office of such Grantor and the original copies of
each Assigned Agreement and Related Contract to which such Grantor is a
party and all originals of all chattel paper that evidence Receivables
of such Grantor, are located at the address specified therefor in
Schedule IV hereto, as such Schedule IV may be amended from time to time
pursuant to Section 12(a). The Grantor is located (within the meaning of
Section 9-307 of the UCC) in the state or jurisdiction set forth in
Schedule IV hereto. Such Grantor's federal tax identification number is
set forth opposite such Grantor's name in Schedule IV hereto. All
Security Collateral consisting of certificated securities and
instruments have been delivered to the Collateral Agent. Original copies
of each Assigned Agreement and all originals of all chattel paper that
evidence Receivables have been delivered to the Collateral Agent, in
each case to the extent that delivery thereof to the Collateral Agent is
required under Section 4. None of the Receivables or Agreement
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Collateral is evidenced by a promissory note or other instrument that
has not been delivered to the Collateral Agent.
(c) Such Grantor is the legal and beneficial owner of the
Collateral of such Grantor free and clear of any Lien, claim, option or
right of others, except for the security interest created under this
Agreement or permitted under the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all
or any part of such Collateral or listing such Grantor or any trade name
of such Grantor as debtor is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent relating to
the Loan Documents or as otherwise permitted under the Credit Agreement.
Such Grantor has the trade names listed on Schedule V hereto.
(d) Such Grantor has exclusive possession and control of the
Equipment and Inventory other than Inventory or Equipment stored at any
leased premises or warehouse (which leased premises or warehouse is so
indicated by an asterisk on Schedule III hereto, as such Schedule III
may be amended from time to time pursuant to Section 10(a)).
(e) The Pledged Shares pledged by such Grantor hereunder have
been duly authorized and validly issued and are fully paid and
non-assessable. The Pledged Debt issued by any Grantor and pledged by
such Grantor hereunder, and, to the best of such Grantor's knowledge,
any Pledged Debt issued by a third party and pledged hereunder, has been
duly authorized, authenticated or issued and delivered, is the legal,
valid and binding obligation of the issuers thereof, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding
in equity or at law is evidenced by one or more promissory notes (which
notes have been delivered to the Collateral Agent) and is not in
default.
(f) The Initial Pledged Shares constitute the percentage of the
issued and outstanding shares of stock of the issuers thereof indicated
on Schedule I hereto as of the date hereof. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor by
the issuers thereof and is outstanding, as of the date hereof, in the
principal amount indicated on Schedule I hereto as of the date hereof.
(g) All of the investment property owned by such Grantor as of
the date hereof is listed on Schedule I hereto.
(h) The Assigned Agreements to which such Grantor is a party,
true and complete copies of which have been furnished to each Secured
Party, have been duly authorized, executed and delivered by all parties
thereto, have not been amended, amended and restated, supplemented or
otherwise modified, are in full force and effect and are binding upon
and enforceable against such Grantor, and to the Grantor's knowledge all
parties thereto in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles
of equity, regardless of whether considered in a proceeding in equity or
at law. There exists no default under any
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Assigned Agreement to which such Grantor is a party by any party
thereto. Other than the Grantors, each party to the Assigned Agreements
listed on Schedule II hereto which requires such parties' consent for
assignment and to which such Grantor is a party has executed and
delivered to such Grantor a consent, in substantially the form of
Exhibit B hereto or otherwise in form and substance satisfactory to the
Collateral Agent, to the assignment of the Agreement Collateral to the
Collateral Agent pursuant to this Agreement.
(i) All filings and other actions necessary other than the
delivery of the original title certificates to motor vehicles or
reasonably desirable to perfect and protect the security interest in the
Collateral of such Grantor created under this Agreement have been or are
concurrently herewith being duly made or taken and are in full force and
effect, and this Agreement creates in favor of the Collateral Agent for
the benefit of the Secured Parties a valid and, together with such
filings and other actions, perfected first priority security interest in
the Collateral of such Grantor, securing the payment of the Secured
Obligations.
(j) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the grant by such Grantor
of the assignment, pledge and security interest granted hereunder or for
the execution, delivery or performance of this Agreement by such
Grantor, except for the pledge of any stock held in any HMO Subsidiary
or Insurance Subsidiary pledged pursuant to Section 5.01(i) of the
Credit Agreement, for which approval has been obtained, (ii) the
perfection or maintenance of the assignment, pledge and security
interest created hereunder (including the first priority nature of such
assignment, pledge or security interest), except for the filing of
financing and continuation statements under the Uniform Commercial Code,
which financing statements upon due filing will be in full force and
effect, the recordation of the Intellectual Property Security Agreements
referred to in Section 13(f) with the U.S. Patent and Trademark Office
and the U.S. Copyright Office, and the actions described in Section 4
with respect to the Security Collateral, and the delivery of the
original title certificates to motor vehicles or (iii) for the exercise
by the Collateral Agent of its voting or other rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement, except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally and except as may be
required in connection with the exercise of any foreclosure, voting,
assignment or other rights or remedies in respect of the stock of any
HMO Subsidiary or Insurance Subsidiary, including, but not limited to,
obtaining the written approval of the applicable HMO Regulator or
Insurance Regulator prior to the exercise by the Collateral Agent of its
foreclosure, voting, assignment or other rights with respect to any
Pledged Shares or Pledged Debt issued by any HMO Subsidiary or Insurance
Subsidiary or any Assigned Agreement to which any HMO Subsidiary or
Insurance Subsidiary is a party.
(k) The Inventory that has been produced or distributed by such
Grantor has been produced in compliance with all material requirements
of applicable law, including, without limitation, the Fair Labor
Standards Act.
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(l) As to itself and its Intellectual Property Collateral:
(i) To the best of such Grantor's knowledge, the rights of
such Grantor in or to the Intellectual Property Collateral do not
conflict with, misappropriate or infringe upon the intellectual
property rights of any third party, and no written claim has been
asserted that the use of such Intellectual Property Collateral
does or may infringe upon the intellectual property rights of any
third party.
