EXHIBIT 99.3
PLEDGE AGREEMENT
AND IRREVOCABLE PROXY
PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from time
to time, this "Agreement") dated as of January 29, 2002 between National Medical
Health Card Systems, Inc., a New York corporation (the "Grantor"), and NMHC
Funding, LLC as the Purchaser (together with its successors and assigns, the
"Purchaser") pursuant to a certain Receivables Purchase and Transfer Agreement
dated as of the date hereof, among the Providers named therein, the Purchaser,
and the Grantor (as amended, modified, restated or supplemented from time to
time in accordance with its terms, the "RPTA"). Capitalized terms used herein
and not defined herein shall have the respective meanings assigned to such terms
in the RPTA.
The Purchaser has agreed to purchase Receivables from the Grantor pursuant
to, and subject to the term and conditions of, the RPTA. In addition, HFG
Healthco-4 LLC (the "Lender") has agreed to extend loans and certain other
financial accommodations to the Purchaser pursuant to, and subject to the terms
and conditions of, the Loan and Security Agreement dated as of the date hereof
between the Purchaser and the Lender (as amended, modified, restated or
supplemented from time to time in accordance with its terms, the "Loan
Agreement"). The Grantor will derive substantial benefit from the transactions
contemplated by the RPTA and the Loan Agreement. The obligation of the Lender to
extend such Revolving Loans under the Loan Agreement is conditioned on the
execution and delivery by the Grantor of a pledge agreement in the form hereof
for the benefit of the Purchaser to secure the following (collectively, the
"Secured Obligations"): (a)(i) the indemnification obligations of the Providers
set forth in Sections 4.01 and 4.02 of the RPTA, including, without limitation,
any and all costs, expenses, losses, claims, damages and liabilities to the
extent resulting from any dispute, claim, offset or defense of any Obligor which
is a Governmental Entity to the payment of any Transferred Receivable due to any
investigation, suit, judgment or claim by such Obligor or any other Governmental
Entity involving the overpayment to or for the benefit of the Grantor or any
Person in which he is a shareholder, partner, member or investor of medical
claims; (ii) the obligations of the Providers set forth in Sections 5.05 and
5.07 of the RPTA to pay fees, costs and expenses set forth thereunder; and (b)
all obligations of the Grantor at any time and from time to time under this
Agreement, including without limitation any and all reasonable costs and
expenses (including reasonable counsel fees and expenses) paid or incurred in
enforcing any rights under this Agreement and that this Agreement be assigned to
the Lender.
Accordingly, the Grantor and the Purchaser hereby agree as follows:
1. Pledge. As security for the payment and performance in full of the
Secured Obligations, the Grantor hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges, sets over, and endorses over unto the Purchaser
and its assignees, and grants to the Purchaser and its assignees, a security
interest in, (a) the shares of capital stock listed in Schedule I annexed hereto
next to the Grantor's name (the "Initial Pledged Stock") and any additional
shares of capital stock or any other form of equity interests obtained in the
future by the Grantor (collectively, the Initial Pledged Stock together with all
such additional shares pledged in the future or shares issued in replacement
thereof, the "Pledged Stock"), (b) all instruments of debt (whether now existing
or hereinafter arising) by any of the issuers listed in Schedule I annexed
hereto which name the Grantor as payee thereunder (the "Initial Pledged Debt")
and any additional instruments of debt or any other form of debt interests
obtained in the future by the Grantor (collectively, the Initial Pledged Debt
together with all such additional debt pledged in the future, the "Pledged
Debt"), (c) the software and computer programs, together with all related
intellectual property and proprietary rights thereunder, listed in Schedule II
annexed hereto (the "Initial Pledged Software") and all modifications and
enhancements thereto (collectively, the Initial Pledged Software together with
all such additional modifications and enhancements thereto pledged in the
future, the "Pledged Software"), and (d) subject to Section 5 below, all
proceeds of the Pledged Stock, the Pledged Debt and Pledged Software including,
without limitation, all cash, securities or other property at any time and from
time to time receivable or otherwise distributed in respect of or in exchange
for any of or all such Pledged Stock, Pledged Debt and Pledged Software (the
items referred to in clauses (a) through (d) being collectively called the
"Collateral").
