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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
NUTRAMAX PRODUCTS, INC.
---------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
---------------------------------------------------------
(Title of Class of Securities)
67061A 30 0
---------------------------------------------------------
(CUSIP Number)
F. Douglas Raymond, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
(215) 988-2700
---------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 18, 1996
---------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|, (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
- ------------------------- --------------------------
CUSIP No. 67061A 30 0 Page 2 of 8 Pages
- ------------------------- --------------------------
- -------------------------------------------------------------------------------
1 | NAME OF REPORTING PERSON
| S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
| MEDIQ Incorporated
| IRS Identification No. 51-0219413*
- -------------------------------------------------------------------------------
|
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
| (b) |_|
- --------------------------------------------------------------------------------
3 | SEC USE ONLY
|
- --------------------------------------------------------------------------------
4 | SOURCE OF FUNDS*
|
| 00
- --------------------------------------------------------------------------------
5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
| TO ITEMS 2(d) OR 2(e)
| |_|
- --------------------------------------------------------------------------------
6 | CITIZENSHIP OR PLACE OF ORGANIZATION
|
| Delaware
- --------------------------------------------------------------------------------
| 7 | SOLE VOTING POWER
| |
| | -0-
NUMBER OF SHARES |-----|--------------------------------------
BENEFICIALLY | 8 | SHARED VOTING POWER
OWNED BY EACH | |
REPORTING PERSON | | 4,037,258
WITH |-----|--------------------------------------
| 9 | SOLE DISPOSITIVE POWER
| |
| | -0-
|-----|--------------------------------------
| 10 | SHARED DISPOSITIVE POWER
| |
| | 4,037,258
- --------------------------------------------------------------------------------
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
| 4,037,258
- --------------------------------------------------------------------------------
12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
| SHARES*
| |_|
- --------------------------------------------------------------------------------
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
| 47.34%
|
- --------------------------------------------------------------------------------
14 | TYPE OF REPORTING PERSON*
| CO
|
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
The statement on Schedule 13D (the "Original Schedule 13D") dated September
26, 1990 and amended as of August 5, 1991 and September 3, 1991, filed with the
Securities and Exchange Commission by MEDIQ Incorporated ("MEDIQ") with respect
to beneficial ownership of Common Stock (as herein defined) of Nutramax
Products, Inc., which stock is beneficially owned by MEDIQ through its
wholly-owned subsidiary, MEDIQ Investment Services, Inc., a Delaware corporation
("MIS"), is hereby amended and restated in its entirety as follows.
Item 1. Security and Issuer.
This statement relates to the common stock, par value $.001 per share (the
"Common Stock"), of NutraMax Products, Inc. (the "Issuer"). The Issuer is a
Delaware corporation and has its principal executive offices located at 9
Blackburn Drive, Gloucester, Massachusetts 01930.
Item 2. Identity and Background.
The Reporting Person for this statement is MEDIQ, a Delaware corporation,
with its principal offices at One MEDIQ Plaza, Pennsauken, New Jersey 08110.
MEDIQ, through its operating subsidiaries, operates the largest movable critical
care and life support medical equipment rental business in the United States,
renting a wide variety of equipment for use by acute care hospitals, alternative
care facilities, nursing homes and home health care companies. The names,
business or residence addresses and present principal occupations of the
directors and executive officers of the Reporting Person, each of whom is a
United States citizen, is attached on Schedule I. During the last five years
neither the Reporting Person nor such persons have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); and have not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgment, decree of final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On July 25, 1990, MEDIQ acquired 4,931,319 shares of Common Stock as a
result of the merger of the Issuer and Aid-Pack, Inc., which was a wholly-owned
subsidiary of MEDIQ. On May 1, 1991, MEDIQ returned 144,061 shares of Common
Stock to the Issuer pursuant to certain conditions of such merger, resulting in
MEDIQ's beneficial ownership being reduced to 4,787,258 shares. On July 31,
1991, MEDIQ transferred record ownership of its shares of Common Stock to MIS.
In August, 1991, in connection with a public offering by the Issuer of its
Common Stock, MIS sold 750,000 Shares in the public offering. As of the date
hereof, MEDIQ has beneficial ownership and MIS has record ownership of 4,037,238
shares of Common Stock.
Item 4. Purpose of Transaction.
-3-
<PAGE>
The shares of Common Stock beneficially owned by MEDIQ were acquired for
investment purposes.
On July 30, 1993, MEDIQ issued its 7 1/2% Exchangeable Subordinated
Debentures due 2003 (the "Subordinated Debentures") which are, by their terms,
exchangeable into shares of Common Stock of the Issuer owned by MEDIQ at an
exchange ratio initially equal to 65.3595 shares of Common Stock of the Issuer
for each $1,000 principal amount of Subordinated Debentures exchanged. Of the
4,037,258 shares of Common Stock owned by Seller, 2,254,902 shares are held in
escrow (the "Escrowed Shares") for possible exchange with the Subordinated
Debentures pursuant to that certain Indenture dated as of July 30, 1993 between
MEDIQ and First Fidelity Bank, N.A. Pennsylvania (the "Indenture") and that
certain Escrow Agreement dated July 30, 1993 among MEDIQ, MIS and First Fidelity
Bank, N.A., Pennsylvania (the "Escrow Agreement"). As of September 30, 1996
there was outstanding $34.5 million in principal amount of Subordinated
Debentures.
In January, 1995, MEDIQ announced that its board of directors had formed a
special committee for the purpose of exploring alternative ways to maximize
shareholder value. In March, 1995, MEDIQ announced that the special committee
had authorized Lazard Freres & Co. LLC, MEDIQ's investment banker, to solicit
offers for MEDIQ and, among other assets, MEDIQ's investment in the Issuer.
In June, 1995, the Issuer reported that its board of directors had formed a
special committee to explore strategic alternatives for the company. The special
committee retained Wasserstein Parella & Co. as financial advisors to seek
opportunities for the Issuer to maximize shareholder value.
In September, 1996, MEDIQ and MIS (together the "Seller") entered into a
Stock Purchase Agreement dated as of September 18, 1996 with the Issuer (the
"Stock Purchase Agreement"). Pursuant to the Stock Purchase Agreement, and
subject to the conditions set forth therein (including the approval by
stockholders of the Issuer, other than Seller, and the receipt by the Issuer of
adequate financing), the Issuer has agreed to purchase from Seller all of the
shares of the Issuer owned by Seller for a purchase price of $9.00 per share, or
$36,335,322 in the aggregate.
The purchase price for the Common Stock (other than the Escrowed Shares)
will be paid by wire transfer on the Closing Date under the Stock Purchase
Agreement and the certificates representing such shares will be transferred to
the Issuer at the same time. Pursuant to the Stock Purchase Agreement, the
Closing is to occur on December 31, 1996 or such other date mutually agreed upon
by MEDIQ, MIS and the Issuer. Seller has agreed to deliver to the Issuer the
Escrowed Shares as they are released from escrow under the Indenture and Escrow
Agreement. The Issuer will pay for the Escrowed Shares by delivery of its
promissory note (the "Note") in the principal amount of $20,294,118, secured by
a letter of credit satisfactory to MEDIQ, pursuant to which the Issuer will make
prepayments in an amount equal to the
-4-
<PAGE>
purchase price for any of the Escrowed Shares so delivered in lots of no less
than 50,000 shares.
Unless an event of default occurs under the Note, from and after the
Closing Date, Seller will vote the Escrowed Shares in the manner directed by the
Issuer and the Issuer will be entitled to receive any and all dividends paid or
payable with respect to the Escrowed Shares, other than dividends apportioned to
the Escrowed Shares to which MEDIQ is not entitled pursuant to the terms of the
Indenture. The number of shares and the purchase price set forth in the Stock
Purchase Agreement will be appropriately adjusted for any stock split, reverse
stock split, stock dividend or any similar event occurring after the date of the
Stock Purchase Agreement but prior to the consummation of the purchase and sale
of the Common Stock. The foregoing summary of the Stock Purchase Agreement is
qualified in its entirety by reference to the copy of the Stock Purchase
Agreement included as Exhibit 99.1 to this Schedule 13D and incorporated herein
in its entirety by reference.
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of the date hereof, MEDIQ is the beneficial owner of 4,037,258
shares of Common Stock. Based upon the Issuer's Report on Form 10-Q for the
fiscal quarter ended June 30, 1996, MEDIQ's Common Stock holdings represent
approximately 47.34% of the 8,519,952 shares of Common Stock then outstanding.
See Schedule 1 hereto for information regarding the directors and executive
officers of MEDIQ.
(c) and (d) The response to Item 4 is incorporated herein by reference.
(e) Not applicable.
Item 6. Contracts, arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
The Stock Purchase Agreement is included as Exhibit 99.1 to this Schedule
13D and is incorporated herein by reference. See Item 4.
In connection with the Subordinated Debentures, MEDIQ has entered into an
Indenture and Escrow Agreement, each dated as of July 30, 1993 between MEDIQ and
First Fidelity Bank, N.A. Pennsylvania, which are included as Exhibits 99.2 and
99.3 to this Schedule 13D and are incorporated herein by reference, pursuant to
which certain of the Subordinated Debentures are, by their terms, exchangeable
into shares of stock of the Issuer owned by MEDIQ. See Item 4.
In connection with a Credit Agreement between MEDIQ/PRN Life Support
Services, Inc., MEDIQ, PRN Holdings, Inc., Banque Nationale de Paris,
NationsBank, N.A. and certain other lenders, dated as of October 1, 1996, MEDIQ
has pledged all of the shares of the Issuer owned by it, except the Escrowed
Shares, to Banque Nationale de Paris for the benefit of the lenders pursuant to
a Security Agreement dated
-5-
<PAGE>
as of October 1, 1996, which is included as Exhibit 99.4 to this Schedule 13D
and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
1. Stock Purchase Agreement dated as of September 18, 1996 among MEDIQ
Incorporated, MEDIQ Investment Services, Inc. and NutraMax Products,
Inc.
2. Indenture dated as of July 30, 1993 between MEDIQ Incorporated and
First Fidelity Bank, N.A. Pennsylvania, which is incorporated herein
by reference to Exhibit 4.1 to Registration Statement on Form S-2 No.
33-61724 originally filed April 28, 1993, as amended.
3. Escrow Agreement dated July 30, 1993 among MEDIQ Incorporated, MEDIQ
Investment Services, Inc. and First Fidelity Bank, N.A., Pennsylvania.
4. Security Agreement dated as of October 1, 1996 among MEDIQ/PRN Life
Support Services, Inc., the Lender Parties party thereto, Banque
Nationale de Paris, as Administrative Agent and as Initial Issuing
Bank, and NationsBank, N.A., as Documentation Agent.
-6-
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 11, 1996
MEDIQ INCORPORATED
/s/ Michael F. Sandler
------------------------------
Michael F. Sandler
Chief Financial Officer
-7-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
Name, Business or Residence Ownership of Shares of
Addresses* Principal Occupation Common Stock of the Issuer
- --------------------------- -------------------- --------------------------
<S> <C> <C>
Michael J. Rotko, Esquire** Partner, Drinker Biddle & Reath, a -0-
Philadelphia National Bank Bldg. law firm and a Director and
1345 Chestnut Street Chairman of MEDIQ
Philadelphia, PA 19107-3496
Jacob A. Shipon** Physician, Director of MEDIQ 1,000***
5200 E. Roosevelt Boulevard
Philadelphia, PA 19124
Thomas E. Carroll President and Chief Executive 1,326****
Officer and a Director of MEDIQ
and MIS
Michael F. Sandler Senior Vice President, Finance and 14,400
Chief Financial Officer and Treasurer
and a Director of MEDIQ and a
Director of the Issuer
Sheldon M. Bonovitz, Esquire Partner, Duane, Morris & 50
Duane, Morris & Heckscher Heckscher, a law firm and a Director
4200 One Liberty Place of MEDIQ
Philadelphia, PA 19103
Lionel Felzer Retired; a Director of MEDIQ -0-
Breyer Woods
412 Linden Drive
Elkins Park, PA 19027
Mark S. Levitan Vice President -- Consulting -0-
529 Spring Mill Road Division, MedQuist Inc. and a
Villanova, PA 19085 Director of MEDIQ
Jay M. Kaplan Senior Vice President and Chief -0-
Financial Officer of MEDIQ/PRN
Life Support Services, Inc., Assistant
Treasurer of MEDIQ and Vice
President and Treasurer of MIS
H. Scott Miller President, Strategic Advisors -0-
Strategic Advisors International, Inc. and a Director
International, Inc. of MEDIQ
One Tower Bridge
West Conshohocken, PA 19428
</TABLE>
* If not otherwise indicated, the business address of each person is One
Mediq Plaza, Pennsauken, NJ 08110-1460.
** Mr. Rotko, together with his mother, Bessie G. Rotko, Judith M. Shipon (the
spouse of Jacob A. Shipon), John Iskrant and PNC Bank, N.A., are trustees
of a Trust which owns 3,570,969 shares of the Common Stock, and 3,570,969
shares of the Preferred Stock of MEDIQ. The Trustees share voting and
investment power with respect to such shares.
-8-
<PAGE>
*** Shares are owned jointly by Dr. and Mrs. Shipon.
**** Includes 300 shares held by Mr. Carroll's spouse and 716 shares held by
Mr. Carroll's children as to which Mr. Carroll disclaims beneficial
ownership.
-9-
EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September 18, 1996 (the
"Agreement"), among MEDIQ Incorporated, a Delaware corporation ("MEDIQ"), MEDIQ
Investment Services, Inc., a Delaware corporation ("MIS" and together with
MEDIQ, collectively the "Seller"), and NutraMax Products, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Seller owns 4,037,258 shares of Common Stock of the Company
(the "NutraMax Shares"); and
WHEREAS, 2,254,902 of the NutraMax Shares are held in escrow (the
"Escrowed Shares") in support of MEDIQ's 7 1/2% Subordinated Debentures due 2003
(the "Bonds") pursuant to that certain Indenture dated as of July 30, 1993
between MEDIQ and First Fidelity Bank, N.A., Pennsylvania (the "Indenture") and
that certain Escrow Agreement dated July 30, 1993 among MEDIQ, MIS and First
Fidelity Bank, N.A., Pennsylvania (the "Escrow Agreement"); and
WHEREAS, the Seller desires to sell and the Company desires to purchase
all of the NutraMax Shares in accordance with the terms and conditions hereof;
and
WHEREAS, pursuant to Section 11.14 of the Indenture, MEDIQ has the right
to deliver cash in lieu of the Escrowed Shares upon exchange of the MEDIQ Bonds.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereto
agree as follows:
1. SALE OF THE SHARES
1.1 On the dates and in the amounts as set forth herein, the Seller
shall transfer, assign, sell and deliver to the Company, and the Company shall
purchase from the Seller all of the NutraMax Shares for a purchase price of
$9.00 per share (the "Purchase Price"), or $36,335,332 in the aggregate for all
Shares. The closing of the sale and purchase and delivery of all of the Shares
other than the Escrowed Shares (the "Closing") shall be held as provided in
Section 1.2 and thereafter the sale and purchase and delivery against payment of
the Note (as hereinafter defined) of Escrowed Shares shall occur as provided in
Section 1.3.