(ii) Such Grantor is the exclusive owner or non-exclusive
licensee of the entire and unencumbered right, title and interest
in and to the Intellectual Property Collateral and is entitled to
use all such Intellectual Property Collateral without limitation,
subject only to the license terms of the Licenses.
(iii) The Intellectual Property Collateral set forth on
Schedule V hereto includes all of the patents, patent
registrations, patent applications, trademark registrations and
applications, copyright registrations and applications and
Licenses owned by such Grantor.
(iv) The Intellectual Property Collateral is subsisting
and has not been adjudged invalid or unenforceable in whole or
part, and to the best of such Grantor's knowledge, is valid and
enforceable. Such Grantor is not aware of any uses of any item of
Intellectual Property Collateral that would reasonably be
expected to lead to such item becoming invalid or unenforceable.
(v) Such Grantor has made or performed all filings,
recordings and other acts and has paid all required fees and
taxes to maintain and protect its interest in each and every item
of Intellectual Property Collateral in full force and effect, and
to protect and maintain its interest therein including, without
limitation, recordations of any of its interests in the Patents
and Trademarks with the U.S. Patent and Trademark Office, except
with respect to any items of Intellectual Property Collateral
which such Grantor, in the reasonable exercise of its business
judgment, deems not be material to the ongoing business of such
Grantor. Such Grantor has used proper statutory notice in
connection with its use of each patent, trademark and copyright
of the Intellectual Property Collateral.
(vi) No action, suit, investigation, litigation or
proceeding has been asserted or is pending or threatened against
such Grantor (i) based upon or challenging or seeking to deny or
restrict the use of any of the Intellectual Property Collateral,
or (ii) alleging that any services provided by, processes used
by, or products manufactured or sold by, such Grantor infringe
upon or misappropriate any material item of patent, trademark,
copyright or any other proprietary right of any third party. To
the best of such Grantor's knowledge, no Person is engaging in
any activity that infringes upon or misappropriates the
Intellectual Property Collateral or upon the rights of such
Grantor therein. Except as set forth on Schedule V hereto, such
Grantor has not granted any license, release, covenant not to
▇▇▇, non-assertion assurance, or other right to any Person
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with respect to any material part of the Intellectual Property
Collateral. The consummation of the transactions contemplated by
the Transaction Documents will not result in the termination or
material impairment of any material item of the Intellectual
Property Collateral.
(vii) With respect to each License material to the
business of such Grantor: (A) such License is valid and binding
and in full force and effect against such Grantor and, to the
best of such Grantor's knowledge, each other Person party thereto
and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of such
License; (B) such License will not cease to be valid and binding
and in full force and effect on terms identical to those
currently in effect as a result of the rights and interest
granted herein, nor will the grant of such rights and interest
constitute a breach or default under such License or otherwise
give the licensor or licensee a right to terminate such License;
(C) such Grantor has not received any notice of termination or
cancellation under such License; (D) such Grantor has not
received any notice of a breach or default under such License,
which breach or default has not been cured; (E) such Grantor has
not granted to any other third party any rights, adverse or
otherwise, under such License, other than pursuant to a License
set forth in Schedule V hereto; and (F) neither such Grantor nor
to the best of such Grantor's knowledge, any other party to such
License is in breach or default of such License in any material
respect, and no event has occurred that, with notice or lapse of
time or both, would constitute such a breach or default or permit
termination, modification or acceleration under such License.
Section 9. Further Assurances. (a) Each Grantor agrees that from
time to time, at the expense of such Grantor, such Grantor will promptly execute
and deliver, or otherwise authenticate, all further instruments and documents,
and take all further action, that may be necessary or reasonably desirable, or
that the Collateral Agent may request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted by
such Grantor hereunder or to enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral of such
Grantor. Without limiting the generality of the foregoing, each Grantor will
promptly with respect to Collateral of such Grantor: (i) at the reasonable
request of the Collateral Agent, ▇▇▇▇ conspicuously each chattel paper included
in Receivables, each Assigned Agreement and each of its records pertaining to
such Collateral with a legend, in form and substance reasonably satisfactory to
the Collateral Agent, indicating that such chattel paper, Assigned Agreement or
Collateral is subject to the security interest granted hereby; provided,
however, that no such legend shall be required if such Collateral is delivered
to the Collateral Agent pursuant to clause (ii) below; (ii) if any such
Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; (iii) execute or authenticate and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or reasonably desirable, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
(iv) deliver and pledge to the Collateral
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Agent for benefit of the Secured Parties certificates representing Security
Collateral that constitutes certificated securities, accompanied by undated
stock or bond powers executed in blank; and (v) deliver to the Collateral Agent
evidence that all other action that the Collateral Agent may deem reasonably
necessary or reasonably desirable in order to perfect and protect the security
interest created by such Grantor under this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral of such Grantor without the
signature of such Grantor where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor will furnish to the Collateral Agent from time
to time statements and schedules further identifying and describing the
Collateral of such Grantor and such other reports in connection with such
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
Section 10. As to Equipment and Inventory. (a) Each Grantor will
keep the Equipment and Inventory of such Grantor (other than Inventory sold in
the ordinary course of business, Equipment and Inventory constituting mobile
goods or Equipment and Inventory in transit in the ordinary course of such
Grantor's business) at the places therefor specified in Section 8(a) or, upon 30
days' prior written notice to the Collateral Agent, at such other places in a
jurisdiction where all action required by Section 9 shall have been taken with
respect to such Equipment and Inventory (and, upon the taking of such action in
such jurisdiction, Schedule III hereto shall be automatically amended to include
such other places).
(b) Each Grantor will cause the Equipment of such Grantor to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and will forthwith, or in the case of any loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection therewith
that are necessary or reasonably desirable to such end.
(c) Each Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including, without limitation, claims for labor, materials and
supplies) against, the Equipment and Inventory of such Grantor, except to the
extent payment thereof is not required by Section 5.01(b) of the Credit
Agreement. In producing its Inventory, each Grantor will comply with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act, except where any such noncompliance would not be reasonably
likely to result in a Material Adverse Effect.