2. Delivery of Collateral. The Grantor agrees to deliver promptly or cause
to be delivered to the Program Manager for the benefit of the Lender as assignee
of the Purchaser any and all Pledged Securities, and any and all certificates or
other instruments or documents representing any of the Collateral (together with
appropriate stock powers or any necessary endorsements, as the case may be).
Upon delivery to the Program Manager for the benefit of the Lender as assignee
of the Purchaser, any securities now or hereafter included in the Collateral
including, without limitation, the Pledged Stock (the "Pledged Securities")
shall be accompanied by undated stock powers duly executed in blank or other
instruments of transfer satisfactory to the Lender as assignee and by such other
instruments and documents as the Lender as assignee may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule showing a
description of the securities theretofore and then being pledged hereunder,
which schedule shall be attached hereto as Schedule I and made a part hereof.
Each schedule so delivered shall supersede any prior schedules so delivered.
3. Representations, Warranties and Covenants. The Grantor hereby
represents, warrants and covenants to and with the Purchaser and its assignees
that:
(a) except for the security interest granted to the Purchaser and its
assignees, the Grantor (i) is and, subject to the provisions of the RPTA, will
at all times continue to be the direct owner, beneficially and of record, of the
Pledged Securities that it is pledging hereunder and is and will continue to be
the holder of the Pledged Debt that it is pledging hereunder except for the
delivery and endorsement over of such Pledged Debt to the Purchaser and its
assignees as contemplated hereunder, (ii) holds the Collateral that it is
pledging hereunder free and clear of all Liens, charges, encumbrances and
security interests of every kind and nature, and the Pledged Stock is subject to
no options to purchase or any similar or other rights of any Person, (iii) will
make no assignment, pledge, hypothecation or, subject to the provisions of the
RPTA, transfer of, or create any security interest in, the Collateral that it is
pledging hereunder including, without limitation, by virtue of becoming bound by
any agreement which restricts in any manner the rights of any present or future
holder of any Pledged Stock with respect thereto, and (iv) subject to Section 5
below, will cause any and all Collateral, whether for value paid by the Grantor
or otherwise, to be forthwith deposited with the Program Manager for the benefit
of the Lender as assignee and pledged or assigned hereunder;
(b) the Grantor (i) has good right and legal authority to pledge the
Collateral it is pledging hereunder in the manner hereby done or contemplated,
(ii) will not amend, modify or supplement any Pledged Security (including,
without limitation, any Pledged Debt) without the prior written consent of the
Purchaser, nor forgive any Debt evidenced by any Pledged Security, and (iii)
will defend its title or interest thereto or therein against any and all
attachments, Liens, claims, encumbrances, security interests or other
impediments of any nature, however arising, of all Persons whomsoever;
(c) no consent or approval of any governmental body or regulatory authority
or any securities exchange was or is necessary to the validity of the pledge
effected hereby;
(d) by virtue of the execution and delivery by the Grantor of this
Agreement, when the certificates, instruments or other documents representing or
evidencing the Collateral are delivered to the Program Manager for the benefit
of the Lender as assignee in accordance with this Agreement, the Purchaser and
the Lender as assignee will obtain a valid and perfected first Lien upon and
security interest in such Collateral as security for the repayment of the
Secured Obligations, prior to all other Liens and encumbrances thereon and
security interests therein;
(e) the pledge effected hereby is effective to vest in the Purchaser and
the Lender as assignee the rights in the Collateral as set forth herein; and
(f) all of the Pledged Stock has been duly authorized and validly issued
and as at the date hereof, the Initial Pledged Stock constitutes all of the
issued and outstanding shares of capital stock of the issuer, listed on Schedule
I annexed hereto.