1.2 Closing. The Closing of the purchase and sale of the NutraMax Shares
(other than the Escrowed Shares) shall be held on December 31, 1996 or such
other date as Seller and the Company may mutually agree (the "Closing Date"). At
the Closing (i) the purchase price for the NutraMax Shares other than the
Escrowed Shares shall be paid by the Company by wire transfer pursuant to
instructions previously given by Seller to the Company for that purpose against
delivery of certificates for the NutraMax Shares so purchased duly endorsed or
<PAGE>
accompanied by stock powers duly executed in blank; (ii) payment for the
Escrowed Shares shall be made by delivery by the Company to Seller of a
promissory note of the Company in favor of Seller substantially in the form
attached hereto as Exhibit A, in the original principal amount of $20,294,118
(the "Note") secured by a letter of credit reasonably acceptable in form and
substance to Seller (the "Letter of Credit").
1.3 Delivery of Escrowed Shares. Seller shall, as Escrowed Shares are
released from escrow under the Indenture and Escrow Agreement, upon 3 business
days prior notice to the Company, sell, transfer, assign and deliver such
Escrowed Shares to the Company free and clear of all liens, claims, encumbrances
and restrictions (other than as imposed by applicable securities laws), upon
receipt by Seller from the Company of a prepayment of the Note in an amount
equal to the Purchase Price of the Escrowed Shares so delivered. Notwithstanding
the foregoing, the Company shall not be required to prepay the Note and accept
delivery of any of the Escrowed Shares except in lots of no less than 50,000
shares; provided, however, if there are less than 50,000 Escrowed Shares
remaining, the Company shall be required to prepay the Note upon delivery of
such remaining Escrowed Shares.
1.4 Delivery of Cash. To the extent that any holder of a MEDIQ Bond or
Bonds presents such MEDIQ Bond or Bonds for exchange for Escrowed Shares in
accordance with the terms of the Indenture and MEDIQ delivers Escrowed Shares to
such holder, (i) the principal amount of the Note shall be reduced by an amount
equal to the product of the number of Escrowed Shares so delivered by MEDIQ to
such holder and $9.00, and (ii) the principal amount of the Note shall further
be reduced by an amount (the "Excess Cash Amount") equal to the product of the
number of Escrowed Shares so delivered by MEDIQ to such holders and the number
which is equal to (X) $1,000 divided by the then Exchange Rate (as such term is
defined in the Indenture) minus (Y) $9.00, provided, however, that in lieu of
such further reduction in the principal amount of the Note under the foregoing
clause (ii), the Company may elect to receive an amount in cash from Seller
equal to the Excess Cash Amount.
1.5 Voting of Escrowed Shares, etc. Seller agrees that, from and after
the Closing, (i) at any meeting of stockholders of the Company, however called,
or in connection with a written consent of the Company's stockholders, Seller
shall vote (or cause to be voted) the Escrowed Shares in the manner directed by
the Company and (ii) the Company shall be entitled to receive any and all
dividends paid or payable with respect to the Escrowed Shares (other than
dividends apportioned to the Escrowed Shares pursuant to Section 11.05 of the
Indenture to which Seller is not entitled); provided, however, that the
obligations of Seller under the foregoing clause (i) and the right of the
Company to receive dividends pursuant to the foregoing clause (ii) shall
terminate upon an event of default under the Note.
2. CERTAIN REPRESENTATIONS AND WARRANTIES
2.1 Certain Representations and Warranties by the Seller. The Seller
represents and warrants to the Company that:
2
<PAGE>
(a) Organization and Good Standing. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to carry on its
business and to own and lease the assets which it owns and leases.
(b) Power and Authorization. Each Seller has full legal right, power and
authority to enter into and perform its obligations under this Agreement and the
other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by each Seller of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly and validly
executed and delivered by each Seller and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms. When
executed and delivered by such Seller as contemplated herein, each of such other
agreements and documents shall constitute the legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor the
consummation by each Seller of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Seller is a party or by which it or any of
its properties are bound (which, in relation to a contract, commitment,
agreement, understanding, arrangement or restriction would have a material
adverse effect on the Seller or prohibit the transactions contemplated herein)
and (ii) no consent, approval, order or authorization of any court,
administrative agency, other governmental entity or any other person is required
(as opposed to voluntary) by or with respect to such Seller in connection with
the execution and delivery of this Agreement by such Seller.
(d) Ownership of Shares. (i) Upon transfer and delivery of the NutraMax
Shares by the Seller hereunder to the Company, as provided herein, Company shall
acquire good and marketable title to such shares, free and clear of all claims,
liens, charges, proxies, encumbrances and security interests and (ii) the Seller
does not own beneficially (as hereinafter defined) or of record any shares of
common stock of the Company other than the NutraMax Shares.
(e) No Broker. Neither Seller nor any director, officer, employee of
Seller has incurred or will incur on behalf of the Company any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement.
2.2 Certain Representations and Warranties by the Company. The Company
represents and warrants to the Seller that:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and
3
<PAGE>
has all necessary corporate power and authority to carry on its business and to
own and lease the assets which it owns and leases.
(b) Power and Authorization. The Company has legal right, power and
authority to enter into and perform its obligations under this Agreement and the
other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by the Company of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action pursuant to the Delaware General Corporation Law and otherwise.
The transactions contemplated by this Agreement have been approved by a special
committee of the board of directors composed entirely of directors who are not
officers or employees of the Company and/or present or former employees or
consultants of MEDIQ. This Agreement has been duly and validly executed and
delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms. When executed
and delivered as contemplated herein, each of such other agreements and
documents shall constitute the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor the
consummation by the Company of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement,
obligation, duty or restriction of any kind to which the Company is a party or
by which it or any of its properties is bound and (ii) no consent, approval,
order or authorization of or by the stockholders of the Company or of any court,
administrative agency, other governmental entity or any other person (other than
that which has already been obtained) is required (as opposed to voluntary) by
or with respect to the Company in connection with the execution and delivery of
this Agreement by it.
(d) Company SEC Documents. The Company has timely filed with the
Securities and Exchange Commission (the "SEC"), and has heretofore delivered to
Seller true, correct and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed with the SEC by it since
December 31, 1993 pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") or the Securities Act of 1933 (the "Securities Act") (such documents, as
supplemented and amended since the time of filing, collectively, the "NutraMax
SEC Documents"). The NutraMax SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time filed (and in
the case of registration statements and proxy statements, on the dates of
effectiveness and the date of mailing, respectively) (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. The financial
statements of the Company included in the NutraMax SEC Documents at the time
filed (and, in the case of registration statements and proxy statements, on the
date of effectiveness and the date of mailing, respectively) complied as to form
in all material respects with applicable accounting requirements and with the
4
<PAGE>
published rules and regulations of the Commission with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the period involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and fairly present (subject in the case of unaudited
statements to normal, recurring audit adjustments) the consolidated financial
position of the Company as at the dates thereof and the consolidated results of
its operations and cash flows for the periods then ended.
(e) Capitalization. The Company's authorized issued and outstanding
capital stock and its other securities are fully and accurately described in the
Company's most recent SEC reports. Except for shares subject to the Company's
employee stock option and similar employee benefits plans, no person has any
preemptive or other similar rights and with respect to any such equity interests
or other securities and there are no offers, options, warrants, rights,
agreements or commitments of any kind (contingent or otherwise) relating to the
issuance, conversion, registration, voting, sale or transfer of any equity
interests or other securities of the Company (including, without limitation, the
NutraMax Shares) or obligating the Company or any other person to purchase or
redeem any such equity interests or other securities.
(f) No Brokers. Neither the Company nor any director, officer or
employee of the Company has incurred or will incur on behalf of the Company, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement.
3. CONDITIONS PRECEDENT
3.1 Mutual Condition. The obligation of the Company and the Seller to
enter and consummate the transactions contemplated hereby is subject to the
satisfaction of the following condition: the transactions contemplated hereby
shall not violate any order or decree of any court or governmental body of
competent jurisdiction and no suit, action, proceeding or investigation shall
have been brought or threatened by any person (other than Seller or the Company)
which questions the validity or legality of this Agreement or any of the
transactions contemplated hereby.
3.2 Certain Conditions Precedent to the Company's Obligations. The
obligation of the Company to enter into and complete the transactions
contemplated hereby is subject to the fulfillment (or waiver in writing by the
Company in its sole discretion) on or prior to the Closing Date of the
conditions that:
(a) the representations and warranties of the Seller contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and on the Closing Date with the same force and effect as though
made on and as of the Closing Date;
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<PAGE>
(b) the Seller shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by the Seller on or prior to the Closing Date;
(c) the Seller shall have delivered to the Company a certificate, dated
the Closing Date and signed by a duly authorized officer of the Seller, to the
foregoing effect; and
(d) the Company shall have received financing upon terms and for such
amount necessary to fulfill its obligations hereunder.
(e) Seller shall have delivered to the Company an opinion of counsel to
the Seller as to the matters set forth in Section 2.1(a), (b), (c) and (d)
hereof (provided that with respect to Sections 2.1(c) and (d) the opinion need
only relate to such factual matters as to which such counsel has knowledge.
(f) the Company shall have received a favorable vote of its shareholders
other than Seller with respect to the consummation of the transactions
contemplated by this Agreement.
(g) the Board of Directors of the Company shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the Shareholders of the Company (other than the Seller).
(h) the Board of Directors of the Seller shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the shareholders of the Seller.
3.3 Certain Conditions Precedent to Seller's Obligations. The obligation
of the Seller to enter into and complete the transactions contemplated hereby is
subject to the fulfillment (or waiver in writing by the Seller in its sole
discretion) on or prior to the Closing Date of the conditions that:
(a) the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and on the Closing Date with the same force and effect as though
made on and as of the Closing Date;
(b) the Company shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complete with the by the Company on or prior to the Closing Date;
(c) the Company shall have delivered to Seller a certificate, dated the
Closing Date and signed by a duly authorized officer of the Company, to the
foregoing effect;
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<PAGE>
(d) the Company shall have obtained at its own expense and provided to
Seller the Letter of Credit securing its obligations under the Note; and
(e) the Company shall have delivered to Seller an opinion of counsel to
the Company as to the matters set forth in Section 2.2(a), (b), (c) hereof
(provided that with respect to Section 2.2(c) the opinion need only relate to
agreements as to which such counsel has knowledge).
(f) the Company shall have received a favorable vote of its shareholders
other than Seller with respect to the consummation of the transactions
contemplated by this Agreement.
(g) the Board of Directors of the Company shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the Shareholders of the Company (other than the Seller).
(h) the Board of Directors of the Seller shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the shareholders of the Seller.
4. CLOSING DELIVERIES
4.1 Seller's Deliveries. At the Closing, Seller shall deliver, or shall
cause to be delivered to the Company the following:
(a) certificates for all of the NutraMax Shares other than the Escrowed
Shares, duly endorsed or accompanied by stock powers duly executed in blank;
(b) an irrevocable proxy authorizing the Board of Directors of the
Company to vote all of the Escrowed Shares, in form and substance reasonably
satisfactory to the parties; provided that such proxy shall terminate upon an
event of default under the Note;
(c) copies of the resolutions of the Board of Directors of each Seller
authorizing the execution, delivery and performance of this Agreement, certified
as of the Closing by the Secretary or an Assistant Secretary of Seller; and
(d) such other documents and instruments as the Company may reasonably
request to effectuate or evidence the transactions contemplated by this
Agreement;
4.2 The Company's Deliveries. At the Closing, the Company shall deliver,
or shall cause to be delivered to Seller the items described below:
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<PAGE>
(a) the Closing Payment;
(b) the Note;
(c) the Letter of Credit; and
(d) a copy of the resolutions of the Board of Directors of the
Company and each committee thereof authorizing the execution, delivery and
performance by the Company of this Agreement and the other agreements and
instruments referred to herein, certified as of the Closing by the Secretary or
an Assistant Secretary of the Company.
5. INDEMNIFICATION
5.1 Indemnification by Seller. Seller shall indemnify and hold the
Company and its officers, directors and shareholders harmless against and in
respect of any and all losses, costs, expenses, claims, damages, obligations and
liabilities, including interest, costs of investigation, penalties and
reasonable attorneys' fees and disbursements ("Damages") which Buyer or any such
person may suffer, incur or become subject to arising out of, based upon or
otherwise in respect of any inaccuracy in or breach of any representation or
warranty of Seller made in or pursuant to this Agreement or any agreement or
document required to be delivered pursuant to this Agreement or any breach or
nonfulfillment of any covenant or obligation of Seller contained in this
Agreement or such other agreements and documents.
5.2 Indemnification by the Company. The Company shall indemnify and hold
Seller and its officers, directors and shareholders harmless against and in
respect of any and all Damages which Seller or any such person may suffer, incur
or become subject to arising out of, based upon or otherwise in respect of any
inaccuracy in or breach of any representation or warranty of the Company made in
or pursuant to this Agreement or any agreement or document required to be
delivered pursuant to this Agreement or any breach or nonfulfillment of any
covenant or obligation of the Company contained in this Agreement or such other
agreements and documents.
5.3 Third Party Claims.
(a) Each party shall promptly notify the other of the assertion by any
third party of any claim with respect to which the indemnification set forth in
this Section relates. The indemnifying party shall have the right, upon notice
to the indemnified party within ten (10 business days after the receipt of any
such notice, to undertake the defense of or, with the consent of the indemnified
party (which consent shall not unreasonably be withheld), to settle or
compromise such claim. The failure of the indemnifying party to give such notice
and to undertake the defense of or to settle or compromise such a claim shall
constitute a waiver of the indemnifying party's rights under this Section 5.3(a)
and in the absence of gross negligence or willful misconduct on the part of the
indemnified party shall preclude the indemnifying party from disputing the
manner in which the indemnified party may conduct the defense of such claim or
the reasonableness of any amount paid by the indemnified party in satisfaction
of such claim.
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(b) The election by the indemnifying party, pursuant to Section 5.3(a),
to undertake the defense of a third party claim shall not preclude the party
against which such claim has been made also from participating or continuing to
participate in such defense, so long as such party bears its own legal fees and
expenses for so doing.