Section 11. Insurance. (a) Each Grantor will, at its own expense,
maintain insurance with respect to the Equipment and Inventory of such Grantor
in such amounts, against such risks, in such form and with such insurers, as is
customary with companies of a similar size and line of business and shall
otherwise be reasonably satisfactory to the Collateral Agent. Each policy of
each Grantor for general liability insurance shall provide for the Collateral
Agent as
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additional insured, and each policy for property damage insurance shall provide
for all losses (except for losses of less than $1,000,000 per occurrence) to be
paid directly to the Collateral Agent. Each such policy shall in addition (i)
name such Grantor and the Collateral Agent as insured parties thereunder
(without any representation or warranty by or obligation upon the Collateral
Agent) as their interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder shall be payable to the Collateral Agent, (iii) provide
that there shall be no recourse against the Collateral Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insurer. Each Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate policies
or certificates of such insurance provided by the insurance companies and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor will, at
the request of the Collateral Agent, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of Section
9 and use reasonable efforts to cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 11 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Credit Agreement, to
pay or as reimbursement for the costs of such repairs or replacements.
(c) So long as no Event of Default shall have occurred and be
continuing, all insurance payments received by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
will be released by the Collateral Agent to the applicable Grantor for the
repair, replacement or restoration thereof, subject to such terms and conditions
with respect to the release thereof as the Collateral Agent may reasonably
require. To the extent that (i) the amount of any such insurance payments
exceeds the cost of any such repair, replacement or restoration, or (ii) such
insurance payments are not otherwise required by the applicable Grantor to
complete any such repair, replacement or restoration required hereunder, the
Collateral Agent will not be required to release the amount thereof to such
Grantor and may hold or continue to hold such amount as additional security for
the Secured Obligations of such Grantor (except that the Collateral Agent will
direct the applicable Collateral Bank to release to such Grantor any such amount
if and to the extent that any prepayment of Obligations is required under the
Credit Agreement in connection with the receipt of such amount and such
prepayment has been made). Upon the occurrence and during the continuance of any
Event of Default or the actual or constructive total loss (in excess of
$1,000,000 per occurrence) of any Equipment or Inventory, all insurance payments
in respect of such Equipment or Inventory shall be paid to the Collateral Agent
and shall, in the Collateral Agent's sole discretion, (i) be released to the
applicable Grantor to be applied as set forth in the first sentence of this
subsection (c) or (ii) be held as additional Collateral hereunder or applied as
specified in Section 21(b).
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Section 12. Place of Perfection; Records; Collection of
Receivables. (a) Each Grantor will not change its name, type of legal entity,
federal tax identification number, organizational identification number or
location from those set forth in Section 8(a) and (b) of this Agreement without
first giving at least 30-days advance written notice to the Collateral Agent and
taking all action required by the Collateral Agent for the purpose of perfecting
or protecting the liens granted by this Agreement. Each Grantor will also keep
the originals of the Assigned Agreements, and Related Contracts to which such
Grantor is a party and all originals of all chattel paper that evidence
Receivables of such Grantor, at the location therefor specified in Section 8(a)
or, upon 30 days' prior written notice to the Collateral Agent, at such other
location in a jurisdiction where all actions required by Section 9 shall have
been taken with respect to the Collateral of such Grantor (and, upon the taking
of such action in such jurisdiction, Schedule IV hereto shall be automatically
amended to include such other location). Each Grantor will hold and preserve its
records relating to the Collateral, the Assigned Agreements, the Related
Contracts and chattel paper and will permit representatives of the Collateral
Agent at any time during normal business hours and with reasonable prior notice
to inspect and make abstracts from such records and other documents.
(b) Except as otherwise provided in this subsection (b), each
Grantor will continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Receivables and the Related Contracts. In
connection with such collections, such Grantor may take (and, at the Collateral
Agent's direction, will take) such action as such Grantor or the Collateral
Agent may deem reasonably necessary or advisable to enforce collection of the
Receivables and the Related Contracts; provided, however, that the Collateral
Agent shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default and upon written notice to such Grantor of
its intention to do so, to notify the obligors (each individually, an "OBLIGOR"
and collectively, the "OBLIGORS") under any Receivables or Related Contracts of
the assignment of such Receivables or Related Contracts to the Collateral Agent
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Collateral Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables or Related Contracts, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by any Grantor of the notice from the
Collateral Agent referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including instruments) received by such Grantor in respect
of the Receivables and the Related Contracts of such Grantor shall be received
in trust for the benefit of the Collateral Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
indorsement) to be held as cash collateral and shall be either (A) released to
such Grantor so long as no Event of Default shall have occurred and be
continuing or (B) if any Event of Default shall have occurred and be continuing,
applied as provided in Section 21(b) and (ii) such Grantor will not adjust,
settle or compromise the amount or payment of any Receivable, release wholly or
partly any Obligor thereof, or allow any credit or discount thereon. No Grantor
will permit or consent to the subordination of its right to payment under any of
the Receivables or the Related Contracts to any other indebtedness or
obligations of the Obligor thereof.
Section 13. As to Intellectual Property Collateral. (a) With
respect to each item of its Intellectual Property Collateral (except with
respect to any items of Intellectual Property
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Collateral which such Grantor, in its reasonable business judgment, deems not to
be material to the ongoing business of such Grantor), each Grantor agrees to
take, at its expense, all necessary steps, including, without limitation, in the
U.S. Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authority, to (i) maintain the validity and enforceability of each
such item of Intellectual Property Collateral and maintain each such item of
Intellectual Property Collateral in full force and effect, and (ii) pursue the
registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in the Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
governmental authorities, the filing of applications for renewal or extension,
the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings. No Grantor shall, without the
written consent of the Collateral Agent, discontinue use of or otherwise abandon
any Intellectual Property Collateral, or abandon any right to file an
application for letters patent, trademark, or copyright, unless such Grantor
shall have previously determined that such use or the pursuit or maintenance of
such Intellectual Property Collateral is no longer desirable in the conduct of
such Grantor's business and that the loss thereof would not be reasonably likely
to have a Material Adverse Effect, in which case, such Grantor will give prompt
notice of any such abandonment to the Collateral Agent.