All representations, warranties and covenants of the Grantor contained in
this Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 14 hereof.
4. Registration in Nominee Name; Denominations. Upon the occurrence and
during the continuance of an Event of Termination, (a) the Purchaser or its
assignees shall have the right (in its sole and absolute discretion with
subsequent notice to the Grantor) to transfer to or to register the Pledged
Securities in its own name or the name of its nominee, and (b) the Purchaser or
its assignees shall have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
5. Voting Rights; Dividends; etc. (a) Unless and until an Event of
Termination hereunder shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of Pledged Securities or any
part thereof for any purpose not inconsistent with the terms of this Agreement
and the RPTA provided that such action would not adversely affect the rights
inuring to the Purchaser or its assignees under this Agreement or the RPTA or
adversely affect the rights and remedies of the Purchaser or its assignees under
this Agreement, the RPTA or the Documents (as defined in the Loan Agreement) or
the ability of the Purchaser or its assignees to exercise the same.
(ii) The Purchaser and its assignees shall execute and deliver to the
Grantor, or cause to be executed and delivered to the Grantor, all such proxies,
powers of attorney, and other instruments as the Grantor may reasonably request
for the purpose of enabling the Grantor to exercise the voting and/or consensual
rights and powers which the Grantor is entitled to exercise pursuant to
subparagraph (i) above.
(iii) The Grantor shall be entitled to receive and retain any and all cash
dividends paid on the Pledged Securities only to the extent that such cash
dividends are permitted by, and otherwise paid in accordance with the terms and
conditions of, the RPTA and applicable laws. Any and all
a. noncash dividends,
b. stock or dividends paid or payable in cash or otherwise in connection
with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in property, return of
capital, capital surplus or paid-in surplus or other distributions made on or in
respect of Pledged Securities (other than dividends permitted by this Section
5(a)(iii)), whether paid or payable in cash or otherwise, whether resulting from
a subdivision, combination or reclassification of the outstanding capital stock
of the issuer of any Pledged Securities or received in exchange for Pledged
Securities or any part thereof, or in redemption thereof, as a result of any
merger, consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise,
shall be and become part of the Collateral, and, if received by the
Grantor, shall not be commingled by the Grantor with any of its other funds or
property but shall be held separate and apart therefrom, shall be held in trust
for the benefit of the Purchaser and its assignees and shall be forthwith
delivered to the Program Manager for the benefit of the Lender as assignee in
the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Termination, all rights of the Grantor to receive any dividends, stock,
instruments, securities and other distributions which the Grantor is authorized
to receive pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all
such rights shall thereupon become vested in the Purchaser or its assignees,
which shall have the sole and exclusive right and authority to receive and
retain such dividends. All dividends which are received by the Grantor contrary
to the provisions of this Section 5(b) shall be received in trust for the
benefit of the Purchaser or its assignees, shall be segregated from other
property or funds of the Grantor and shall be forthwith delivered to the Program
Manager as Collateral in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Program Manager pursuant to the provisions of this Section 5 (b) shall be
retained by the Program Manager in an account to be established by the Program
Manager upon receipt of such money or other property and shall be applied in
accordance with the provisions of Section 8 hereof.
(c) Upon the occurrence and during the continuance of an Event of
Termination, all rights of the Grantor to exercise the voting and consensual
rights and pursuant to the irrevocable proxy granted herein, powers which it is
entitled to exercise pursuant to Section 5(a)(i) shall cease, and all such
rights shall thereupon become vested in the Purchaser or its assignees, which
shall have the sole and exclusive right and authority to exercise such voting
and consensual rights and powers.
(d) As long as the RPTA or the Loan Agreement remain in effect and until
all of the Secured Obligations have been paid fully and indefeasibly, any
payments made in respect of the Pledged Debt shall be and become part of the
Collateral, and, if received by the Grantor, shall be held in trust for the
benefit of the Purchaser or its assignees and shall be forthwith delivered to
the Program Manager in the same form as so received and applied to the Secured
Obligations.