6. MISCELLANEOUS
6.1 Best Efforts. Each of the parties shall use its best reasonable
efforts to take all action and do all things necessary, proper or advisable to
consummate the transaction contemplated by this Agreement.
6.2 Parties in Interest; Assignment. Neither of the parties to this
Agreement may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party hereto, provided that
Seller may pledge, assign or otherwise transfer part or all of its interest in
and to the Note without such consent. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
6.3 Entire Agreement; Amendments; Waiver. This Agreement contains the
entire understanding between the Seller and the Company with respect to its
specific subject matter. This Agreement may be amended only by written
instrument duly executed by the parties hereto. No party may waive any term,
provision, covenant or restriction of this Agreement except by duly signed
writing referring to the specific provision to be waived.
6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered personally
or transmitted by telex, fax or telegram, to the respective parties as follows:
(a) If to the Seller, to it at:
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110-1460
Attention: Thomas E. Carroll, President
Telecopier: (609) 661-0958
with a copy to:
Drinker, Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
Attention: F. Douglas Raymond, III, Esquire
Telecopier: (215) 988-2757
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(b) If to the Company, to it at:
NutraMax Products, Inc.
9 Blackburn Drive
Gloucester, Massachusetts 01930
Attention: Donald E. Lepone, President
Telecopier: 508-281-7824
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attention: Richard E. Floor, P.C.
Telecopier: 617-570-8150
or to such other address as any party may have furnished to the others
in writing.
6.5 Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Delaware.
6.6 Survival. All representations, warranties, covenants and agreements
of the parties hereto shall survive indefinitely the Closing.
6.7 Termination.
(a) This Agreement may be terminated and the transactions contemplated
herein may be abandoned at any time prior to the Closing:
(i) by Company or Seller, if the Closing has not occurred by
December 31, 1996;
(ii) by mutual consent of Company and Seller;
(iii) by Company, if any representation or warranty of Seller made
in or pursuant to this Agreement is untrue or incorrect in any material
respect, Seller breaches its covenants or other terms of this Agreement
or any of the conditions precedent to Closing contained in Section 3.2
are not satisfied on or before December 31, 1996; or any event or
circumstance occurs such that any of such conditions will not be
satisfied as of such date; or
(iv) by Seller, if any representation or warranty of Company made in
or pursuant to this Agreement is untrue or incorrect in any material
respect, Company breaches the covenants or other terms of this Agreement
or any of the conditions precedent to Closing contained in Section 3.3
are not satisfied on or before December 31, 1996 or any
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<PAGE>
event or circumstance occurs such that any of such conditions will not
be satisfied as of such date.
(b) A party terminating this Agreement pursuant to Section 6.7 shall
give written notice thereof to each other party hereto, whereupon this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any party; provided, however, that if such termination
is pursuant to Section 6.7(a)(i) by reason of a breach by a party hereto, such
termination is by Company pursuant to Section 6.7(a)(iii) or if such termination
is by Seller pursuant to Section 6.7(a)(iv), nothing herein shall affect the
non- breaching party's right to damages on account of such other party's breach.
6.8 Specific Performance. The Seller acknowledges that the NutraMax
Shares are unique and that the Company will not have an adequate remedy at law
if the Seller fails to perform any of its obligations hereunder, and the Seller
agrees that the Company shall have the right, in addition to any other right it
has, to specific performance or equitable relief by way of injunction if the
Seller fails to perform any of its obligations hereunder.
6.9 Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same document. The article and
section headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
6.10 Expenses. Each of the parties hereto shall pay the fees and
expenses it incurs in connection with this Agreement, other than as a result of
the breach hereof by the other party hereto.
6.11 Certain Definitions. For purposes of the Agreement:
(a) "beneficially owned" shall have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act, as such Rule is in effect on the date
hereof.
(b) "business day" means any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
New York, New York or Philadelphia, Pennsylvania.
6.12 Stock Splits, etc. The number of NutraMax Shares and the purchase
price therefor specified in this Agreement shall be appropriately adjusted for
any stock split, reverse stock split, stock dividend or any similar event
occurring after the date hereof and prior to the consummation of the purchase
and sale of all such NutraMax Shares.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written.
MEDIQ INCORPORATED
By: /s/ Michael Sandler
------------------------------
MEDIQ INVESTMENT SERVICES, INC.
By: /s/ Michael Sandler
------------------------------
NUTRAMAX PRODUCTS, INC.
By: /s/ Donald E. Lepone
------------------------------
PROMISSORY NOTE
$20,294,118.00 _____________, 1996
FOR VALUE RECEIVED, NutraMax Products, Inc., a Delaware corporation with
its principal place of business at 9 Blackburn Drive, Gloucester, MA 01930
("Company"), hereby promises to pay to the order of MEDIQ Investment Services,
Inc. ("Seller"), a Delaware corporation with its principal place of business c/o
MEDIQ Incorporated ("MEDIQ"), One MEDIQ Plaza, Pennsauken, NJ 08110-1460, the
principal amount of TWENTY MILLION TWO HUNDRED NINETY-FOUR THOUSAND ONE HUNDRED
EIGHTEEN DOLLARS ($20,294,118.00) in installments as Escrowed Shares (as defined
in that certain Stock Purchase Agreement among MEDIQ, Seller and Company, dated
as of September 18, 1996 (the "Purchase Agreement")) are released from escrow
under the Indenture and the Escrow Agreement (as such terms are defined in the
Purchase Agreement) in accordance with Section 1.3 of the Purchase Agreement,
together with interest at the annual rate of 7 1/2%, payable quarterly in
arrears; provided, however, that (i) if this Note is still outstanding eighteen
(18) months after the Closing Date (as such date is defined in the Purchase
Agreement), the annual interest rate of this Note shall be reduced to 5%;
(ii) if this Note is still outstanding thirty (30) months after the
Closing Date, the annual interest rate on this Note shall be reduced to 4%;
(iii) if this Note is still outstanding forty-two (42) months after the Closing
Date, the annual interest rate on this Note shall be reduced to 3%; and (iv) if
this Note is still outstanding fifty-four (54) months after the Closing Date,
interest shall no longer accrue under this Note. Notwithstanding the foregoing,
the outstanding principal amount of this Note is subject to reduction in
accordance with the terms of the Purchase Agreement and is subject in all
respects thereto.
Payments of principal and interest shall be made in lawful money of the
United States of America by wire transfer of immediately available funds to
Seller at One MEDIQ Plaza, Pennsauken, New Jersey 08110-1460 or at such other
place as Seller shall designate to Company in writing.
This Note is entitled to be benefits of, and is secured by that certain
Letter of Credit issued by ___________________________ (the "Letter of Credit").
The failure of Company to make any payment of principal or interest when
due under this Note shall consititute an "Event of Default" hereunder. Upon the
occurrence of an Event of Default, Seller may draw on the Letter of Credit to
satisfy the obligations of Company hereunder.
Payment under this Note is subject to the terms and conditions of the
Purchase Agreement, including, without limitation, the delivery of Escrowed
Shares to Company pursuant to Section 1.3 thereof.
<PAGE>
This Note shall inure to the benefit of Seller and its successors and
assigns and shall be binding upon Company and its successors and assigns.
Subject to applicable law, this Note may be amended, modified and supplemented
only by written agreement of both Company and Seller.
Any notice, request or other communication pursuant to this Note shall
be deemed duly given if delivered pursuant to the notice provisions contained in
the Purchase Agreement.
No failure or delay on the part of Seller to insist on strict
performance of Company's obligations hereunder or to exercise any remedy shall
constitute a waiver of Seller's rights in that or any other instance. No waiver
of any of Seller's rights shall be effective unless in writing, and any waiver
of any default or any instance of non-compliance shall be limited to its express
terms and shall not extend to any other default or instance of non-compliance.
Company hereby waives presentment, notice of nonpayment or dishonor,
protest, notice of protest and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of payment of this
Note, and hereby waives all notice or right of approval of any extensions,
renewals, modifications or forbearances which may be allowed.
Company shall pay all reasonable costs and expenses (including
attorneys' fees) incurred by Seller relating to the enforcement of this Note.
Any provision hereof found to be illegal, invalid or enforceable for any
reason whatsoever shall not affect the validity, legality or enforceability of
the remainder hereof.
If the effective interest rate on this Note would otherwise violate any
applicable usury law, then the interest rate shall be reduced to the maximum
permissible rate and any payment received by Seller in excess of the maximum
permissible rate shall be treated as a prepayment of the principal of this Note.
The execution, delivery and performance of this Note shall be governed
by and construed in accordance with the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, Company has caused this Note to be executed under
seal by its duly authorized representatives as of the date set forth above.
NUTRAMAX PRODUCTS, INC.
By:____________________________
Name:
Title:
ATTEST: ________________________
EXHIBIT 99.3
MEDIQ INCORPORATED,
MEDIQ INVESTMENT SERVICES, INC.
and
FIRST FIDELITY BANK, N.A. PENNSYLVANIA,
as Escrow Agent
ESCROW AGREEMENT
July 30, 1993
7 1/2% Exchangeable Subordinated Debentures Due 2003
<PAGE>
Escrow Agent and its successors as such, the Company, MIS and the Escrow Agent
hereby agree as follows:
SECTION 1. Deposit.
The Company, simultaneously with the execution and delivery of this
Agreement, is delivering to the Escrow Agent, irrevocably except as provided in
Section 7 hereof, to be held by the Escrow Agent hereunder certificates,
registered in the name of the Escrow Agent or its agent or nominee, representing
2,254,902 shares of NutraMax Common Stock. The Company and MIS represent and
warrant that MIS has good and lawful title to such shares, that such shares are
fully paid and non-assessable, and that such shares are delivered free and clear
of any liens, claims, charges and encumbrances. The Escrow Agent hereby
acknowledges receipt of such certificates for 2,254,902 shares of NutraMax
Common Shares and further acknowledges that it holds and will hold the NutraMax
Common Stock and the proceeds thereof pursuant to and in accordance with the
terms hereof and of the Indenture.
The Company and the Escrow Agent recognize that the holders of the
Debentures have an interest in the powers conferred on the Escrow Agent under
this Agreement, and, except as provided in Section 8 hereof, such powers may not
be revoked, amended or modified without the consent of the holders of at least a
majority in principal amount of the Debentures at the time outstanding; provided
that no revocation, amendment or modification shall affect adversely the right
to exchange any Debentures for NutraMax Common Shares and other Escrowed
Property (as defined below) at the then effective Exchange Rate and upon the
terms set forth in Article Eleven of the Indebenture or reduce the aforesaid
percentage of Debenture the holders of which are required to consent to any
revocation, amendment or modification, without the consent of all the holders of
all Debentures then outstanding.
The shares of NutraMax Common Stock received by the Escrow Agent and
retained for the benefit of the holders of the Debentures, together with such
other securities, cash and other property as may be held by the Company for
delivery to the Escrow Agent or delivered to the Escrow Agent in accordance with
the Agreement and the Indenture, are herein sometimes referred to as the
"Escrowed Property."
SECTION 2. Covenant by Escrow Agent.
The Escrow Agent covenants and agrees to hold the Escrowed Property
received by it pursuant to this Agreement for the purposes and upon the terms
and conditions set forth in the Indenture and this Agreement.
<PAGE>
SECTION 3. Notification of Adjustment of Exchange Rate;
Exchange of Debentures.
The Company will notify the Escrow Agent in writing forthwith upon any
adjustment of the Exchange Rate, and will, upon request, notify the Escrow Agent
in writing of the Market Price (as defined in the Indenture) of the NutraMax
Common Stock (or per unit Market Price of any other securities or property which
is part of the Escrowed Property) as of any relevant date for the purpose of
computing cash adjustments in respect of fractional interests. The Escrow Agent
shall be under no duty or responsibility with respect to any such notice except
to exhibit such notice from time to time to any holder of Debentures requesting
inspection thereof.
Upon surrender to the Escrow Agent of any Debenture (or a principal
portion thereof which is an integral multiple of $1,000) for exchange in
accordance with the terms thereof and of the Indenture, the Escrow Agent shall
promptly (i) cause to be delivered, to or on the written order of the person for
whose account such Debenture (or portion thereof) was to surrender for
exchange, a certificate or certificates representing the number of shares of
NutraMax Common Stock (or such other securities, property or cash as shall be
added to such shares of NutraMax Common Stock or as such Nutramax Common Stock
shall have been changed into as provided in Article 11 of the Indenture)
deliverable upon the exchange of any such Debenture (or portion thereof), the
property (other than securities or cash), if any, apportioned thereto, a check
for any cash apportioned thereto and for any fractional interest in NutraMax
Common Stock or other securities or property), (ii) deliver to the Trustee the
Debenture so exchanged marked cancelled, and (iii) if only a portion of said
Debenture is exchanged, obtain from the Trustee and deliver to or on the order
of the person for whose account the Debenture was surrendered for exchange a new
Debenture or Debentures for the principal amount thereof not exchanged; provided
that if the Company elects to make a cash payment in lieu of exchange of
NutraMax, Common Stock pursuant to Section 11.14 of the Indenture and if
immediately available funds are simultaneously deposited with the Escrow Agent
by the Company, the Escrow Agent shall pay to the holder of the Debentures so
surrendered an amount in cash equal to the value of the NutraMax Common Stock
for which such Debentures are exchangeable (based on the Market Price was
defined in the Indenture) on the date of receipt by the Escrow Agent of the
notice of exchange delivered by the holder of Debentures pursuant to Section
11.02 of the Indenture) and as set forth in Section 12 hereof, the Escrow Agent
shall deliver to the Company such shares of NutraMax Common Stock which
otherwise would have been delivered upon exchange to the holder.
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<PAGE>
In any case in which Section 11.04 of the Indenture shall require that
an adjustment of the Exchange Rate be made immediately following a record date,
the Escrow Agent may defer delivering to the holder of any Debenture surrendered
for exchange after such record date the additional securities and other property
deliverable upon such exchange: as a result of such adjustment until such
additional securities and other property have been delivered to the Escrow
Agent; and, in lieu of the additional securities and other property the delivery
of which is so deferred, the Escrow Agent shall deliver to such holder due bills
or other appropriate evidence (determined in the sole discretion of the Escrow
Agent) of the right to receive such additional securities and other property.
SECTION 4. Division of Certificates; Payment of Taxes, Fees
and Charges, and Cash Adjustments; Payment of
Fractional Interest.
The Company shall make, execute and deliver or cause to be made,
executed and delivered any and all such instruments end assurances, and take all
such further action, as may be reasonably necessary or proper to carry out the
intention of or to facilitate the performance of the terms of this Agreement or
to secure the rights and remedies hereunder of the holders of the Debentures.