(b) Except as provided in this Section regarding the
discontinuation of use or abandonment of any Intellectual Property Collateral,
each Grantor agrees promptly to notify the Collateral Agent if such Grantor
learns (i) that any item of the Intellectual Property Collateral may have become
abandoned, placed in the public domain, invalid or unenforceable, or of any
adverse determination or development regarding such Grantor's ownership of any
of the Intellectual Property Collateral or its right to register the same or to
keep and maintain and enforce the same, or (ii) of any adverse determination or
the institution of any proceeding (including, without limitation, the
institution of any proceeding in the U.S. Patent and Trademark Office or any
court) regarding any item of the Intellectual Property Collateral.
(c) In the event that any Grantor becomes aware that any item of
the Intellectual Property Collateral material to the business of such Grantor is
being infringed or misappropriated by a third party, such Grantor shall promptly
notify the Collateral Agent and shall take such actions, at its expense, as such
Grantor or the Collateral Agent deems reasonable and appropriate under the
circumstances to protect such Intellectual Property Collateral, including,
without limitation, suing for infringement or misappropriation and for an
injunction against such infringement or misappropriation.
(d) Each Grantor shall use proper statutory notice in connection
with its use of each item of its Intellectual Property Collateral. Except with
respect of any item of Intellectual Property Collateral, which such Grantor, in
the reasonable exercise of its business judgment, deems not to be material to
the ongoing business of such Grantor, no Grantor shall do or permit any act or
knowingly omit to do any act whereby any of its Intellectual Property Collateral
may lapse or become invalid or unenforceable or placed in the public domain.
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(e) Except with respect of any item of Intellectual Property
Collateral, which such Grantor, in the reasonable exercise of its business
judgment, deems not to be material to the ongoing business of such Grantor, each
Grantor shall take all steps which it or the Collateral Agent deems reasonable
and appropriate under the circumstances to preserve and protect each item of its
Intellectual Property Collateral, including, without limitation, maintaining the
quality of any and all products or services used or provided in connection with
any of the Trademarks, consistent with the quality of the products and services
as of the date hereof, and taking all steps necessary to ensure that all
licensed users of any of the Trademarks use such consistent standards of
quality.
(f) With respect to its Intellectual Property Collateral, each
Grantor agrees to execute an agreement, in substantially the form set forth in
Exhibit C hereto (an "INTELLECTUAL PROPERTY SECURITY AGREEMENT"), for recording
the security interest granted hereunder to the Collateral Agent in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
(g) Each Grantor agrees that, should it obtain an ownership
interest in any item of the type set forth in Section 1(g) which is not on the
date hereof a part of the Intellectual Property Collateral (the "AFTER-ACQUIRED
INTELLECTUAL PROPERTY"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Collateral Agent in accordance herewith and (iv) such Grantor shall execute and
deliver to the Collateral Agent an IP Security Agreement Supplement covering
such After-Acquired Intellectual Property as "Additional Collateral" thereunder
and as defined therein, and shall record such IP Security Agreement Supplement
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such After-Acquired Intellectual Property.
Section 14. Voting Rights; Dividends; Etc. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral of
such Grantor or any part thereof for any purpose; provided however, that
such Grantor will not exercise or refrain from exercising any such right
if such action would have a material adverse effect on the value of the
Security Collateral or any part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest and other distributions paid in respect of the
Security Collateral of such Grantor if and to the extent that the
payment thereof is not otherwise prohibited by the terms of the Loan
Documents; provided, however, that any and all
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(A) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a
partial or total liquidation or dissolution or in connection with
a reduction of capital, capital surplus or paid-in-surplus and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Security Collateral
in each case, received after the date of the Initial Extension of
Credit, shall be, and shall be forthwith delivered to the Collateral
Agent to hold as, Security Collateral and shall, if received by such
Grantor, be received in trust for the benefit of the Collateral Agent,
be segregated from the other property or funds of such Grantor and be
forthwith delivered to the Collateral Agent as Security Collateral in
the same form as so received (with any necessary indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to
be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 14(a)(i) shall,
upon notice to such Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would
otherwise be authorized to receive and retain pursuant to Section
14(a)(ii) shall automatically cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall thereupon have the
sole right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such
dividends, interest and other distributions, subject to obtaining the
approval of the applicable HMO Regulator or Insurance Regulator prior to
the exercise by the Collateral Agent of its foreclosure, voting,
assignment or other rights with respect to any Pledged Shares issued by
any HMO Subsidiary or Insurance Subsidiary where such approval is
required for the Collateral Agent to exercise such rights under the
applicable Governmental Rules.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of
this Section 14(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
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Section 15. As to the Assigned Agreements. (a) Each Grantor will
at its expense:
(i) perform and observe in all material respects, all terms and
provisions of the Assigned Agreements to be performed or observed by it,
maintain the Assigned Agreements to which it is a party in full force
and effect, enforce the Assigned Agreements to which it is a party in
accordance with the terms thereof and take all such action to such end
as may be requested from time to time by the Collateral Agent; and
(ii) furnish to the Collateral Agent promptly upon receipt
thereof copies of all written notices, requests and other documents
received by such Grantor under or pursuant to the Assigned Agreements to
which it is a party, and from time to time (A) furnish to the Collateral
Agent such information and reports regarding the Assigned Agreements and
such other Collateral of such Grantor as the Collateral Agent may
reasonably request and (B) upon reasonable request of the Collateral
Agent make to each other party to any Assigned Agreement to which it is
a party such demands and requests for information and reports or for
action as such Grantor is entitled to make thereunder.
(b) Each Grantor hereby consents on its behalf and on behalf
of its Subsidiaries to the assignment and pledge, for security purposes, to the
Collateral Agent for benefit of the Secured Parties of each Assigned Agreement
to which it is a party.