(e) In order to permit the Purchaser or its assignees to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
to Section 5(c) and to receive all dividends and other distributions which it
may be entitled to receive under Section 5(a)(iii) or Section 5(b), upon the
occurrence and during the continuance of an Event of Termination, the Grantor
shall promptly execute and deliver (or cause to be executed and delivered) to
the Program Manager all such proxies, dividend payment orders and other
instruments as the Purchaser or its assignees may from time to time reasonably
request.
Without limiting the effect of the foregoing, the Grantor does hereby
constitute and appoint the Lender (as assignee of the Purchaser) as its proxy,
and the Lender (as assignee of the Purchaser) shall have the right, upon the
occurrence and during the continuance of an Event of Termination, to exercise
all rights, benefits, privileges and powers accruing to the Grantor, as owner of
the Pledged Securities, including, without limitation, giving or withholding
consent, calling and attending shareholders meetings to be held from time to
time with full power to vote and act for and in the name, place, and stead of
the Grantor and in the same manner, to the same extent, and with the same effect
that the Grantor would if personally present at such meetings, giving to the
Lender (as assignee of the Purchaser) full power of substitution and revocation,
which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Stock on the record books of the
issuer thereof) by any Person (including the issuer of the Pledged Stock or any
officer or agent thereof).
THIS PROXY IS IRREVOCABLE
Any proxy or proxies heretofore given by the Grantor to any Person or
Persons whatsoever are hereby revoked. This proxy shall continue in full force
and effect until such time as all Secured Obligations are paid and satisfied in
full.
6. Issuance of Additional Stock. The Grantor agrees that it will cause each
of its subsidiaries not to issue any stock or other securities, whether in
addition to, by stock dividend or other distribution upon, or in substitution
for, the Pledged Securities or otherwise, other than Preferred Stock that is
pledged to, or subject to a lien in favor of, the Purchaser or its assignees.
7. Remedies upon Event of Termination. If an Event of Termination shall
have occurred and be continuing, the Purchaser and its assignees may sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Purchaser or its assignees shall deem
appropriate and as required by the Uniform Commercial Code. Each such purchaser
at any such sale shall hold the property sold absolutely, free from any claim or
right on the part of the Grantor, and the Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which the Grantor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Purchaser or its assignees shall give the Grantor 10 days' written
notice (which the Grantor agrees is reasonable notice within the meaning of
Section 9-611(c) of the Uniform Commercial Code as in effect in New York) of the
Purchaser's or its assignees' intention to make any sale of Collateral. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Purchaser or
its assignees may fix and state in the notice (if any) of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as the Lender may (in its sole and absolute
discretion) determine. The Purchaser or its assignees shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Purchaser or its assignees may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Purchaser or its assignees until the sale price is paid by the purchaser or
purchasers thereof, but the Purchaser and its assignees shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public sale made pursuant to this Section
7, the Purchaser or its assignees may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay or appraisal on the part of
the Grantor (all said rights being also hereby waived and released to the extent
permitted by law), with respect to the Collateral or any part thereof offered
for sale and the Purchaser or its assignees may make payment on account thereof
by using any claim then due and payable to the Purchaser or its assignees from
the Grantor as a credit against the purchase price, and the Purchaser or its
assignees may, upon compliance with the terms of sale, hold, retain and dispose
of such property without further accountability to the Grantor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof; the Purchaser or its assignees shall
be free to carry out such sale and purchase pursuant to such agreement, and the
Grantor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Purchaser and
its assignees shall have entered into such an agreement all Events of
Termination shall have been remedied and the Secured Obligations paid in full.