The Company shall pay (i) any and all documentary, stamp, transfer or similar
taxes that may be payable in respect of the deposit of the shares of NutraMax
Common Stock and the transfer or delivery of the Escrowed Property to holders of
Debentures upon exchange thereof; (ii) any income or other taxes incurred by the
Escrow Agent in its capacity as such for any reason (except for payment or
accrual of its own fees); (iii) all out-of-pocket fees or charges of the Escrow
Agent in connection with or arising out of the Agreement, the Indenture or any
exchange of Debentures in accordance with the terms hereof and thereof; (iv) all
cash adjustments in respect of fractions of shares of NutraMax Common Stock or
other fractional units of property or other securities which the holders of
Debentures may be entitled to receive upon exchange thereof (after giving effect
to moneys received by the Escrow Agent from the sale of Escrowed Property for
the purpose of paying for such fractional interests); and (v) cash in an amount
equal to any losses on investments made pursuant to Section 6 of this Agreement
to the extent necessary to maintain on deposit with the Escrow Agent funds equal
from time to time to the aggregate amount of cash apportioned to all NutraMax
Common Stock at each such time deliverable upon exchange of all Debentures then
outstanding. Notwithstanding the foregoing, the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
delivery, upon an exchange of Debentures, of Escrowed Property in a name other
than that in which the Debentures so exchanged were registered, and no such
transfer or delivery shall be made unless and until the person requesting
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<PAGE>
such transfer has paid to the Company or the Escrow Agent the amount of any such
tax or has established, to the satisfaction of the Company, that such tax has
been paid.
The Escrow Agent shall be authorized to, and, at the Company's
direction, shall, sell any shares of NutraMax Common Stock or other securities
or property which are part of the Escrowed Property held by it in order to
obtain the funds necessary, or anticipated by it to be necessary, for payment of
fractional interests with respect to Debentures delivered to it for exchange;
provided that after any such sale, the number of shares of NutraMax Common Stock
and any such other securities or property remaining on deposit with the Escrow
Agent shall be sufficient to allow the exchange of all the then outstanding
Debentures for shares of NutraMax Common Stock and other Escrowed Property on
the basis of the then applicable Exchange Rate. If a sale of shares of NutraMax
Common Stock to make cash payments for fractional shares is not permitted or if
the funds obtained from such a sale are insufficient, then the Company shall
furnish additional moneys to permit such payment in accordance with Section
11.03 of the Indenture.
SECTION 5. Voting of Escrowed Property.
The Company shall have the full and unqualified right and power to
exercise any rights to vote, or to give consents to take any other action in
respect of, its shares of the NutraMax Common Stock or other securities which
are part of the Escrowed Property, and the Escrow Agent shall have no duty to
exercise any rights.
The Escrow Agent or its nominee shall from time to time deliver, or
cause to be delivered, to the Company in a timely fashion such proxies as may be
necessary or appropriate to permit the Company to vote on each matter submitted
to the holders of shares of NutraMax Common Stock of other securities which are
part of the Escrowed Property.
SECTION 6. Investment of Cash.
All cash received and retained by the Escrow Agent under Section 11.05
of the Indenture and Section 13 hereof shall be invested at the direction of the
Company in a money market account of a domestic commercial bank, which may
include the Trustee, having capital and surplus in exccess of $250 million or in
securities issued or guaranteed by the United States of America or any agency or
instrumentality thereof, provided that such obligations shall mature by their
terms within 12 months following their purchase. The Company will be entitled to
receive upon request any net income or gain on such investments, and the Company
shall deposit with the Escrow Agent, as additional Escrowed Property, the amount
of any losses realized
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<PAGE>
in respect of such investments. The Escrow Agent shall not be responsible for
any losses realized with respect to any investment made in accordance with a
direction of the Company.
SECTION 7. Distribution of Escrowed Property to Company.
The Escrow Agent shall cause any Escrowed Property which the Company is
entitled to receive under Section 11.05 of the Indenture to be delivered to the
Company.
SECTION 8. Amendment or Modification of Agreement.
The Company and the Escrow Agent may by mutual accord cure any ambiguity
or correct or supplement any provision contained herein which may be
inconsistent with any other provision contained herein or with any provision of
the Indenture. Otherwise, except with respect to an amendment which is for one
or more of the following purposes:
(1) to evidence the succession of another corporation to the Company and
the assumption by any such successor of the covenants of the Company herein
contained;
(2) to add to the covenants of the Company, for the benefit of the
holders of the Debentures, or to surrender any right or power herein conferred
upon the Company;
(3) to comply with the requirements of Section 11.10 of the Indenture;
or
(4) to make any other provisions with respect to matters or questions
arising under this Agreement or the Indenture so long as such action shall not
adversely affect the interest of the holders of the Debentures and provided that
the Escrow Agent receives from the Company an Officers' Certificate (as defined
in the Indenture) and an opinion of counsel, addressed to Escrow Agent, to the
effect that such action will not adversely affect the interest of the holders of
the Debentures;
This Agreement may not be amended or modified at any time without the written
consent of the Escrow Agent, the written consent of the Company and the consent
of the holders of not less than a majority of the outstanding aggregate
principal amount of the Debentures. No amendment or modification shall adversely
affect the right to exchange any Debentures for shares of NutraMax Common Stock
and other Escrowed Property at the Exchange Rate and upon the terms set forth in
Article 11 of the Indenture or reduce the aforesaid percentage of Debentures the
holders of which are required to consent to any amendment or modification,
without the consent of all the holders of all Debentures then outstanding.
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<PAGE>
SECTION 9. Duties and Obligations of Escrow Agent.
(a) The Escrow Agent shall not at any time be under any duty or
responsibility to any holder of Debentures to determine whether any facts exist
which may require any adjustments of the Exchange Rate, or with respect the
nature or extent of any such adjustment when made, or with respect to the method
employed in making such adjustment; and the Escrow Agent may conclusively rely
as to all such matters upon the notice furnished by the Company or upon the
absence of such notice. The Escrow Agent shall not be accountable with respect
to the validity or value (or the kind or amount) of any shares, of NutraMax
Common Stock, or of any other securities or other property, which may at any
time be issued or delivered upon the exchange of any Debenture; and the Escrow
Agent makes no representation with respect thereto. The Escrow Agent shall not
be responsible for any failure of the Company to comply with any of its
covenants contained in this Agreement or in the Indenture.
(b) The Escrow Agent, either directly or through its nominee, shall be
under no duty or obligation to enforce, through the institution of legal
proceedings or otherwise, any of its rights as the record owner (either directly
or through its nominee) of the shares of NutraMax Common Stock or any other
Escrowed Property either to secure possession of any cash or other securities or
other property or otherwise to assert any rights or claims in the interest of
any holder of Debentures, nor shall it be required to make independent inquiry
as to as to any matter but can conclusively rely upon such written notice
pertaining to the shares of NutraMax Common Stock or other securities or other
property as it shall receive from the Company, the Trustee or from the issuer of
any, of the securities held by it hereunder; provided that if the Escrow Agent
shall be furnished with indemnity, in manner and form satisfactory to it,
against losses or expenses which may be sustained or incurred by it in taking
such action, the Escrow Agent shall take such action as may be specifically
directed in writing by the Company, but the Escrow Agent shall have the right to
decline to follow any such direction if it shall be advised by counsel that the
actions so directed may not be lawfully taken or if the Escrow Agent shall in
good faith determine that such action so directed would be prejudicial to the
holders of Debentures.
(c) The Escrow Agent shall be obligated to perform only such duties as
are herein specifically set forth and shall have no duty or obligation to
inquire into than terms or conditions of any other document. The Escrow Agent
shall not be liable for any action taken, omitted or suffered by it in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, and may conclusively rely and shall
be protected in acting or refraining from acting in reliance upon advice of
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<PAGE>
counsel (which need not constitute an Opinion of Counsel, as defined in the
Indenture) or upon any certificate, request or other document believed by it to
be genuine and to have been signed or presented by the proper party or parties;
provided that the Escrow Agent shall not make any payment or deliver any
Escrowed Property to the Company until delivery to the Escrow Agent of an
Officers' Certificate as to compliance with the conditions precedent provided
for in Section 11.05(h) of the Indenture. The Escrow Agent shall not be required
to take any action hereunder which, in the opinion of its counsel, will be
contrary to law.
In the event the Escrow Agent is instructed by the Company to sell any
securities (including any shares of Nutramax Common Stock) that constitute
Escrowed Property, the Escrow Agent shall be entitled to an opinion of counsel
(which counsel is satisfactory to the Escrow Agent), to the effect that the
proposed sale of securities will not violate any applicable United States
federal or state securities laws.
SECTION 10. Sales and Tenders of Escrowed Property.
In the event that Article 11 of the Indenture permit the Company to
direct the Escrow Agent to sell or tender any Escrowed Property, the Escrow
Agent shall sell or tender such Escrowed Property in such manner as shall be set
forth in written instructions concerning any such sale or tender which are given
by the Company by means of an Officers' Certificate and shall remit the proceeds
thereof as provided in such officers, Certificate. Such Officers' Certificate
shall demonstrate to the reasonable satisfaction of the Escrow Agent that such
sale or tender and such disposition of proceeds is permitted under the
Indenture.
SECTION 11. Release or Sale of Excess Escrowed Property.
To the extent Debentures are repurchased pursuant to Section 3.07 of the
Indenture or redeemed pursuant to paragraph 5 of the Debentures, the Company
shall be entitled, out of the Escrowed Property held by the Escrow Agent, to
receive in a timely fashion such number of shares of NutraMax Common Stock and
kind and amount of other Escrowed Property which otherwise would have been
deliverable upon exchange to the holder of the repurchased or redeemed
Debenture.
SECTION 12. Cash Equivalent.
In lieu of delivering certificates representing shares of NutraMax
Common Stock upon surrender of any Debenture for exchange in accordance with the
terms thereof and of the Indenture, the Escrow Agent shall, if so directed by
the Company within five Business Days following the receipt by the Escrow
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<PAGE>
Agent and the Company of the holder's notice of exchange, pay to the holder in
cash an amount equal to the Market Price (as defined in the Indenture) of the
NutraMax Common Stock for which such Debenture is exchangeable, determined as of
the date of receipt by the Escrow Agent of the notice of exchange relating to
such Debenture plus any cash or other property which the holder of such
Debenture shall be entitled to receive in accordance with the terms of the
Indenture. Simultaneously with directing the Escrow Agent to make any such cash
payment, the Company shall deposit with the Escrow Agent the cash so payable.
After depositing the cash payable upon exchange of the Debentures, the Company
shall be entitled, out of the Escrowed Property held by the Escrow Agent, to
receive in a timely fashion such number of shares of NutraMax Common Stock which
otherwise would have been delivered upon exchange to the holder.
SECTION 13. Interest Payments, Cash Dividends, Other
Distributions and Subscription Rights.
Promptly upon its receipt thereof, the Escrow Agent shall deliver to the
Company all interest payments on any debt securities held for exchange by the
Escrow Agent which are issued in exchange for NutraMax Common Stock pursuant to
any merger or consolidation of NutraMax or in connection with the sale of all or
substantially all of the assets of NutraMax and cash dividends received with
respect to any shares of NutraMax Common Stock held by the Escrow Agent, to the
extent that the Company is entitled to receive such dividends pursuant to the
terms of the Indenture, in accordance with the terms of the Indenture.
To the extent the Company receives any distribution of cash, securities
or other property or if subscription rights, options, warrants or similar rights
are granted to the Company (with respect to any securities or property held by
the Escrow Agent) which, pursuant to the Indenture, are to be delivered (or sold
and the proceeds delivered) on exchange of Debentures, the Company shall, except
as expressly provided in the preceding paragraph, as soon as reasonably
practicable after its receipt thereof, deliver such securities, other property,
cash and rights to the Escrow Agent.
On instructions of the Company, the Escrow Agent shall sell such rights,
options, warrants, securities or other property received by it for cash, which
cash proceeds, net of any tax payable by the Company, shall then be held for
delivery on exchange of Debentures.
SECTION 14. Consolidation, Merger, etc., of the
Company and MIS.
(a) The Company and MIS hereby covenant and agree that, upon any
consolidation or merger, or any sale, assignment
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transfer, lease, conveyance or other disposition of all or substantially all of
its properties or assets other than a consolidation or merger in which the
Company or MIS is the continuing corporation, the rights and obligations of the
Company and MIS under this Agreement shall be expressly assumed, by a
supplemental agreement reasonably satisfactory in form to the Escrow Agent,
executed and delivered to the Escrow Agent, by the Person (as defined in the
Indenture) formed by such consolidation, or with or into which the Company or
MIS shall have merged or to which the assets of the Company or MIS shall have
been sold, assigned, transferred, leased, conveyed or otherwise disposed.
(b) In the case of any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the Company's or MIS's properties or assets referred to in subsection (a)
hereof, and upon the execution and deliver to the Escrow Agent of the
supplemental agreement referred to therein by the successor or acquiring Person,
such successor or acquiring Person shall succeed to the rights and obligations
of and be substituted for the Company or MIS under this Agreement, with the same
effect as if such Person had been named herein as that Company or MIS, and in
the event of any such sale, assignment, transfer, lease, conveyance or other
disposition, the Company or MIS shall be discharged from all obligations and
covenants under this Agreement.
SECTION 15. Reliance on Information Supplied.
The Escrow Agent may conclusively rely on the contents of any Officers'
Certificate furnished hereunder and, in delivering any such certificate, the
Company may rely on information furnished to the Company by the Escrow Agent as
to the quantity and identity of NutraMax Common Stock and other Escrowed
Property delivered to holders of Debentures upon exchange thereof. The Escrow
Agent will furnish on request to the Company such information as to the Escrow
Agent's holdings and as to Escrowed Property delivered to holders of Debentures
upon exchange thereof.
SECTION 16. Expenses and Indemnification of the Escrow Agent.
The Company covenants and agrees to pay to the Escrow Agent
from time to time, and the Escrow Agent shall be entitled to, compensation, as
mutually agreed by the Company and the Escrow Agent, and the Company will pay or
reimburse the Escrow Agent upon its request for all out-of-pocket expenses,
disbursements and advances incurred or made by the Escrow Agent in accordance
with any of the provisions of this Agreement (including the out-of-pocket
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in
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its employ) except any such expense, disbursement or advance as may arise from
its gross negligence or misconduct. The Trustee and the holders of the
Debentures shall not be liable for any expenses or compensation of the Escrow
Agent and no charge shall be made for such expenses or compensation against the
Escrowed Property.