Section 16. Payments Under the Assigned Agreements. All moneys
received or collected pursuant to any Assigned Agreement shall be (i) released
to the applicable Grantor so long as no Event of Default shall have occurred and
be continuing or (ii) if any Event of Default shall have occurred and be
continuing, applied as provided in Section 21(b), subject to obtaining the
approval of the applicable HMO Regulator or Insurance Regulator prior to the
exercise by the Collateral Agent of its foreclosure, voting, assignment or other
rights with respect to any Assigned Agreements to which any HMO Subsidiary or
Insurance Subsidiary is a party where such approval is required for the
Collateral Agent to exercise such rights under the applicable Governmental
Rules.
Section 17. Transfers and Other Liens; Additional Shares. (a)
Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and permitted under the terms of the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities.
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Section 18. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 11,
(b) to ask for, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
or (b) above, and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
compliance with the terms and conditions of any Assigned Agreement or
the rights of the Collateral Agent with respect to any of the
Collateral.
Section 19. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may, as the
Collateral Agent deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 22(b).
Section 20. The Collateral Agent's Duties. (a) The powers
conferred on the Collateral Agent hereunder are solely to protect the Secured
Parties' interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not any Secured Party
has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding,
the Collateral Agent may from time to time, when the Collateral Agent deems it
to be necessary, appoint one or more subagents (each a "SUBAGENT") for the
Collateral Agent hereunder with respect to all or any part of the Collateral. In
the event that the Collateral Agent so appoints any Subagent with
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respect to any Collateral, (i) the assignment and pledge of such Collateral and
the security interest granted in such Collateral by each Grantor hereunder shall
be deemed for purposes of this Security Agreement to have been made to such
Subagent, in addition to the Collateral Agent, for the ratable benefit of the
Secured Parties, as security for the Secured Obligations of such Grantor, (ii)
such Subagent shall automatically be vested, in addition to the Collateral
Agent, with all rights, powers, privileges, interests and remedies of the
Collateral Agent hereunder with respect to such Collateral, and (iii) the term
"Collateral Agent," when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Agent with respect to such
Collateral, shall include such Subagent; provided, however, that no such
Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Agent.
Section 21. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) Subject to obtaining the approval of the applicable HMO
Regulator or Insurance Regulator prior to the exercise by the Collateral
Agent of its foreclosure, voting, assignment or other rights with
respect to any of the Pledged Shares or the Pledged Debt issued by any
HMO Subsidiary or Insurance Subsidiary or any Assigned Agreement to
which any HMO Subsidiary or Insurance Subsidiary is a party where such
approval is required under the applicable Governmental Rules, the
Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under
the N.Y. Uniform Commercial Code (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may: (i)
require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of the Collateral Agent forthwith, assemble
all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place and time to be
designated by the Collateral Agent that is reasonably convenient to both
parties; (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable; (iii) occupy any
premises owned or leased by any of the Grantors where the Collateral or
any part thereof is assembled or located for a reasonable period in
order to effectuate its rights and remedies hereunder or under law,
without obligation to such Grantor in respect of such occupation; and
(iv) exercise any and all rights and remedies of any of the Grantors
under or in connection with the Assigned Agreements, the Receivables and
the Related Contracts or otherwise in respect of the Collateral,
including, without limitation, any and all rights of such Grantor to
demand or otherwise require payment of any amount under, or performance
of any provision of, the Assigned Agreements, the Receivables and the
Related Contracts. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to
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time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all
cash proceeds received by or on behalf of the Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for, and/or then or
at any time thereafter applied (after payment of any amounts payable to
the Collateral Agent pursuant to Section 22) in whole or in part by the
Collateral Agent for the ratable benefit of the Secured Parties against,
all or any part of the Secured Obligations, in the following manner:
(i) first, to the Agents for any amounts owing to the
Agents pursuant to Section 9.04 of the Credit Agreement or
otherwise under the Loan Documents, ratably in accordance with
such respective amounts then owing to the Agents;
(ii) second, deposited as Collateral in the L/C Cash
Collateral Account up to an amount equal to 100% of the aggregate
Available Amount of all outstanding Letters of Credit, provided
that in the event that any such Letter of Credit is drawn, the
Collateral Agent shall pay to the Issuing Bank that issued such
Letter of Credit the amount held in the L/C Cash Collateral
Account in respect of such Letter of Credit, provided further
that, to the extent that any such Letter of Credit shall expire
or terminate undrawn and as a result thereof the amount of the
such Collateral in the L/C Cash Collateral Account shall exceed
the aggregate Available Amount of all then outstanding Letters of
Credit, such excess amount of such Collateral shall be applied in
accordance with the order of priority set out in this Section
21(b);
(iii) third, to the Issuing Bank and the Swing Line Bank
for any amounts then owing to them, in their capacities as such,
under the Loan Documents ratably in accordance with such
respective amounts then owing to the Issuing Bank and the Swing
Line Bank; and
(iv) fourth, to the Lender Parties, for any amount then
owing to them, in their capacities as such, under the Loan
Documents ratably in accordance with such respective amounts then
owing to the Lender Parties.
Any surplus of such cash or cash proceeds held by or on the behalf of
the Collateral Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the applicable Grantor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) Subject to obtaining the approval of the applicable HMO
Regulator or Insurance Regulator prior to the exercise by the Collateral
Agent of its foreclosure, assignment or other rights with respect to any
Assigned Agreement to which any HMO Subsidiary or Insurance Subsidiary
is a party where such approval is required under the applicable
Governmental Rules, all payments received by any Grantor under or in
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connection with any Assigned Agreement or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary indorsement).
(d) The Collateral Agent may, without notice to any Grantor
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against any funds held in the L/C Cash Collateral Account or in any
deposit account of such Grantor.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill of the
business connected with and symbolized by any Trademarks subject to such
sale or other disposition shall be included therein, and such Grantor
shall supply to the Collateral Agent or its designee such Grantor's
know-how and expertise, and documents and things relating to any
Intellectual Property Collateral subject to such sale or other
disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services
of such Grantor.