The Grantor shall remain liable for any deficiency. As an alternative to
exercising the power of sale herein conferred upon it, the Lender (as assignee
of the Purchaser) may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
8. Application of Proceeds of Sale. The proceeds of any sale of Collateral,
as well as any Collateral consisting of cash, shall be applied by the Purchaser
or its assignees as follows:
FIRST, to the payment of all reasonable costs and expenses incurred by the
Purchaser and its assignees in connection with such sale or otherwise in
connection with this Agreement, the Documents (as defined in the Loan Agreement)
or any of the Secured Obligations, including, but not limited to, all court
costs and the reasonable fees and expenses of the Purchaser's and its assignees'
agents and legal counsel, the repayment of all advances made by the Purchaser
and its assignees hereunder on behalf of the Grantor or to protect and preserve
the Collateral and any other reasonable costs or expenses incurred in connection
with the exercise of any right or remedy hereunder; and
SECOND, as contemplated under the Documents (as defined in the Loan
Agreement).
9. Lender Appointed Attorney-in-Fact. The Grantor hereby appoints the
Lender as the assignee of the Purchaser its attorney-in-fact for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument which the Lender as the assignee of the Purchaser may
deem necessary or advisable after the occurrence and during the continuance of
an Event of Termination to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Lender as the assignee of the Purchaser shall have the right,
upon the occurrence and during the continuance of an Event of Termination, with
full power of substitution either in the Purchaser's name or in the name of the
Grantor, to ask for, demand, xxx for, collect, receive receipt and give
acquittance for any and all moneys due or to become due and under and by virtue
of any Collateral, to endorse checks, drafts, orders and other instruments for
the payment of money payable to the Grantor representing any interest or
dividend, or other distribution payable in respect of the Collateral or any part
thereof or on account thereof and to give full discharge for the same, to
settle, compromise, prosecute or defend any action, claim or proceeding with
respect thereto, and to sell, assign, endorse, pledge, transfer and make any
agreement respecting, or otherwise deal with, the same; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Lender as the assignee of the Purchaser to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the Lender as
the assignee of the Purchaser, or to present or file any claim or notice, or to
take any action with respect to the Collateral or any part thereof or the moneys
due or to become due in respect thereof or any property covered thereby, and no
action taken by the Lender as the assignee of the Purchaser or omitted to be
taken with respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of the Grantor or to any claim or
action against the Lender as the assignee of the Purchaser in the absence of the
gross negligence or wilful misconduct of the Lender as the assignee of the
Purchaser.
10. No Waiver. No failure on the part of the Purchaser or the Lender to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Purchaser or its assignees preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. The Purchaser and its assignees shall not be deemed to
have waived any rights hereunder or under any other agreement or instrument
unless such waiver shall be in writing and signed by such parties.
11. Registration, etc. The Grantor agrees that, upon the occurrence and
during the continuance of an Event of Termination hereunder, if for any reason
the Purchaser or its assignees desire to sell any of the Pledged Securities at a
public sale, Purchaser or its assignees will, at any time and from time to time,
upon the written request of the Purchaser or its assignees, take or to cause the
issuer of such Pledged Securities to take such action and to prepare, distribute
and/or file such documents, as are required or advisable in the opinion of
counsel for the Purchaser or its assignees to permit the public sale of such
Pledged Securities. The Grantor further agrees to indemnify, defend and hold
harmless the Purchaser and its assignees and any underwriter and their
respective officers, directors, affiliates and controlling Persons (within the
meaning of Section 20 of the Securities Exchange Act of 1934) from and against
all loss, liability, expenses, costs, fees and disbursements of counsel
(including, without limitation, a reasonable estimate of the cost to the
Purchaser and its assignees of legal counsel), and claims (including the costs
of investigation) which they may incur insofar as such loss, liability, expense
or claim arises out of or is based upon any untrue statement of a material fact
contained in any prospectus (or any amendment or supplement thereto) or in any
notification or offering circular, or arises out of or is based upon any
omission to state a material fact required to be stated therein or necessary to
make the statements in any thereof not misleading, except insofar as the same
arises out of any untrue statement or omission based upon information furnished
in writing to the Grantor or the issuer of such Pledged Securities by the
Purchaser or its assignees or the underwriter expressly for use therein. The
Purchaser and its assignees (with respect to such information furnished by it)
shall indemnify, defend and hold harmless the Grantor or the issuer of such
Pledged Securities and their respective officers, directors, affiliates and
controlling Persons (within the meaning of Section 20 of the Securities Exchange
Act of 1934) upon the same terms as are applicable to the Grantor pursuant
hereto. The Grantor further agrees to use its best efforts to qualify, file or
register, or cause the issuer of such Pledged Securities to qualify, file or
register, any of the Pledged Securities under the Blue Sky or other securities
laws of such states as may be requested by the Lender as the assignee of the
Purchaser and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. The Grantor will bear all costs and
expenses of carrying out its obligations under this Section 11. The Grantor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 11 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 11 may be specifically enforced.