The Company and MIS hereby agree, jointly and severally, to indemnify
the Escrow Agent, its, officers, employees and agents and hold it and them
harmless from any and all claims, liabilities, losses, actions, suits, or
proceedings at law or in equity, which it or they may incur or with which it or
they may be threatened by reason of its acting under this Agreement, except in
the case of the Escrow Agent's own willful misconduct or gross negligence; and
in connection therewith to indemnify the Escrow Agent, its officers, employees
and agents against any and all expenses, including attorneys' fees and expenses
and the cost of defending any action, suit or proceeding or resisting any claim.
SECTION 17. Resignation or Removal of the Escrow Agent.
(a) The Escrow Agent may at any time resign by giving 60 days' written
notice of resignation to the Company and the Trustee. The Company may at any
time remove the Escrow Agent by giving like written notice of removal to the
Escrow Agent and the Trustee. The holders of a majority in principal amount of
the Debentures at the time outstanding may at any time remove the Escrow Agent.
If the Escrow Agent shall resign or be removed, a successor Escrow Agent, which
in each case shall be a bank or trust company having surplus and capital of at
least $50,000,000, shall be appointed by the Company by written instrument
executed and delivered to the Escrow Agent and to such successor Escrow Agent, a
copy of which shall be delivered by the Company to the Trustee.
(b) Any resignation or removal of the Escrow Agent and any appointment
of a successor Escrow Agent pursuant to any of the provisions of this Agreement
shall become effective upon acceptance of appointment by the successor as
provided in Section 18 hereof.
SECTION 18. Acceptance by Successor Escrow Agent.
Any successor Escrow Agent appointed as provided in Section 17 of this
Agreement shall execute, acknowledge and offer to the Company and to its
predecessor Escrow Agent an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Escrow Agent shall
become effective and such successor Escrow Agent, without any further act, deed
or conveyance, shall become vested with all the right, title and interest to all
property held hereunder, and all
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<PAGE>
other rights, powers, duties and obligations hereunder, of such predecessor
Escrow Agent; but nevertheless such predecessor Escrow Agent shall forthwith
deliver to such successor Escrow Agent physical possession of the certificates
evidencing the NutraMax Common Stock and of all other Escrowed Property, and
such predecessor Escrow Agent shall, on the written request of the Company or
such successor Escrow Agent and upon payment of any amounts then due it pursuant
to the provisions of Section 16 hereof, execute and deliver to such successor
Escrow Agent an instrument transferring to such successor Escrow Agent all
right, title and interest hereunder in and to the NutraMax Common Stock and the
other Escrowed Property, and all other rights and powers hereunder, of such
predecessor Escrow Agent.
SECTION 19. Succession by Consolidation, Merger, etc.
Any Person into which the Escrow Agent may be merged converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Escrow Agent shall be a party, or any
Person succeeding to the business of the Escrow Agent, shall be the successor of
the Escrow Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation shall be eligible under Section 17 hereof.
SECTION 20. Termination of Agreement.
This Agreement shall terminate when the rights of all holders of
Debentures under the Indenture to surrender Debentures for exchange pursuant to
Article 11 of the Indenture shall have expired or been terminated and when all
other obligations of the Company shall have been satisfied under this Agreement,
which termination or expiration and satisfaction shall be evidenced by an
officer's Certificate of the Company to that effect. Upon termination of this
Agreement pursuant to this Section 20, any NutraMax Common Stock and any other
Escrowed Property remaining in the hands of the Escrow Agent hereunder which are
not required for the exchange of Debentures previously duly surrendered and duly
accepted for the exchange shall be delivered by the Escrow Agent to the Company.
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<PAGE>
SECTION 21. Notices.
Any notice or communication shall be sufficiently given if in writing
and delivered in person or mailed by first-class mail, postage prepaid,
addressed as follows:
If to the Company:
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
Attention: President,
with a copy to the legal department
If to the Escrow Agent:
First Fidelity Bank, N.A., Pennsylvania
123 S. Broad Street
Philadelphia, PA 19109
Attention: Corporate Trust Administration
The Company or the Escrow Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a holder of Debentures shall be
mailed by first-class mail, postage prepaid, to such holder at such holder's
address as it appears on the registration books of the registrar for the
Debentures and shall be sufficiently given to such holder if so mailed within
the time prescribed.
Failure to mail any notice or communication to a holder of Debentures or
any defect in it shall not affect its sufficiency with respect to other holders
of Debentures. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 22. Benefits of Agreement.
Nothing in this Agreement or the Debentures, expressed or implied, shall
give or be construed to give any person, firm or corporation, other than the
parties hereto, the holders of Debentures as such and the Trustee as such
holders' representative, any legal or equitable right, remedy or claim under any
covenant, condition or provision herein contained, all the covenants, conditions
and provisions contained in this Agreement being for the sole benefit of the
parties hereto, the
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<PAGE>
holders of the Debentures as such and the Trustee as such holders'
representative.
SECTION 23. Headings.
The headings contained in this Agreement are for convenience of
reference only and shall have no effect on the interpretation or operation of
this Agreement.
SECTION 24. Choice of Laws.
This Agreement and the legal relations between the parties hereto shall
be governed by and construed in accordance with the laws of the State of New
Jersey, without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto by duly
authorized officers as of this day and year first above written.
MEDIQ INCORPORATED
By: /s/ Donald Gleklen
--------------------------------
MEDIQ INVESTMENT SERVICES, INC.
By: /s/ Donald Gleklen
--------------------------------
FIRST FIDELITY BANK, N.A.
PENNSYLVANIA,
as Escrow Agent
By: /s/ George J. Rayzis
--------------------------------
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EXHIBIT 99.4
SECURITY AGREEMENT
SECURITY AGREEMENT dated October 1, 1996 made by the Persons listed on
the signature pages hereof and the Additional Grantors (as defined in Section
23(b)) (such Persons so listed and the Additional Grantors being, collectively,
the "Grantors") to BANQUE NATIONALE DE PARIS ("BNP"), as administrative agent
(the "Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS.
(1) MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the
"Borrower"), has entered into a Credit Agreement dated as of October 1, 1996
(said Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement"), with BNP, as
Administrative Agent, NationsBank as Documentation Agent and the Lender Parties
party thereto. Capitalized terms used herein and not otherwise defined are used
herein as defined in the Credit Agreement.
(2) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that each Grantor shall have granted the assignment and security interest and
made the pledge and assignment contemplated by this Agreement.
(3) Each Grantor is the owner of the shares of stock set forth opposite
such Grantor's name in Part I of Schedule I hereto and issued by the
corporations indicated therein and of the indebtedness set forth opposite such
Grantor's name in Part II of Schedule I hereto and issued by the obligors
indicated therein.
(4) The Borrower has opened a non-interest bearing cash collateral
account (the "Asset Sale Blocked Account") with BNP at its office at 499 Park
Avenue, New York, New York 10022, Account No. 202506-001-48, in the name of the
Borrower but under the sole control and dominion of the Administrative Agent and
subject to the terms of this Agreement.
(5) The Borrower has opened a non-interest bearing cash collateral
account (the "L/C Cash Collateral Account") with BNP at its office at 499 Park
Avenue, New York, New York 10022, Account No. 200875-001-77, in the name of the
Borrower but under the sole control and dominion of the Administrative Agent and
subject to the terms of this Agreement.
(6) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Credit Agreement.
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2
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender Parties to make Advances and to issue Letters of Credit under the
Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower from time to time, each Grantor hereby agrees with
the Administrative Agent for the ratable benefit of the Secured Parties as
follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and pledges to
the Administrative Agent for the ratable benefit of the Secured Parties, and
hereby grants to the Administrative Agent for the ratable benefit of the Secured
Parties a security interest in, 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 (the
"Collateral"):
(a) All of the following (the "Security Collateral"):
(i) the shares of stock set forth opposite such Grantor's name
in Part I of Schedule I hereto and issued by the corporations
indicated therein (collectively referred to herein as the "Initial
Pledged Shares", and together with the shares referred to in clause
(iii) below, the "Pledged Shares"), together with the certificates
representing such 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 such Initial Pledged Shares;
(ii) the indebtedness (whether or not evidenced by instruments)
set forth opposite such Grantor's name in Part II of Schedule I
hereto and issued by the obligors indicated therein (collectively
referred to herein as the "Initial Pledged Debt", and together with
the indebtedness referred to in clause (iv) below, the "Pledged
Debt") and the instruments (if any) evidencing such Initial Pledged
Debt, all security therefor 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
Initial Pledged Debt;
(iii) all additional shares of stock of any issuer of any
Initial Pledged Shares or of any other Loan Party or any Subsidiary
of any Loan Party or of any other Person from time to time acquired
by such Grantor in any manner, and all additional shares of stock of
each other Subsidiary of such Grantor to the extent required
pursuant to Section 5.01(m) of the Credit Agreement, together with
the certificates 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;
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3
(iv) all additional indebtedness from time to time owed to such
Grantor by any obligor of the Initial Pledged Debt (whether or not
evidenced by instruments) and the instruments evidencing such
indebtedness (if any), and all additional indebtedness owed to such
Grantor by any other obligor to the extent required pursuant to
Section 5.01(m) of the Credit Agreement, all security therefor 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) within five days after acquiring or organizing any foreign
Subsidiary or joint venture or any domestic joint venture, (A) in
the case of any foreign Subsidiary or joint venture, 66% of the
total outstanding shares or other ownership interests of such Person
held by such Grantor and (B) in the case of any domestic joint
venture, 100% of the shares or other ownership interests of such
Person held by such Grantor;
(b) All of the following (collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) the Asset Sale Blocked Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the Asset Sale Blocked Account;
(iii) all Blocked Accounts (as hereinafter defined), all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing the Blocked Accounts;
(iv) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such deposit accounts;
(v) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(vi) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered
to or otherwise possessed by the Administrative Agent for or on
behalf of such Grantor,
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4
including, without limitation, those delivered to or possessed in
substitution for or in addition to any or all of the then existing
Account Collateral; and
(vii) 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;
(c) All of such Grantor's right, title and interest, in and to all
equipment in all of its forms (including, without limitation, (i) all adult
and infant ventilators, portable volume ventilators, adult, infant, neonatal
and fetal monitors, infant apnea monitors, phototherapy units, pediatric
aerosol tents, compressors, infusion and suction pumps and poles,
incubators, infant warmers, pulse oximeters, sequential compression devices
and all other medical equipment of every kind and nature, and (ii) all
machinery, equipment, office machinery, furniture, computers, computer
hardware, automotive equipment, trucks and motor vehicles), wherever
located, all fixtures and all parts thereof and all accessions and additions
thereto, parts and appurtenances thereof, substitutions therefor and
replacements thereof (any and all such equipment, fixtures, accessions,
additions, parts, appurtenances, substitutions and replacements being the
"Equipment");
(d) All of such Grantor's right, title and interest, in and to all
inventory in all of its forms, wherever located (including, but not limited
to, (i) all medical equipment and raw materials and work in process
therefor, finished goods thereof and materials used or consumed in the
manufacture, production or preparation thereof, (ii) 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 (iii) goods that are returned to or
repossessed 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");
(e) All of such Grantor's right, title and interest, in and to all
accounts, contract rights, chattel paper, instruments, deposit accounts and
general intangibles and all other obligations of any kind, now or hereafter
existing, 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 (including, without limitation, any rights with respect to
workers' compensation or other deposits made by such Grantor and any rights
to receive tax refunds or other refunds, reimbursements and payments from
any federal, state or local government or any political subdivision, agency
or instrumentality thereof), 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, contract rights, chattel paper, instruments,
deposit accounts, general
<PAGE>
5
intangibles or obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
obligations, to the extent not referred to in clause (a), (b), (f) or (g) of
this Section 1, being the "Receivables", and any and all such leases,
security agreements and other contracts being the "Related Contracts");
(f) All of such Grantor's right, title and interest in and to each of
the agreements listed on Schedule II hereto, and each Hedge Agreement to
which such Grantor is now or may hereafter become a party, in each case as
such agreements may be amended, supplemented or otherwise modified from time
to time (collectively, the "Assigned Agreements"), including, without
limitation, (i) all 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");
(g) All general intangibles of such Grantor (other than general
intangibles for moneys due or to become due which are covered by Section
1(e) above, including, without limitation, (i) all partnership, corporate
and other interests in and to any Person (other than any Security
Collateral), (ii) all governmental permits, licenses (and any subsequent
renewals thereof), franchises, registrations, authorizations and approvals
and (iii) all trademarks, trade names, trade styles, trade secrets, service
marks, logos, copyrights, patents, patent applications and all licenses,
license applications, registrations and good will relating to or associated
with any of the foregoing (including, without limitation, all such items
listed on Schedule 4.01(ii));
(h) To the extent not otherwise covered above, all of the Borrower's
right, title and interest in and to any funds or other property under or
pursuant to the 12.125% Indenture, including, without limitation, the
Borrower's right to receive monies or U.S. Government Obligations (as
defined in the 12.125% Indenture) from the Trustee or the Paying Agent (each
such term as defined in the 12.125% Indenture) under or pursuant to the
12.125% Indenture;
(i) All proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the types described
in clauses (a) through (i) of this Section 1) and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or
<PAGE>
6
damage to or otherwise with respect to any of the foregoing Collateral, and
(ii) cash; and
(j) With respect to any Alternative Lender, the Collateral shall be
limited to all of the foregoing Collateral except for Margin Stock
Collateral.
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, including any extensions, modifications, substitutions, amendments
and renewals thereof, whether for principal (including reimbursement for amounts
drawn under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations secured hereby being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations of such Grantor and that would be owed by such Grantor to the
Secured Parties under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantors Remain Liable. Anything contained herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in the 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
Administrative Agent of any of its 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 of Security Collateral, Account Collateral,
Agreement Collateral and Receivables. All certificates or instruments
representing or evidencing any Security Collateral, Account Collateral,
Agreement Collateral or Receivables (and, to the extent requested by the
Administrative Agent, representing or evidencing any other Collateral) shall be
delivered to and held by or on behalf of the Administrative 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 Administrative Agent; provided,
however, that this Section 4 shall not apply to any certificate of title
representing automotive equipment, trucks and motor vehicles referred to in
Section 1(c). Upon and after an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice to any Grantor,
to
<PAGE>
7
transfer to or to register in the name of the Administrative Agent or any of its
nominees any or all of the Security Collateral and Account Collateral, subject
only to the revocable rights specified in Section 14(a). In addition, upon and
after an Event of Default, the Administrative Agent shall have the right at any
time to exchange certificates or instruments representing or evidencing the
Security Collateral or Account Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 5. Maintaining the L/C Cash Collateral Account and the Asset
Sale Blocked Account. (a) So long as any Advance shall remain unpaid, any Letter
of Credit or Bank Hedge Agreement shall be outstanding or any Lender Party shall
have any Commitment under the Credit Agreement:
(i) The Borrower will maintain the L/C Cash Collateral Account with BNP.