(f) If the Collateral Agent shall determine to exercise its right
to sell all or any of the Security Collateral of any Grantor pursuant to
this Section 21, each Grantor agrees that, upon request of the
Collateral Agent, such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of such
Security Collateral contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Collateral
Agent, reasonably advisable to register such Security Collateral
under the provisions of the Securities Act of 1933 (as amended
from time to time, the "SECURITIES ACT"), to cause the
registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required
by law to be furnished and to make all amendments and supplements
thereto and to the related prospectus that, in the opinion of the
Collateral Agent, are necessary or reasonably advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use commercially reasonable efforts to qualify the
Security Collateral under the state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale
of such Security Collateral, as requested by the Collateral
Agent;
(iii) cause each such issuer of such Security Collateral,
other than a third party issuer of Pledged Debt, to make
available to its security holders, as soon as practicable, an
earnings statement that will satisfy the provisions of Section
11(a) of the Securities Act;
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(iv) provide the Collateral Agent with such other
information and projections as may be necessary or, in the
opinion of the Collateral Agent, reasonably advisable to enable
the Collateral Agent to effect the sale of such Security
Collateral; and
(v) do or cause to be done all such other acts and things
as may be necessary to make such sale of such Security Collateral
or any part thereof valid and binding and in compliance with
applicable law.
(g) The Collateral Agent is authorized, in connection with any
sale of the Security Collateral pursuant to this Section 21, to deliver
or otherwise disclose to any prospective purchaser of the Security
Collateral: (i) any registration statement or prospectus, and all
supplements and amendments thereto, prepared pursuant to subsection
(f)(i) above; (ii) any information and projections provided to it
pursuant to subsection (f)(iv) above; and (iii) any other information in
its possession relating to such Security Collateral.
Section 22. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense resulted from such
Indemnified Party's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.
Section 23. Amendments; Waivers; Additional Grantors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral Agent
or any other Secured Party to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"SECURITY AGREEMENT
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SUPPLEMENT"), (i) such Person shall be referred to as an "ADDITIONAL GRANTOR"
and shall be and become a Grantor hereunder and each reference in this Agreement
and the other Loan Documents to "Grantor" shall also mean and be a reference to
such Additional Grantor, and (ii) the supplemental schedules I, II, III, IV and
V attached to each Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules I, II, III, IV and V, respectively,
hereto, and the Collateral Agent may attach such supplemental schedules to such
Schedules; and each reference to such Schedules shall mean and be a reference to
such Schedules as supplemented pursuant to each Security Agreement Supplement.
Section 24. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to, in the case of the Borrower or the Collateral Agent, addressed to it at its
address specified in the Credit Agreement and, in the case of each Grantor other
than the Borrower, addressed to it at its address set forth opposite such
Grantor's name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall, when mailed, telegraphed, telecopied or telexed, be effective when
deposited in the mails, delivered to the telegraph company, telecopied or
confirmed by telex answerback, respectively, addressed as aforesaid; except that
notices and other communications to the Collateral Agent shall not be effective
until received by the Collateral Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.
Section 25. Continuing Security Interest; Assignments under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations, (ii) the Termination
Date and (iii) the termination or expiration of all Letters of Credit, (b) be
binding upon each Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement as permitted by Section 9.07 thereunder
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement.
Section 26. Release; Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any Grantor in
accordance with the terms of the Loan Documents (other than sales of Inventory
in the ordinary course of business), the security interest in such Collateral
shall, without further action, automatically be released and the Collateral
Agent will, at such Grantor's expense, promptly execute and deliver to such
Grantor such UCC termination statements or partial releases, as applicable, and
similar documents that are necessary to remove notice of such liens from public
records and return to such Grantor any Collateral, including any Pledged Shares,
that it has pledged to the Collateral Agent, all of the foregoing as
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such Grantor shall reasonably request; provided, however, that at the time of
such request and such release (i) no Default shall have occurred and be
continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at
least ten Business Days (or such shorter time as the Collateral Agent shall
agree to) prior to the date of the proposed release, a written request for
release describing the item of Collateral and the material terms of the sale,
lease, transfer or other disposition in reasonable detail, including, without
limitation, the price thereof and any expenses in connection therewith, together
with a form of release for execution by the Collateral Agent and a certificate
of such Grantor to the effect that the transaction is in compliance with the
Loan Documents and as to such other matters as the Collateral Agent may
reasonably request and (iii) the proceeds of any such sale, lease, transfer or
other disposition required to be applied, or any payment to be made in
connection therewith, in accordance with Section 2.06 of the Credit Agreement
shall, to the extent so required, be paid or made to, or in accordance with the
instructions of, the Collateral Agent when and as required under Section 2.06 of
the Credit Agreement.
(b) Upon the latest of (i) the payment in full in cash of the
Secured Obligations, (ii) the Termination Date and (iii) the termination or
expiration of all Letters of Credit (or the full cash collateralization of any
such Letters of Credit in a manner satisfactory to the Issuing Bank, provided
that the security interest of the Collateral Agent in the L/C Cash Collateral
Account shall survive until the termination or expiration of all Letters of
Credit), pledge, assignment and security interest granted hereby shall terminate
and all rights to the Collateral shall revert to the applicable Grantor. Upon
any such termination, the Collateral Agent will, at the applicable Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
Section 27. Security Interest Absolute. The obligations of each
Grantor under this Agreement are independent of the Secured Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Loan Party or whether such
Grantor or any other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and the other Secured Parties and the pledge,
assignment and security interest hereunder, and all obligations of each Grantor
hereunder, shall be irrevocable, absolute and unconditional irrespective of, and
each Grantor hereby irrevocably waives (to the maximum extent permitted by
applicable law) any defenses it may now have or may hereafter acquire in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document
or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan
Documents or any other amendment or waiver of or any consent to any
departure from any Loan Document, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Loan Party or any of its Subsidiaries or
otherwise;
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(c) any taking, exchange, release or non-perfection of any
Collateral or any other collateral, or any taking, release or amendment
or waiver of or consent to departure from any guaranty, for all or any
of the Secured Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured
Obligations, or any manner of sale or other disposition of any
Collateral or any other collateral for all or any of the Secured
Obligations or any other Obligations of any other Loan Party under or in
respect of the Loan Documents or any other assets of any Loan Party or
any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan
Party any information relating to the business, condition (financial or
otherwise), operations, performance, assets, nature of assets,
liabilities or prospects of any other Loan Party now or hereafter known
to such Secured Party (each Grantor waiving any duty on the part of the
Secured Parties to disclose such information);
(g) the failure of any other Person to execute this Agreement or
any other Collateral Document, guaranty or agreement or the release or
reduction of liability of any Grantor or other grantor or surety with
respect to the Secured Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a
defense available to, or a discharge of, such Grantor or any other
Grantor or a third party grantor of a security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
Section 28. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
Section 29. The Mortgages. In the event that any of the
Collateral hereunder is also subject to a valid and enforceable Lien under the
terms of any Mortgage and the terms of such Mortgage are inconsistent with the
terms of this Agreement, then with respect to such Collateral, the terms of such
Mortgage shall be controlling in the case of fixtures and real estate leases,
letting and licenses of, and contracts and agreements relating to the lease of,
real property, and the terms of this Agreement shall be controlling in the case
of all other Collateral.