12. Security Interest Absolute. All rights of the Purchaser and its
assignees hereunder, the grant of a security interest in the Collateral and all
obligations of the Grantor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the Documents (as
defined in the Loan Agreement), any agreement with respect to any of the Secured
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in 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 the Documents (as defined in the
Loan Agreement) or any other agreement or instrument, (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment or
waiver of or consent to or departure from any guarantee, for all or any of the
Secured Obligations or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Grantor in respect of
the Secured Obligations or in respect of this Agreement.
13. Purchaser and Lender's Fees and Expenses. The Grantor shall be
obligated to, upon demand, pay to the Purchaser and its assignees the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
their respective counsel and of any experts or agents which the Purchaser and
its assignees may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Purchaser or its assignees hereunder or
(iv) the failure by the Grantor to perform or observe any of the provisions
hereof. In addition, the Grantor indemnifies and holds the Purchaser and its
assignees harmless from and against any and all liability incurred by the
Purchaser and its assignees hereunder or in connection herewith, unless such
liability shall be due to the gross negligence or wilful misconduct of the
Purchaser or its assignees, as the case may be. Any such amounts payable as
provided hereunder or thereunder shall be additional Secured Obligations secured
hereby and by the other Documents.
14. Termination. This Agreement shall terminate when (a) all the Secured
Obligations have been fully and indefeasibly paid in cash, (b) the Purchaser has
no further commitment to purchase Receivables, and (b) the Lender has no further
commitment to make any Revolving Loans under the Loan Agreement, at which time
the Purchaser and its assignees shall reassign and deliver to the Grantor, or to
such Person or Persons as the Grantor shall designate, against receipt, such of
the Collateral (if any) as shall not have been sold or otherwise still be held
by it hereunder, together with appropriate instruments of reassignment and
release; provided, however, that all indemnities of the Grantor contained in
this Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement. Any such reassignment shall be
without recourse to or warranty by the Purchaser and its assignees and at the
expense of the Grantor.
15. Notices. All notices, demands and requests that any party is required
or elects to give to any other shall be in writing, or by a telecommunications
device capable of creating a written record, and any such notice shall become
effective (a) upon personal delivery thereof, including, but not limited to,
delivery by overnight mail and courier service, (b) four (4) days after it shall
have been mailed by United States mail, first class, certified or registered,
with postage prepaid, or (c) in the case of notice by such a telecommunications
device, when properly transmitted, in each case addressed to the party to be
notified as follows:
If to the Lender:
HFG Healthco-4 LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile Number: (000) 000-0000
If to the Purchaser:
NMHC Funding, LLC
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx,
Chief Financial Officer
Facsimile Number: (000) 000-0000
If to the Grantor:
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx,
Chief Financial Officer
Facsimile Number: (000) 000-0000
16. Further Assurances. The Grantor agrees to do such further acts and
things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Purchaser or its assignees may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Purchaser or its assignees their rights
and remedies hereunder.