(ii) 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 Section 20, that no amount
(including interest on Collateral Investments) shall 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.
(b) All Excess Cash from Permitted Asset Sales shall be promptly deposited
in the Asset Sale Blocked Account. It shall be a term and condition of
the Asset Sale Blocked Account, and except as otherwise provided by the
provisions of Section 8 and Section 20, that no amount (including interest on
Collateral Investments) shall 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
Asset Sale Blocked Account, provided, however, that so long as no Default has
occurred and is continuing, upon the request of the Borrower, such interest
shall be released to the Borrower on the last day of each fiscal quarter.
The L/C Cash Collateral Account and the Asset Sale Blocked Account shall be
subject to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.
SECTION 6. Maintaining the Blocked Accounts. So long as any Advance
shall remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be
outstanding or any Lender Party shall have any Commitment under the Credit
Agreement:
(a) Each Grantor shall, to the extent such Grantor shall have at any
time an aggregate amount on deposit in excess of $250,000, maintain blocked
deposit accounts
<PAGE>
8
("Blocked Accounts") only with banks ("Blocked Account Banks") that have
entered into letter agreements in substantially the form of Exhibit A (or
such other form as the Administrative Agent and such Grantor shall agree)
with such Grantor and the Administrative Agent ("Blocked Account Letters").
(b) At the end of each Business Day, the Grantors required to
maintain Blocked Accounts pursuant to the foregoing paragraph shall
deposit all cash in Blocked Accounts; provided, however, that the
provisions of this Section 6(b) shall not apply to (i) the Citibank
Account and payments required to be made thereto and (ii) any deposit
account held in the name of the Borrower at PNC Bank for miscellaneous
cash receipts and payments thereto so long as the aggregate amount on
deposit in such accounts shall not exceed $25,000.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by any
Grantor required to maintain any Blocked Account pursuant to Section
6(a) or any Blocked Account Bank, such Grantor shall immediately notify
all Obligors that were making payments to such Blocked Account to make
all future payments to another Blocked Account. Following the occurrence
and during the continuance of an Event of Default, such Grantor agrees
to terminate any or all Blocked Accounts and Blocked Account Letters
upon request by the Administrative Agent.
SECTION 7. Investing of Amounts in the L/C Cash Collateral Account and
the Asset Sale Blocked Account. If requested by the Borrower, the Administrative
Agent will, subject to the provisions of Sections 8 and 20, from time to time
(a) invest amounts on deposit in the L/C Cash Collateral Account and the Asset
Sale Blocked Account in such Cash Equivalents in the name of the Administrative
Agent or as to which all action required by Section 10 shall have been taken as
the Borrower may select and the Administrative 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 in the name of the Administrative Agent or
as to which all actions required by Section 10 shall have been taken as the
Borrower may select and the Administrative Agent may approve (the Cash
Equivalents referred to in clauses (a) and (b) above being collectively
"Collateral Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be deposited and
held in the L/C Cash Collateral Account or the Asset Sale Blocked Account, as
the case may be; provided, however, that so long as no Default has occurred and
is continuing, upon the request of the Borrower, such interest deposited and
held in the Asset Sale Blocked Account shall be released to the Borrower on the
last day of each fiscal quarter.
<PAGE>
9
SECTION 8. Release of Amounts. Any amount on deposit in the Asset Sale
Blocked Account shall be released by the Administrative Agent in accordance with
the terms and conditions set forth in Section 2.16 of the Credit Agreement.
SECTION 9. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) 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 liens and security interests created under this
Agreement or permitted by the Credit Agreement. No effective financing
statement or other instrument similar in effect covering all or any part
of such Collateral (including, without limitation, accounts and general
intangibles relating to the Collateral) or listing such Grantor or any
of its Subsidiaries or any trade name of such Grantor or any of its
Subsidiaries as debtor with respect to Collateral is on file in any
recording office, except such as may have been filed in favor of the
Administrative Agent relating to the Loan Documents or as permitted by
Section 5.02(a) of the Credit Agreement.
(b) The Pledged Shares owned by such Grantor have been duly
authorized and validly issued and are fully paid and non-assessable.
The Pledged Debt held by such Grantor has been duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(c) The Initial Pledged Shares owned by such Grantor constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I hereto. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor for
money borrowed or for the deferred purchase price of property of the
issuers thereof.
(d) On the date hereof and thereafter on the most recent date on
which a revised Schedule III is required to be furnished to the
Administrative Agent pursuant to Section 11(d), all of the Equipment
and Inventory of such Grantor, other than such Equipment and Inventory
as has been rented or leased to such Grantor's customers, is located at
the places specified in Schedule III hereto. The chief place of
business and chief executive office of such Grantor and the office
where such Grantor keeps its records concerning the Receivables, and
the original copies of each Assigned Agreement and all originals of all
Related Contracts and all chattel paper, if any, that evidence
Receivables (other than (i) those delivered to the Administrative Agent
and (ii) rental contracts located in the ordinary course of business at
the Borrower's branch offices), are located at the address set forth on
the signature pages hereto beneath such Grantor's name. Such Grantor
has delivered to the Administrative Agent the originals of all
agreements, certificates or instruments representing or
<PAGE>
10
evidencing any Collateral and all security therefor and guaranties
thereof, in each case to the extent that the delivery thereof to the
Administrative Agent is required under Section 4 above. None of the
Receivables or Agreement Collateral is evidenced by a promissory note
or other instrument that is required to be delivered to the
Administrative Agent hereunder and has not been so delivered (other
than promissory notes issued to the Borrower with respect to amounts
due to the Borrower, in the ordinary course of business on a basis
consistent with current practice).
(e) The Assigned Agreements to which such Grantor is a party, true
and complete copies of which have been furnished to each Lender Party,
have been duly authorized, executed and delivered by all parties
thereto, have not been amended or otherwise modified, are in full force
and effect and are binding upon and enforceable against all parties
thereto in accordance with their terms. There exists no default under
any Assigned Agreement to which such Grantor is a party by any party
thereto. Each party to any Assigned Agreement to which such Grantor is a
party (other than such Grantor) 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 Administrative
Agent, to the assignment of the Agreement Collateral to the
Administrative Agent for the benefit of the Secured Parties pursuant to
this Agreement.
(f) Such Grantor has no Blocked Accounts or other deposit accounts
other than the Blocked Accounts listed on Part I of Schedule V hereto
and the other deposit accounts listed on Part II of Schedule V hereto.
Each Grantor has instructed all existing Obligors to make all payments
to a Blocked Account to the extent required by the terms hereof.
(g) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create in favor of the Administrative Agent for the benefit of
the Secured Parties a valid and perfected security interest in the
Collateral of such Grantor, securing the payment of the Secured
Obligations of such Grantor, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been
duly taken. Such security interest is subject in priority only to
(i) the lien imposed on the Collateral pursuant to the 12.125% Indenture
as in effect on the date of the Initial Extension of Credit, (ii) the
existing lien of Meridian Bank on the promissory note issued by Medifac,
Inc. to MEDIQ, (iii) the existing lien of Meridian Bank on the
promissory note issued by Granary Partners, L.P. to MEDIQ, and (iv) the
prior liens permitted under Section 5.02(a) of the Credit Agreement.
Upon the release of the liens referred to in the foregoing clauses
(i), (ii), (iii) and (iv), such security interest shall be a first
priority security interest.
<PAGE>
11
(h) Such Grantor has no trade names except as set forth on Schedule
IV hereto; such trade names were adopted in good faith; and, to the best
of such Grantor's knowledge, there exist no adverse claims against such
trade names as of the Closing Date.
(i) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required (i) for the
grant by such Grantor of the assignment and security interest granted
hereby, for the pledge by such Grantor of any Security Collateral
hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) for the perfection or maintenance of the
pledge, assignment and security interest created hereunder (including
the first priority nature of such pledge, assignment and security
interest, except as otherwise permitted), except for the filing of
financing and continuation statements under the Uniform Commercial Code,
which financing statements have been duly filed, or (iii) for the
exercise by the Administrative 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.
(j) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(k) Such Grantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter
into this Agreement, and such Grantor has established adequate means of
obtaining from any other Loan Parties on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties and
prospects of such other Loan Parties.
SECTION 10. Further Assurances. (a) Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
such Grantor believes may be necessary or desirable, or that the Administrative
Agent may reasonably request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor will: (i) mark conspicuously (A) each invoice issued in
connection with the rental or lease of any Equipment or Inventory, from 60 days
after the Initial Extension of Credit, with the following legend: "THIS
EQUIPMENT MAY BE SUBJECT TO A SECURITY INTEREST GRANTED TO BANQUE NATIONALE DE
PARIS AS
<PAGE>
12
ADMINISTRATIVE AGENT" and (B) each Assigned Agreement of such Grantor included
in the Collateral, and each of its records pertaining to the Collateral, with a
legend, in form and substance satisfactory to the Administrative Agent,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) if any Collateral shall be evidenced by a promissory note or other
instrument (other than promissory notes permitted pursuant to Section
5.02(f)(ix) of the Credit Agreement), deliver and pledge to the Administrative
Agent for the benefit of the Secured Parties hereunder such note or instrument
duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Administrative Agent,
(iii) deliver and pledge to the Administrative Agent for the benefit of the
Secured Parties hereunder certificates representing the Pledged Shares
accompanied by undated stock powers executed in blank and evidence that all
other action that the Administrative Agent may deem necessary or desirable in
order to perfect and protect the liens and security interests created under this
Agreement has been taken and (iv) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Administrative Agent may
request, in order to perfect and preserve the pledge, assignment and security
interests granted or purported to be granted hereunder.
(b) Each Grantor hereby authorizes the Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral 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 Administrative Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.
(d) The Borrower will furnish to the Administrative Agent, at any time
within six months prior to the fifth anniversary of the date hereof, an opinion
of counsel acceptable to the Required Lenders to the effect that all financing
or continuation statements have been filed, and all other action has been taken,
to perfect and validate continuously from the date hereof the pledge, assignment
and security interests granted hereunder (excluding, in the case of perfection,
any Collateral in which a security interest may not be perfected by the filing
of a financing statement under the Uniform Commercial Code of any jurisdiction).
<PAGE>
13
SECTION 11. As to Equipment and Inventory. Each Grantor shall:
(a) On the date hereof and thereafter on the most recent date on
which a revised Schedule III is required to be furnished to the
Administrative Agent pursuant to Section 11(d), all of the Equipment and
Inventory of such Grantor, other than such Equipment and Inventory as
has been rented or leased to such Grantor's customers, shall be located
at the places specified in Schedule III hereto or at such other places
in jurisdictions where all action required by Section 10 shall have been
taken with respect to such Equipment and Inventory.
(b) Cause all of its Equipment and Inventory to be maintained and
preserved, as is reasonably required in the conduct of its business, in
good working order and condition, excluding (i) ordinary wear and tear
and (ii) properties that have become obsolete or no longer fit for their
intended purposes, and shall forthwith, or in the case of any loss or
damage to any of such Equipment or Inventory as soon as practicable
after the occurrence thereof, make or cause to be made all repairs,
replacements and other improvements in connection therewith which are
necessary or desirable to such end.
(c) Pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the
Equipment and Inventory; provided, however, that such Grantor shall not
be required to pay or discharge any such tax, assessment, charge, levy
or claim (x) that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained,
or (y) in respect of which the Lien resulting therefrom, if any,
attaches to its property and becomes enforceable against its other
creditors, to the extent that the aggregate amount of all such taxes,
assessments, charges or claims does not exceed $250,000.
(d) Furnish to the Administrative Agent, at the same time as the
quarterly financial statements are required to be furnished to the
Administrative Agent pursuant to Section 5.03(c) of the Credit
Agreement, unless no revisions are required, a revised Schedule III
specifying each place where the Equipment and Inventory of such Grantor
is located excluding such Equipment or Inventory rented or leased to
such Grantor's customers. Such revised Schedule III shall be deemed to
replace the then existing Schedule III and shall be of full force and
effect as of the date of delivery of such Schedule to the Administrative
Agent.
(e) In the event that Equipment and/or Inventory of the Grantors
with a book value equal to or greater than 10% of the aggregate book
value of all Equipment and Inventory of the Grantors' is relocated, in
one move or in a series of moves, from one county to another, furnish
within five Business Days after such relocation
<PAGE>
14
notice of such relocation to the Administrative Agent (such notice to
include the percentage book value of the relocated Equipment and
Inventory and the old and new locations of such Equipment and
Inventory).
(f) For each leased location at which at any time Equipment and
Inventory of the Grantors with a book value equal to or greater than 10%
of the aggregate book value of the Equipment and Inventory is located,
use its good faith efforts to furnish at such time to the Administrative
Agent a landlord access letter or consent on terms and conditions
reasonably acceptable to the Administrative Agent.
SECTION 12. Insurance. (a) Each Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be reasonably
satisfactory to the Administrative Agent from time to time. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Administrative Agent and such Grantor as their interests may appear, 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
Administrative Agent, except to the extent permitted to be paid to a Grantor
pursuant to Section 12(b). Each such policy shall in addition (i) name such
Grantor and the Administrative Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Administrative Agent) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss thereunder shall be payable to the Administrative Agent notwithstanding any
action, inaction or breach of representation or warranty by such Grantor,
(iii) provide that there shall be no recourse against the Administrative
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 Administrative Agent by the insurer. Each Grantor shall,
if so requested by the Administrative Agent, deliver to the Administrative Agent
certificates evidencing such insurance, make the original policies of such
insurance reasonably available for inspection by the Administrative Agent and,
as often as the Administrative Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, each Grantor
shall, at the request of the Administrative Agent, duly exercise and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 10 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any insurance maintained by any Grantor pursuant
to this Section 12 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 12 is not applicable,
such Grantor shall 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
<PAGE>
15
shall be used by such Grantor, except as otherwise required or permitted
hereunder or by the Credit Agreement to pay or as reimbursement for the cost of
such repairs or replacements.
(c) Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Equipment or Inventory shall
be paid to and applied by the Administrative Agent as specified in Section
20(b).
SECTION 13. Place of Perfection; Records; Collection of Receivables.