Section 30. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
PACIFICARE HEALTH SYSTEMS, INC.
a Delaware corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Chief Financial Officer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
PACIFICARE eHOLDINGS, INC.
a California corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
33
SENIORCO, INC.
a Delaware corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
RxCONNECT ACQUISITION CORPORATION
a California corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Rx SOLUTIONS, INC.
a California corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PACIFICARE BEHAVIORAL
HEALTH, INC.
a Delaware corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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SECUREHORIZONS USA, INC.
a California corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
PACIFICARE VENTURES, INC.
a California corporation
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Treasurer
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
35
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
----------------------------,
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
------------------------------
------------------------------
Attn:
-------------------------
PacifiCare Health Systems, Inc.
Ladies and Gentlemen:
Reference is made to (i) the Amended and Restated Credit
Agreement dated as of August 17, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among PacifiCare Health Systems, Inc., a Delaware corporation, as the Borrower,
the Lender Parties party thereto, Bank of America, N.A., as collateral agent
(together with any successor collateral agent appointed pursuant to Article VII
of the Credit Agreement, the "COLLATERAL AGENT"), and Bank of America, N.A., as
Administrative Agent for the Lender Parties, and (ii) the Non-Shared Collateral
Security Agreement dated August 17, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT")
made by the Grantors from time to time party thereto in favor of the Collateral
Agent for the Secured Parties. Terms defined in the Credit Agreement or the
Security Agreement and not otherwise defined herein are used herein as defined
in the Credit Agreement or the Security Agreement.
Section 1. Grant of Security. The undersigned hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties, a security interest in, all of its right, title and interest in and to
all of the Collateral of the undersigned, whether now owned or hereafter
acquired by the undersigned, wherever located and whether now or hereafter
existing or arising, including, without limitation, the property and assets of
the undersigned set forth on the attached supplemental schedules to the
Schedules to the Security Agreement.
Section 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by the undersigned
under this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct
36
2
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.
Section 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV and V to
Schedules I, II, III, IV and V, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.
Section 4. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 8 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.
Section 5. Obligations Under the Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors. The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.
Section 6. Governing Law. This Security Agreement Supplement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By
-------------------------------
Title:
Address for notices:
--------------------------
--------------------------
--------------------------
37
EXHIBIT B TO THE
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby (a) acknowledges notice of, and consents
to the terms and provisions of, the Non-Shared Collateral Security Agreement
dated August 17, 2001 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "SECURITY AGREEMENT", the terms
defined therein being used herein as therein defined) from ____________________,
(the "GRANTOR") and certain other grantors from time to time party thereto to
Bank of America, N.A., as Collateral Agent (the "COLLATERAL AGENT") for the
Secured Parties referred to therein, (b) consents in all respects to the pledge
and assignment to the Collateral Agent of all of the Grantor's right, title and
interest in, to and under the Assigned Agreement (as defined below) pursuant to
the Security Agreement, (c) acknowledges that the Grantor has provided it with
notice of the right of the Collateral Agent in the exercise of its rights and
remedies under the Security Agreement to make all demands, give all notices,
take all actions and exercise all rights of the Grantor under the Assigned
Agreement, and (d) agrees with the Collateral Agent that:
(i) All payments referred to in paragraph (i) above shall be made
by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from any Secured Party for any
reason any such payment once made.
(ii) The Collateral Agent or its designee shall be entitled to
exercise any and all rights and remedies of the Grantor under the
Assigned Agreement in accordance with the terms of the Security
Agreement, and the undersigned shall comply in all respects with such
exercise.
(iii) In the event of a default by the Grantor in the performance
of any of its obligations under the Assigned Agreement, or upon the
occurrence or non-occurrence of any event or condition under the
Assigned Agreement which would immediately or with the passage of any
applicable grace period or the giving of notice, or both, enable the
undersigned to terminate or suspend its obligations under the Assigned
Agreement, the undersigned shall not terminate the Assigned Agreement
until it first gives written notice thereof to the Collateral Agent and
permits the Grantor and the Collateral Agent the period of time afforded
to the Grantor under the Assigned Agreement to cure such default.
(iv) The undersigned shall deliver to the Collateral Agent,
concurrently with the delivery thereof to the Grantor, a copy of each
notice, request or demand given by the undersigned pursuant to the
Assigned Agreement.
(v) Except as specifically provided in this Consent and
Agreement, neither the Collateral Agent nor any other Secured Party
shall have any liability or obligation under the Assigned Agreement as a
result of this Consent and Agreement, the Security Agreement or
otherwise.
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This Consent and Agreement shall be binding upon the undersigned
and its successors and assigns, and shall inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Parties and their successors, transferees and assigns. This Consent and
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this
Consent and Agreement as of the date set opposite its name below.
Dated: [NAME OF OBLIGOR]
----------------, ----
By
--------------------------
Title:
39
EXHIBIT C TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"IP SECURITY AGREEMENT") dated August 17, 2001, is made by the Persons listed on
the signature pages hereof (collectively, the "GRANTORS") in favor of Bank of
America, N.A. ("BANK OF AMERICA"), as collateral agent (the "COLLATERAL AGENT")
for the Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, PacifiCare Health Systems, Inc., a Delaware corporation,
has entered into an Amended and Restated Credit Agreement dated as of August 17,
2001 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), with Bank of America, as Administrative
Agent, Bank of America, as Collateral Agent, and the Lender Parties party
thereto. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as defined in the Credit Agreement.