17. ASSIGNABILITY. SUBJECT TO SECTION 5.03(b) OF THE LSA, THIS PLEDGE
AGREEMENT AND THE PURCHASER'S RIGHTS AND OBLIGATIONS HEREIN SHALL BE ASSIGNABLE
BY THE PURCHASER AND ITS SUCCESSORS AND ASSIGNS. THE GRANTOR HEREBY ACKNOWLEDGES
AND CONFIRMS THAT, AS COLLATERAL SECURITY FOR ANY AND ALL OBLIGATIONS OF THE
PURCHASER PURSUANT TO THE LOAN AGREEMENT, THE PURCHASER IS GRANTING TO THE
LENDER, A SECURITY INTEREST IN, AND COLLATERAL ASSIGNMENT OF, THIS PLEDGE
AGREEMENT AND ALL OF THE PURCHASER'S RIGHTS, TITLE AND INTERESTS HEREUNDER ,
INCLUDING, ALL MONIES DUE OR TO BECOME DUE TO THE PURCHASER, UNDER OR IN
CONNECTION WITH THIS PLEDGE AGREEMENT.
17. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Lender as Collateral under this Agreement.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (EXCEPT CONFLICTS OF LAWS
PRINCIPLES THEREOF), EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
19. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Grantor and the
instruments pledged herein shall have been delivered to the Program Manager.
21. Event of Termination. This Agreement shall constitute a "Document"
under the Loan Agreement.
22. Section Headings. Section headings used herein are for convenience only
and are not to affect the construction of, or be taken into consideration in
interpreting, this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By____________________________
Name:
Title:
NMHC FUNDING, LLC
By: National Medical Health Card Systems, Inc.,
a corporation organized under the laws of
the State of New York
By____________________________
Name:
Title:
SCHEDULE I
PLEDGED STOCK
Issuer Shares Certificate #
------ ------ -------------
Pharmacy Associates, Inc. 100 13
Interchange PMP, Inc.
(f/k/a PMP Acquisition Corp.) 100 1
Specialty Pharmacy Care, Inc. 10 2
National Medical Health Card IPA, Inc. 10 2
HSL Acquisition Corp. 1,000 1
PSCNY IPA, Inc. 10 2
National Medical Health Card Systems, Inc.,
a Delaware corporation 1,000 1
PLEDGED DEBT
Promissory Note, dated as of July 31, 2000, in the principal amount of
$3,890,940 issued by PW Capital LLC, payable to National Medical Health Card
Systems, Inc.
SCHEDULE II
PLEDGED SOFTWARE
Operating
SQL Server 7.0
Oracle 8i
Oracle Data Warehouse Builder
Exchange 5.5
Exchange 2000
Crystal Enterprise 8.0
Windows 2000 Server
Windows 2000 Advanced Server
Windows NT 4.0 Server
NFuse 1.5
Citrix Metaframe
Unix
Xxxxx
Cognos
Oracle Java Development Suite
Oracle Designer
Development
Homesite
Visual Studio 6.0 (VB)
PL/SQL
TOAD
Crystal Reports Developers Edition 8.5
LAN/WAN
Lucent Telephone System
Norton Anti-virus Corporate Edition
SMS Server
Checkpoint Firewall
PC Anywhere
NFS Reflections
Cisco IOS
Shiva
User
Desktop
Microsoft Office 2000 Suite
Microsoft Office XP Suite
Windows 2000 Professional
Windows 2000 XP Professional
Windows 98
Windows NT Workstation 4.0
ACT!
Adobe PhotoShop
Business
PHI Claims Processing Package 3.0
ProClaim
ProHelpDesk
NFO Information Portal
Clinical Patient Navigator
Reports Catalog
What-If Pricing
Copay Analysis
Output Scheduler
Pharmacy Check Production
Check Lookup
Customer Billing
Pacer
Pacer Setup
Billing Utility (Customer Supplemental Data Maintenance)
Call Center Tracking
HR System
Automated Plan Review
Sales Commissions System
Plan Benefit Design Sheet
Eligibility Utility
Eligibility File Upload Utility
Formulary Maintenance Utility
Jobs Bulletin Board Utility
HC Focus
Innate T&A Package
Rebate Processing System for Managed Care
Card Production Custom Application