(a) Each Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Collateral; and
the original copies of the Assigned Agreements of such Grantor, and all
originals of all chattel paper which evidences or constitutes Receivables
(other than rental contracts located in the ordinary course of business at the
Borrower's branch offices), at the location therefor specified in Section 9(d)
or, upon 30 days' prior written notice to the Administrative Agent, at such
other locations in a jurisdiction where all actions required by Section 10 shall
have been taken with respect to the Collateral. Each Grantor will hold and
preserve such records, Assigned Agreements and chattel paper and will permit
representatives of the Administrative Agent at any time during normal business
hours to inspect and make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), such Grantor
shall continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables and Related Contracts. In connection with
such collections, upon and after an Event of Default, such Grantor may take
(and, at the Administrative Agent's direction, shall take) such action as such
Grantor or the Administrative Agent may deem necessary or advisable to enforce
collection of the Receivables and Related Contracts; provided, however, that the
Administrative Agent shall have the right upon the occurrence and during the
continuance of an Event of Default and upon written notice to the Borrower of
its intention to do so, to notify the Obligors under any Receivables or Related
Contracts of the assignment of such Receivables or Related Contracts to the
Administrative Agent and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Administrative
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 such Grantor of the
notice from the Administrative 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 or the Related Contracts shall be received
in trust for the benefit of the Administrative Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Administrative Agent in the same form as so received (with any necessary
indorsement) to be applied as provided by the terms of the Credit Agreement and
(ii) such Grantor shall 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.
<PAGE>
16
SECTION 14. Voting Rights; Dividends; Etc. (a) So long as no Default
under Section 6.01(a) or (f) of the Credit Agreement or 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 not inconsistent with
the terms of this Agreement or the other Loan Documents; provided,
however, that no Grantor shall exercise or refrain from exercising any
such right if, in the Administrative Agent's judgment, 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 and interest 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
(A) dividends and interest 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,
shall be, and shall be forthwith delivered to the Administrative Agent
to hold as, Security Collateral except as otherwise required under the
Credit Agreement and shall, if received by any Grantor, be received in
trust for the benefit of the Administrative Agent, be segregated from
the other property or funds of such Grantor and be forthwith delivered
to the Administrative Agent as Security Collateral in the same form as
so received (with any necessary endorsement).
(iii) The Administrative Agent shall 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.
<PAGE>
17
(b) Upon the occurrence and during the continuance of any Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default:
(i) All rights of each Grantor (A) 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 Administrative Agent, cease, and
(B) to receive the dividends and interest payments 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 Administrative 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 and interest payments.
(ii) All dividends and interest payments 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 Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral
in the same form as so received (with any necessary endorsement).
SECTION 15. As to the Assigned Agreements. (a) Each Grantor shall at its
expense:
(i) perform and observe all the 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 in accordance with the terms thereof and take all
such action to such end as may be requested from time to time by the
Administrative Agent; and
(ii) furnish to the Administrative Agent promptly upon receipt
thereof copies of all 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 Administrative Agent
such information and reports regarding the Assigned Agreements and such
other Collateral of such Grantor as the Administrative Agent may
reasonably request, and (B) upon request of the Administrative 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 agrees that it shall perform and observe all of the
terms and provisions of each Assigned Agreement to be performed or observed by
it, maintain each such Assigned Agreement in full force and effect, enforce such
Assigned Agreement in
<PAGE>
18
accordance with its terms, take all such action to such end as may be from time
to time requested by the Administrative Agent.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Administrative Agent for the
ratable benefit of the Secured Parties of each Assigned Agreement to which it is
a party by any other Grantor hereunder.
SECTION 16. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it shall not (i) sell, assign (by operation of law or
otherwise), lease or otherwise dispose of, or grant any option with respect to,
any of the Collateral of such Grantor (other than sales, assignments, options,
leases and other dispositions permitted under the terms of the Credit Agreement
including, without limitation, Section 5.02(e) 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 Liens created under the Collateral
Documents or permitted under the Credit Agreement.
(b) Each Grantor agrees that it shall (i) cause each issuer of the
Pledged Shares owned 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 of each issuer of any Pledged Shares.
SECTION 17. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints for the term that this Agreement is in
effect the Administrative 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 in the Administrative Agent's discretion, to
take any action and to execute any instrument that the Administrative 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
Administrative Agent pursuant to Section 12,
(b) to ask for, demand, collect, sue 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, indorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) or (b) above,
and
<PAGE>
19
(d) to file any claims or take any action or institute any
proceedings that the Administrative 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 Administrative Agent with respect to any
of the Collateral.
SECTION 18. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without further notice, itself perform, or
cause performance of, such agreement, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by such Grantor under
Section 21.
SECTION 19. The Administrative Agent's Duties. The powers conferred on
the Administrative Agent hereunder are solely to protect its and the other
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 Administrative 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 Security Collateral,
whether or not the Administrative Agent or any other 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 Administrative 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.
SECTION 20. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Administrative 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 New York Uniform Commercial Code as in effect at such time (the
"Code"), whether or not the Code applies to the affected Collateral, and
also may (i) require any Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent forthwith,
assemble all or part of the Collateral as directed by the Administrative
Agent and make it available to the Administrative Agent at a place and time
to be designated by the Administrative Agent which 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 Administrative Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem
<PAGE>
20
commercially reasonable; (iii) occupy any premises owned or leased by any
Grantor 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 Grantor
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 Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to 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 the Administrative Agent as Collateral and all cash
proceeds received by the Administrative 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 Administrative Agent, be held by the
Administrative Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 21) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties against
all or any part of the Secured Obligations as permitted or required by the
Credit Agreement. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection with any
Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Administrative Agent and the other
Secured Parties, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Administrative Agent in the same form as
so received (with any necessary endorsement).
(d) The Administrative Agent may, without notice to the Borrower 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 the L/C
Cash Collateral Account and the Asset Sale Blocked Account or any part
thereof.
<PAGE>
21
SECTION 21. Indemnity and Expenses. (a) Each Grantor agrees to defend,
protect, indemnify and hold harmless each Secured Party from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from such Secured Party's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
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 Administrative Agent or any
other Secured Party against such Grantor, or (iv) the failure by such Grantor to
perform or observe any of the provisions hereof.
(c) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Grantors contained in this Section 21 shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 22. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against such Grantor to enforce
this Agreement, irrespective of whether any action is brought against the other
Grantors or whether the other Grantors are joined in any such action or actions.
All rights of the Administrative Agent and the pledge, assignment and security
interest hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Hedge Agreement or any other agreement or instrument relating thereto;
(ii) 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 amendment
or waiver of or any consent to any departure from any Loan Document or any
Hedge Agreement, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to any Grantor
or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of 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;
<PAGE>
22
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrower or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate structure
or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such 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 23. Amendments; Waivers; 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 Administrative 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 Administrative Agent 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 C hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor and each reference in
this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor, and (ii) the annexes attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I, II, III, IV and V hereto, and the Administrative Agent may attach
such annexes as supplements to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant hereto.
SECTION 24. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and, mailed, telecopied, telegraphed, telexed or delivered
to the Borrower or to the Agent, as the case may be, in each case addressed to
it at its address specified in the Credit Agreement or, as to either party at
such other address as shall be designated by such
<PAGE>
23
party in a written notice to each other party complying as to delivery with the
terms of this Section 24. All such notices and other communications shall, when
mailed, telecopied, telegraphed, telexed or cabled, respectively, be effective
when deposited in the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company, respectively,
addressed as aforesaid.
SECTION 25. Continuing Security Interest; Assignments. This Agreement
shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until the latest of the cash payment in full
of the Secured Obligations, the Termination Date and the termination or
expiration of all Bank Hedge Agreements, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Administrative 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 (including, without limitation, all or any portion of its Commitments,
the Advances owing to it and the Note or Notes 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. No Grantor shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Secured Parties.
SECTION 26. Release and Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Collateral (including, without limitation,
as a result of the sale, in accordance with the terms of the Loan Documents, of
the Person that owns such Collateral) in accordance with the terms of the Loan
Documents (other than sales or rentals of Equipment and Inventory in the
ordinary course of business), the Administrative Agent will, at any Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided, however, that
(i) at the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) the Borrower shall have delivered to the
Administrative Agent, at least five Business Days prior to the date of the
proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Administrative
Agent and a certification by the Borrower to the effect that the transaction is
in compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.06(b)(ii) of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Administrative Agent at the closing.
<PAGE>
24
(b) With respect to the sale or other disposition of Equipment or
Inventory in the ordinary course of business permitted by the Loan Documents, so
long as at the time of such sale no Event of Default shall have occurred and be
continuing, such sale or other disposition may be made free from the lien of
this Agreement and the other Loan Documents without the necessity of any release
from or consent by the Administrative Agent and no purchaser of any such
property shall be bound to inquire into any question affecting the right of any
Grantor to sell or otherwise dispose of such Equipment or Inventory free from
the lien of this Agreement and the Loan Documents.
(c) In connection with any sale, lease, transfer or other disposition of
all or part of the stock of any Discontinued Subsidiary by any Grantor in
accordance with the terms of the Loan Documents, so long as no Event of Default
shall have occurred and be continuing and the Borrower shall have delivered to
the Administrative Agent, at least five Business Days prior to the date of the
such sale, lease, transfer or other disposition, written notice requesting that
the certificates held by the Administrative Agent evidencing such stock be
delivered to such Grantor, the pledge and assignment of, and security interest
in, such stock granted hereby shall be released and such certificates shall be
released to such Grantor.
(d) Upon the latest of the cash payment in full of the Secured
Obligations, the Termination Date and the termination or expiration of all Bank
Hedge Agreements, the pledge, assignment and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Grantors.
Upon any such termination, the Administrative Agent will, at the Borrower's
expense, execute and deliver to the Borrower such documents as the Borrower
shall reasonably request to evidence such termination.
SECTION 27. 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 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 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 a manually executed
counterpart of this Agreement.
SECTION 29. Governing Law; Terms. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in
<PAGE>
25
respect of any particular Collateral are governed by the laws of a jurisdiction
other than the State of New York. Unless otherwise defined herein or in the
Credit Agreement, terms used in Article 8 or Article 9 of the Code are used
herein as therein defined.
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.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By /s/ Jay M. Kaplan
---------------------------------
Name: Jay M. Kaplan
Title: Senior Vice-President
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ INCORPORATED
By /s/ Michael Sandler
---------------------------------
Name: Michael Sandler
Title: Senior Vice-President
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
<PAGE>
26
PRN HOLDINGS, INC.
By /s/ Jay M. Kaplan
---------------------------------
Name: Jay M. Kaplan
Title: Senior Vice-President
Address of Chief Executive Office and for Notices:
1403 Faulk Road
Suite 102
Wilmington, DE 19803
Attention: Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
By /s/ Michael Sandler
---------------------------------
Name: Michael Sandler
Title: Vice President
Address of Chief Executive Office and for Notices:
1403 Faulk Road, Suite 102
Wilmington, DE 19803
Attention: Chief Financial Officer
MEDIQ MANAGEMENT SERVICES, INC.
By /s/ Michael Sandler
---------------------------------
Name: Michael Sandler
Title: Chief Financial Officer
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
<PAGE>
27
MEDIQ SURGICAL EQUIPMENT SERVICES, INC.
By /s/ Jay M. Kaplan
---------------------------------
Name: Jay M. Kaplan
Title: Senior Vice-President
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
VALUE-MED PRODUCTS, INC.
By /s/ Jay M. Kaplan
---------------------------------
Name: Jay M. Kaplan
Title: Treasurer
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
<PAGE>
SCHEDULE 1
Part I: Initial Pledged Shares
Grantor: MEDIQ Incorporated
MEDIQ Investment Services, Inc.: 100 shares
of common stock, $10 par
PRN Holdings, Inc.: 1000 shares of common stock
$.01 par
MEDIQ Management Services, Inc.: 100 shares of
common stock, $10 par
MEDIQ Mobile X-Ray Services, Inc.: 1000 shares
of common stock, $1 par
Health Examinetics, Inc.: 100 shares of common
stock, $10 par
MEDIQ Services, Inc.: 100 shares of common stock
$10 par
Thera-Kinetics Acquisition Corporation: 1000
shares of common stock, $10 par
MEDIQ Imaging Services, Inc.: 100 shares of
common stock, $10 par
MEDIQ Diagnostic Centers Inc.: 100 shares of
common stock, $10 par
MEDIQ Home Therapy Services of Arizona, Inc.:
100 shares of common stock, $10 par
Grantor: PRN Holdings, Inc.
MEDIQ/PRN Life Support Services, Inc.: 10,000
shares of common stock, $.01 par
Value-Med Products, Inc.: 100 shares of common
stock, $10 par
<PAGE>
29
Grantor: MEDIQ Investment Services, Inc.
PCI Services, Inc.: 2,875,000 shares of common
stock, $.001 par
NutraMax Products, Inc.: 1,782,356 shares of
common stock, $.001 par
P. I. Corporation: 100 shares of common stock
$10 par
Grantor: MEDIQ/PRN Life Support Services, Inc.
MEDIQ Surgical Equipment Services, Inc.: 100
shares of common stock, $10 par
Grantor: MEDIQ Management Services, Inc.
Alpha Health Consultants, Inc.: 100 shares of
common stock, $10 par
Part II: Initial Pledged Debt
Grantor: MEDIQ Incorporated
(1) Non-negotiable Subordinated Note, in the original principal amount
of $1,500,000, from Medifac, Inc., dated June 27, 1995;
(2) Note A, in the original principal amount of $2,500,000 from Granary
Partners, L.P., dated June 27, 1995;
(3) Promissory Note, in the original principal amount of $11,500,000
from Mental Health Management, Inc., dated August 31, 1993.