WHEREAS, as a condition precedent to the making of Advances and
the issuance of Letters of Credit by the Lender Parties under the Credit
Agreement, each Grantor has executed and delivered that certain Non-Shared
Collateral Security Agreement dated August 17, 2001 made by the Grantors to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT").
WHEREAS, under the terms of the Security Agreement, Grantors have
granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties, and have agreed as a condition thereof to execute this IP
Security Agreement covering such intellectual property for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each Grantor agrees as
follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "COLLATERAL"):
(i) the United States, international, and foreign patents,
patent applications and patent licenses set forth in Schedule A
hereto (as such Schedule A may be supplemented from time to time
by supplements to the Security Agreement and this IP Security
Agreement, each such supplement being in substantially the form
of Exhibit D to the Security Agreement (an "IP SECURITY AGREEMENT
SUPPLEMENT"), executed and delivered by such Grantor to the
Collateral Agent from time to time), together with all reissues,
divisions,
40
2
continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "PATENTS");
(ii) the United States and foreign trademark and service
▇▇▇▇ registrations, applications, and licenses set forth in
Schedule B hereto (as such Schedule B may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Grantor to the Collateral Agent from time to
time) (the "TRADEMARKS");
(iii) the copyrights, United States and foreign copyright
registrations and applications and copyright licenses set forth
in Schedule C hereto (as such Schedule C may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Grantor to the Collateral Agent from time to
time) (the "COPYRIGHTS");
(iv) any and all claims for damages for past, present and
future infringement, misappropriation or breach with respect to
the Patents, Trademarks and Copyrights, with the right, but not
the obligation, to ▇▇▇ for and collect, or otherwise recover,
such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by each Grantor
under this IP Security Agreement secures the payment of all Obligations of such
Grantor now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
SECTION 3. Recordation. Each Grantor authorizes and requests that
the Register of Copyrights, the Commissioner of Patents and Trademarks and any
other applicable government officer record this IP Security Agreement.
SECTION 4. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 5. Grants, Rights and Remedies. This IP Security
Agreement has been entered into in conjunction with the provisions of the
Security Agreement. Each Grantor does hereby acknowledge and confirm that the
grant of the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated herein by
reference as if fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
41
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
PACIFICARE HEALTH SYSTEMS, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
PACIFICARE eHOLDINGS, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
42
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SENIORCO, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
RxCONNECT ACQUISITION CORPORATION
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
Rx SOLUTIONS, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
PACIFICARE BEHAVIORAL
HEALTH, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
43
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SECUREHORIZONS USA, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
PACIFICARE VENTURES, INC.
By
------------------------------
Title:
Address for Notices:
-------------------
------------------------------
------------------------------
------------------------------
44
EXHIBIT D TO THE
SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"IP SECURITY AGREEMENT SUPPLEMENT") dated ________, ____, is made by the Person
listed on the signature page hereof (the "Grantor") in favor of Bank of America,
N.A., ("BANK OF AMERICA"), as collateral agent (the "COLLATERAL AGENT") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, PacifiCare Health Systems, Inc., a Delaware corporation,
has entered into an Amended and Restated Credit Agreement dated as of August 17,
2001 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), with Bank of America, as Administrative
Agent, Bank of America, as Collateral Agent, and the Lender Parties party
thereto. Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as defined in the Credit Agreement.
WHEREAS, pursuant to the Credit Agreement, the Grantor and
certain other Persons have executed and delivered that certain Non-Shared
Collateral Security Agreement dated August 17, 2001 made by the Grantor and such
other Persons to the Collateral Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "SECURITY AGREEMENT").
To create a short form version of the Security Agreement covering certain
intellectual property of the Grantor and such other Persons for recording with
the U.S. Patent and Trademark Office, the United States Copyright Office and
other governmental authorities, the Grantor and such other Persons have executed
and delivered that certain Intellectual Property Security Agreement made by the
Grantor and such other Persons to the Collateral Agent dated August 17, 2001 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "IP SECURITY AGREEMENT").
WHEREAS, under the terms of the Security Agreement and the IP
Security Agreement, the Grantor has granted a security interest in the
Additional Collateral (as defined in Section 1 below) of the Grantor to the
Collateral Agent for the ratable benefit of the Secured Parties and has agreed
as a condition thereof to execute this IP Security Agreement Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
SECTION 1. Confirmation of Grant of Security. The Grantor hereby
acknowledges and confirms the grant of a security interest to the Collateral
Agent for the ratable benefit of the Secured Parties under the Security
Agreement and the IP Security Agreement in and to all of the Grantor's right,
title and interest in and to the following (the "ADDITIONAL COLLATERAL"):
45
(i) The United States, international, and foreign patents,
patent applications, and patent licenses set forth in Schedule A
hereto, together with all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, and
all rights therein provided by international treaties or
conventions (the "PATENTS");
(ii) The United States and foreign trademark and service
▇▇▇▇ registrations, applications, and licenses set forth in
Schedule B hereto (the "TRADEMARKS");
(iii) The copyrights, United States and foreign copyright
registrations and applications and copyright licenses set forth
in Schedule C hereto (the "COPYRIGHTS");
(iv) any and all claims for damages for past, present and
future infringement, misappropriation or breach with respect to
the Patents, Trademarks and Copyrights, with the right, but not
the obligation, to ▇▇▇ for and collect, or otherwise recover,
such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Supplement to Security Agreement and IP Security
Agreement. Schedule V to the Security Agreement and Schedules A, B and C to the
IP Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.
SECTION 3. Recordation. The Grantor authorizes and requests that
the Register of Copyrights, the Commissioner of Patents and Trademarks and any
other applicable government officer to record this IP Security Agreement
Supplement.
SECTION 4. Governing Law. This IP Security Agreement Supplement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
46
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF GRANTOR]
By
------------------------------
Name:
Title:
Address for Notices:
---------------------------------
---------------------------------
---------------------------------