<PAGE>
SCHEDULE II
Assigned Agreements
None
<PAGE>
SCHEDULE III
LOCATIONS OF EQUIPMENT AND INVENTORY
120 Oxmoor Blvd, Ste A, Homewood, AL AL
175 West Oxmoor Rd., Homewood, AL AL
411 A Twain Curve, Montgomery, AL AL
521 South 48th Street, Ste 105, Tempe, AZ 85251 AZ
305 South Euclid, Suite 105, Tucson, AZ AZ
13311 Brooks Dr, Ste C,D,E, Baldwin Park, CA CA
4230 West Swift, Suites 101-103, Fresno, CA CA
15500 Erwin St, Ste 1113, Van Nuys, CA CA
1411 N. Batavia Ave, Stes. 104-106, 2056, 206, Orange, CA CA
1506 Columbia Ave, Stes 7&8, Riverside, CA CA
250 Harris Ave., Suite 1, Sacramento, CA CA
4900 Roseville Rd., N. Highlands, CA (Unit #K011 & K012) CA
5482 Complex St, Ste 109, San Diego, CA CA
1121 Regatta Square, Richmond, CA CA
1621 South Main St, Milpitas, CA CA
12317 Telegraph Rd, Santa Fe Springs, CA CA
12337 Telegraph Rd, Santa Fe Springs, CA CA
13650 E. Imperial Hwy, Units 21, 22 & 1015, SFS, CA CA
5063 Borwick Ave., South Gate, CA CA
2275 Waynoka Rd. Suite A, Colorado Spr, CO CO
3568 Peona St, Ste 609, Aurora, CO CO
29L Kripes Rd, East Granby, CT CT
1395 South Street, Suffield, CT CT
3728 Phillips Hwy, Ste 216, Jacksonville, FL FL
826 Creighton Rd, #B-100-B, Pensacola, FL FL
11220 Metro Pkwy, Ste 1, Ft Myers, FL FL
2842 NW 79th Ave, Miami, FL FL
3350 NW 22nd Terrace #700B & 800B, Pompano Beach, FL FL
6802 Citicorp Dr #400, Tampa, FL FL
140 Concord Dr., Bldg. G, Space 35 & 40, Casselberry, FL FL
718 S North Lake, Ste 1016, Altamonte Springs, FL FL
9401 NW 106th St., Suites 104 & 105, Medley, FL FL
7401 NW 68th St., Miami, FL (Unit #A-7 & A-9) FL
<PAGE>
32
4757 S. Cobb Dr., Smyrna, GA (3 units) GA
200 Technology Ct., Suite 1200, Smyrna, GA GA
750 Baconsfield Dr #105, Macon, GA GA
1955 Dove St., Macon, GA GA
1780 S. Cobb Dr., Marietta, GA (Unit #C058) GA
870 S Capitol St, Iowa City, IA IA
1110 N. Cole Rd., Boise, ID ID
330 NE Perry Ave., Peoria, IL IL
655 W Grand Ave, #170, Elmhurst, IL IL
0 South 680, Route 83, Oakbrook Terrace, IL IL
224 William St., Bensenville, IL IL
7918 Zionsville Rd, Indianapolis, IN IN
6888 N. Michigan, Indianapolis, IN (Unit #M05) IN
409 Pattie Ave, Wichita, KS KS
1306 Adams, Kansas City, KS KS
10900 Plantside Dr.-C, Louisville, KY KY
5605 Salman St, Harahan, LA LA
5100 Interstate Circle Dr., Suite 1, Shreveport, LA LA
72 Rowe St, Suite A, Auburndale, MA MA
195 Bear Hill Rd., Waltham, MA (Unit #B-16) MA
2600 Cabover Dr, Ste L-M, Hanover, MD MD
44353 Plymouth Oaks Blvd., Plymouth, MI MI
48200 West Road, Wixom, MI MI
48200 West Rd., Wixom, MI (Unit #515) MI
1301 Corporate Center Dr., Suite 117, Eagan, MN MN
5350 Industrial Blvd., #7141, Fridley, MN (three units) MN
1248 Hanley Industrial Court, Brentwood, MO MO
2001 Airport Rd., #105, Flowood, MS MS
2500 Gateway Center Blvd, Ste 650, Morrisville, NC NC
Unit 19, Morrisville, NC NC
Morrisville, NC (Unit #7) NC
<PAGE>
33
258 North 76th St., Omaha, NE NE
One MEDIQ Plaza, Pennsauken, NJ NJ
248 Cox Street, Roselle, NJ NJ
9000 Commerce Pwy, Suite C, Mt. Laurel, NJ NJ
601 South Avenue, Cranford, NJ NJ
5344 Pan American Fwy, Albuquerque, NM NM
6000 S. Eastern Ave, #14J, Las Vegas, NV NV
10435 Palms Airport Dr, Las Vegas, NV NV
6875 Paradise Rd, Las Vegas, NV NV
130 Commercial St, Plainview, NY NY
201 64th St., Brooklyn, NY (Unit #1145 and 1151) NY
110 No. Main St., Port Chester, NY NY
6145 Scherers Place, Suite A, Dublin, OH OH
6405 Old Avery Rd., Unit 812, Amlin, OH OH
9903 Royalton Rd., North Royalton, OH (Unit #0812, 0814) OH
380 Ken-Mark Ind. Pkwy, Broadview Hts, OH OH
2144 Schappele Lane, Cincinnati, OH OH
4422 S. W. 34th St., Oklahoma City, OK OK
5415 S. 125th East Ave., Ste 203, Tulsa, OK OK
6807 NE 79th Court #5, Portland, OR OR
1202 SE 82nd Ave., Portland, OR OR
517 Parkway View Dr., Pittsburgh, PA PA
1929 Lincoln Highway East, Lancaster, PA PA
4295 Cromwell Rd, Suite 207, Chattanooga, TN TN
7537 South Freeway, Houston, TX TX
5407 Bandera Rd, #117, San Antonio, TX TX
4801 Frankford Ave, Unit D, Lubbock, TX TX
9419 Buffalo Speedway, Houston, TX (Unit #F39/56) TX
8101 Cameron Rd., Suite 306, Austin, TX TX
Redelco Plaza, 9 & 10, 1920 Duvall, Harlingen, TX TX
7365 Remcon, B204 & B205, El Paso, TX TX
2100 No Hwy 360, Ste. 800, Grand Prarie, TX TX
2100 No Hwy 360, Ste. 802, Grand Prarie, TX TX
720 Memorial Highway, Nederland, TX TX
<PAGE>
34
2265 South 1300 West, Suite C, SLC, UT UT
2265 South 1300 West, Suite C, SLC, UT UT
5729 South Labumum Ave, Richmond, VA VA
3801 Williamsburg Rd., Richmond, VA (Unit #C-15) VA
734 Middleground Blvd, Ste D, Newport News, VA VA
3425 S. 116th St., Suite 101, Seattle, WA WA
2648 15th Ave W, Units A21 & A28, Seattle, WA WA
109 S. Scott, Units C-4 & 5, Spokane, WA WA
2217 Industrial Dr, Monona, WI WI
2233 South Stoughton Rd., Madison, WI WI
N8 W22350 Johnson Rd, Ste A7, Waukesha, WI WI
W220N515 Springdale Rd., Pewaukee, WI WI
<PAGE>
SCHEDULE IV
Trade Names
CAMP
Telstar
Trackstar
MEDIQ/PRN
MEDIQ
MEDIQ Care Units
Value-Med
Criticare Hospital Services
MEDIQ Consulting Group
MEDIQ Healthcare Resources
<PAGE>
SCHEDULE V
Blocked Accounts and Other Bank Accounts
1. MEDIQ Incorporated
o Summit Bank
Operating Account (Account No. 345004469)**
2. MEDIQ Management Services, Inc.
o Mellon Bank, N.A.
Operating Account (Account No. 2-820-933)**
Payroll Account (Account No. 2-949-493)**
Payroll ACH Prefunding (Account No. 2-834-166)**
3. MEDIQ/PRN Life Support Services, Inc.
o Mellon Bank, N.A.
Master Account (Account No. 2-229-870)**
Operating Account (Account No. 2-951-135)**
Payroll Account (Account No. 2-951-143)**
Lockbox Account (Lockbox No. 7777-W0815)**
o CoreStates Bank, N.A.
Concentration Account (Account No. 00017-03189)**
Operating Account (Account No. 00003-23387)**
Payroll Account (Account No. 00003-16080)**
Lockbox Account - Blocked Account (Account No. 00017-03170)**
o Citibank, N.A.
Health Account (Account No. 38343762)
o PNC Bank (Midlantic Bank)
Petty Cash Account (Account No. 1-40672154-6)
o Congress Financial Corp.
Congress Account
**Accounts covered by Blocked Account Agreements.
<PAGE>
EXHIBIT A TO THE SECURITY AGREEMENT
FORM OF BLOCKED ACCOUNT LETTER
October 1, 1996
[Blocked Account Bank Address]
Attn: [ ]
[Grantor]
Ladies and Gentlemen:
Reference is made to the deposit accounts listed on the attached
Schedule I into which certain monies, instruments and other properties are
deposited from time to time (the "Accounts") maintained with you by [Grantor], a
________ corporation (the "Company"). Pursuant to a Security Agreement dated as
of October 1, 1996 (the "Security Agreement"), the Company has granted to Banque
Nationale de Paris, as administrative agent (the "Administrative Agent") for the
Secured Parties referred to in the Credit Agreement dated as of October 1, 1996
(the "Credit Agreement") with the Company, a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Accounts, all funds held therein and all certificates
and instruments, if any, from time to time representing or evidencing the
Accounts, 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 and all proceeds
of any and all of the foregoing Account Collateral and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Administrative 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 Account Collateral and (ii) cash. It is a condition to the
continued maintenance of the Accounts with you that you agree to this letter
agreement.
By signing this letter agreement, you acknowledge notice of the Security
Agreement and confirm to the Administrative Agent that you have received no
notice of any other pledge or assignment of the Accounts. Further, you hereby
agree with the Administrative Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Accounts, the Accounts are and will be subject to the terms
and conditions of the Security Agreement, will be maintained solely for the
benefit of the Administrative Agent, will be entitled "Banque Nationale de
Paris, as Administrative
<PAGE>
2
Agent, Re: [Grantor]" and will be subject to written instructions only from
an officer of the Administrative Agent.
(b) Upon the written request of the Administrative Agent to you, which
request shall specify that an "Event of Default" under the Credit Agreement
has occurred and is continuing (which writing may be by telex or telecopy
and upon which you may conclusively rely, absent manifest error), you shall
immediately transfer (at the cost and expense of the Company) subject to
your usual deposit terms, all funds then or thereafter deposited in the
Accounts by wire transfer into the Administrative Agent's Account at the
Federal Reserve Bank of New York, 33 Liberty Street, New York, NY, 10048,
ABA No. 026007689, for further credit to Account No. 750420-701-03.
(c) From and after the date that the Administrative Agent shall have
sent to you a written notice (which writing may be by telex or telecopy and
upon which you may conclusively rely, absent manifest error) that an "Event
of Default" under the Credit Agreement has occurred and until the date, if
any, that the Administrative Agent shall have advised you in writing (which
writing may be by telex or telecopy and upon which you may conclusively
rely, absent manifest error) that no Event of Default is continuing, you
shall not honor any withdrawal or transfer from, or any check, draft or
other item of payment on, the Accounts, other than any withdrawal, transfer,
check, draft or other item made in writing by the Administrative Agent or
bearing the written consent of the Administrative Agent, and, to the extent
of collected funds in the Accounts, you shall honor each such withdrawal,
transfer, check, draft or other item made in writing by the Administrative
Agent or bearing the written consent of the Administrative Agent.
(d) You will follow your usual operating procedures for the handling of
the Accounts, including any remittance received in the Accounts that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
(e) You shall furnish to the Administrative Agent, promptly upon the
reasonable written request of the Administrative Agent in each instance, all
information regarding the Accounts, to the extent the same is provided to
the Company, for the period of time specified in such written notice, and
the Company hereby authorizes you to furnish same.
(f) You agree that you will not make, and you hereby waive all of your
rights to make, any charge, debit or offset to the Accounts for any reason
whatsoever, and waive any and all liens, whether contractual or provided
under law, which you may have or hereafter acquire on the Accounts or funds
therein, in each case, other than any charge, offset, debit or lien in
respect of your customary service charges relating to the Accounts.
<PAGE>
3
(g) All service charges and fees with respect to the Accounts shall be
payable by the Company.
(h) After the giving of notice referred to in paragraphs (b) and (c)
above, the Administrative Agent shall be entitled to exercise any and all
rights of the Company in respect of the Accounts, and the undersigned shall
comply in all respects with such exercise.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Administrative Agent, the other
Secured Parties and their successors, transferees and assigns. You may terminate
this letter agreement only upon thirty days' prior written notice to the Company
and the Administrative Agent. Upon such termination you shall close the Accounts
and transfer all funds in the Accounts to the Administrative Agent's Account
specified in paragraph (b) above.
<PAGE>
4
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
[GRANTOR]
By
-----------------------------
Name:
Title:
BANQUE NATIONALE DE
PARIS, as Administrative Agent
By
-----------------------------
Title:
By
-----------------------------
Title:
Acknowledged and agreed to as of
the date first above written:
[BLOCKED ACCOUNT BANK NAME]
By
---------------------------
Title:
<PAGE>
SCHEDULE I TO EXHIBIT A TO THE
SECURITY AGREEMENT
Accounts
<PAGE>
EXHIBIT B TO THE SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the terms
and provisions of, the Security Agreement dated October 1, 1996 (the "Security
Agreement", the terms defined therein being used herein as therein defined) from
MEDIQ/PRN Life Support Services, Inc. (the "Borrower") and certain other parties
thereto (together with the Borrower, the "Grantors") to Banque Nationale de
Paris as agent (the "Administrative Agent") for the Secured Parties referred to
therein, and hereby agrees with the Administrative Agent that:
(a) Upon written notice from the Administrative Agent, the undersigned
will make all payments to be made by it under or in connection with the
__________ Agreement dated _______________, 19__ (the "Assigned Agreement")
between the undersigned and the Borrower in accordance with the instructions
of the Administrative Agent.
(b) All payments referred to in paragraph (a) 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 the Administrative Agent or any Lender for any
reason any such payment once made.
(c) The Administrative Agent shall be entitled to exercise any and all
rights and remedies of the Borrower under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned
shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written consent of the
Administrative Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof, [or]
(ii) amend or otherwise modify the Assigned Agreement [, or (iii) make any
prepayment of amounts to become due under or in connection with the Assigned
Agreement, except as expressly provided therein].
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 Administrative Agent hereunder, to the benefit of the Administrative
Agent, the other 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.
<PAGE>
2
Dated: _______________, ____ [NAME OF OBLIGOR]
By
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT C TO THE SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
Banque Nationale de Paris, as Administrative Agent
under the Credit Agreement
referred to below
[Address]
[Date]
Attention:
Security Agreement dated as of October 1, 1996
made by MEDIQ/PRN Life Support Services, Inc. and
the other Grantors to Banque Nationale de Paris, as Administrative Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such
Security Agreement, as in effect on the date hereof and as it may hereafter be
amended, modified or otherwise supplemented from time to time, being the
"Security Agreement"). The terms defined in the Security Agreement (or in the
Credit Agreement referred to therein) and not otherwise defined herein are used
herein as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Administrative Agent
for the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in, all of the
right, title and interest of the undersigned, whether now owned or hereafter
acquired, in and to the Collateral owned by the undersigned, including, but not
limited to, the property listed on Annex I hereto. Schedules I, II, III, IV and
V to the Security Agreement are hereby supplemented by Annexes I, II, III, IV
and V hereto, respectively. The undersigned hereby certifies that such Annexes
have been prepared by the undersigned in substantially the form of Schedules I,
II, III, IV and V to the Security Agreement and are accurate and complete as of
the date hereof.
The undersigned hereby makes each representation and warranty set forth
in Section 9 of the Security Agreement (as supplemented by the attached Annexes)
to the same extent as
<PAGE>
2
each other Grantor and hereby agrees to be bound as a Grantor by all of the
terms and provisions of the Security Agreement to the same extent as each other
Grantor.
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
-----------------------------
Name:
Title:
Address of Chief Executive
Office and for Notices:
[Address]
Attention: Chief Financial Officer
