Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Security Agreement
Exhibit 10.22
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Securities and Exchange Commission. Asterisks denote omissions.
This Security Agreement (the “Agreement”) is dated as of September 30, 2009, among Accretive
Health, Inc., a Delaware corporation (the “Borrower”), and the other parties executing this
Agreement under the heading “Debtors” (the Borrower and such other parties, along with any parties
who execute and deliver to the Secured Party referred to herein an agreement attached hereto as
Schedule H, being hereinafter referred to collectively as the “Debtors” and individually as a
“Debtor”), each with its mailing address as set forth in Section 12(b) hereof, and Bank of
Montreal, a Canadian chartered bank, acting through its Chicago branch (the “Secured Party”), with
its mailing address as set forth in Section 12(b) hereof. The term “Debtor” and “Debtors” as used
herein shall mean and include the Debtors collectively and also each individually, with all grants,
representations, warranties and covenants of and by the Debtors, or any of them, herein contained
to constitute joint and several grants, representations, warranties and covenants of and by the
Debtors; provided, however, that unless the context in which the same is used shall otherwise
require, any grant, representation, warranty or covenant contained herein related to the Collateral
shall be made by each Debtor only with respect to the Collateral owned by it or represented by such
Debtor as owned by it.
Preliminary Statement
A. The Borrower and the Secured Party have entered into a Credit Agreement dated as of
September 30, 2009 (the Credit Agreement, as the same may be amended or modified from time to time,
including amendments and restatements thereof in its entirety, being referred to herein as the
“Credit Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings
given such terms in the Credit Agreement) pursuant to which the Secured Party may from time to time
extend credit or otherwise make financial accommodations available to or for the account of the
Borrower.
B. The Debtors (other than the Borrower) are subsidiaries or affiliates of the Borrower.
C. Each Debtor provides each of the other Debtors with substantial financial, management,
administrative, and technical support.
D. The interdependent nature of the businesses of the Debtors is such that the viability of
each Debtor is dependent upon the continued success of the other Debtors and, upon the continuation
of such Debtor’s business relationships with the other Debtors, and the continuation thereof
necessitates the Borrower’s access to credit and other financial accommodations from the Secured
Party.
E. As a condition to extending credit or otherwise making financial accommodations available
to or for the account of the Borrower (whether under the Credit Agreement or otherwise), the
Secured Party requires, among other things, that each Debtor grant the Secured Party a security
interest in such Debtor’s personal property described herein subject to the terms and conditions
hereof.
Now, Therefore, in consideration of the benefits accruing to the Debtors, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Grant of Security Interest. As collateral security for the Secured Obligations (as
defined below), each Debtor hereby grants to the Secured Party a lien on and security interest in,
and acknowledges and agrees that the Secured Party has and shall continue to have a continuing lien
on and security interest in, all right, title, and interest of each Debtor, whether now owned or
existing or hereafter created, acquired or arising, in and to all of the following:
(a) Accounts (including Healthcare Insurance Receivables, if any);
(b) Chattel Paper;
(c) Instruments (including Promissory Notes);
(d) Documents;
(e) General Intangibles (including Payment Intangibles and Software, patents,
trademarks, tradestyles, copyrights, and all other intellectual property rights, including
all applications, registration, and licenses therefor, and all goodwill of the business
connected therewith or represented thereby);
(f) Letter-of-Credit Rights;
(g) Supporting Obligations;
(h) Deposit Accounts;
(i) Investment Property (including certificated and uncertificated Securities,
Securities Accounts, Security Entitlements, Commodity Accounts, and Commodity Contracts);
(j) Inventory;
(k) Equipment (including all software, whether or not the same constitutes embedded
software, used in the operation thereof);
(l) Fixtures;
(m) Commercial Tort Claims (as described on Schedule F hereto or on one or more
supplements to this Agreement);
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(n) Rights to merchandise and other Goods (including rights to returned or repossessed
Goods and rights of stoppage in transit) which is represented by, arises from, or relates to
any of the foregoing;
(o) Monies, personal property, and interests in personal property of such Debtor of any
kind or description now held by the Secured Party or at any time hereafter transferred or
delivered to, or coming into the possession, custody, or control of, the Secured Party, or
any agent or affiliate of the Secured Party, whether expressly as collateral security or for
any other purpose (whether for safekeeping, custody, collection or otherwise), and all
dividends and distributions on or other rights in connection with any such property;
(p) Supporting evidence and documents relating to any of the above-described property,
including, without limitation, computer programs, disks, tapes and related electronic data
processing media, and all rights of such Debtor to retrieve the same from third parties,
written applications, credit information, account cards, payment records, correspondence,
delivery and installation certificates, invoice copies, delivery receipts, notes, and other
evidences of indebtedness, insurance certificates and the like, together with all books of
account, ledgers, and cabinets in which the same are reflected or maintained;
(q) Accessions and additions to, and substitutions and replacements of, any and all of
the foregoing; and
(r) Proceeds and products of the foregoing, and all insurance of the foregoing and
proceeds thereof;
all of the foregoing being herein sometimes referred to as the “Collateral”; provided, however,
that in no event will the Collateral described above be deemed to include any Excluded Assets.
All terms which are used in this Agreement which are defined in the Uniform Commercial Code of the
State of Illinois as in effect from time to time (“UCC”) shall have the same meanings herein as
such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. For purposes of this Agreement, (a) the term “Receivables” means
all rights to the payment of a monetary obligation, whether or not earned by performance, and
whether evidenced by an Account, Chattel Paper, Instrument, General Intangible, or otherwise, and
(b) the term “Excluded Assets” means (i) except as may otherwise be required by Section 4.2 of the
Credit Agreement, outstanding equity interests of any Foreign Subsidiary in excess of 65% of all
equity interests of such Foreign Subsidiary, and (ii) any permit or license issued by a
governmental authority to any Debtor or any agreement to which any Debtor is a party, in each case
only to the extent and for so long as the terms of such permit, license or agreement or any
requirement of applicable law effectively (after giving effect to Sections 9-406 -9-409, inclusive,
of the Uniform Commercial Code in the applicable state (or any successor provision or provisions)
or any other applicable law) prohibit the creation by such Debtor of a security interest in such
permit, license or agreement in favor of the Bank or would result in an effective (after giving
effect to Sections 9-406 — 9-409, inclusive, of the Uniform Commercial Code in the applicable
state (or any successor provision or provisions) or any other
applicable law)
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invalidation, termination or breach of the terms of any such permit, license or agreement, in each case unless
and until any required consents are obtained, provided further that, notwithstanding anything set
forth above to the contrary, the Collateral shall include, and the security interest granted in the
Collateral shall attach to, (x) all Proceeds, substitutions or replacements of any such excluded
items referred to herein unless such Proceeds, substitutions or replacements would constitute
excluded items hereunder, (y) all rights to payment due or to become due under any such excluded
items referred to herein, and (z) in the case of any permit, license or agreement, if and when the
prohibition which prevents the granting of a security interest in any such property is removed,
terminated, or otherwise becomes unenforceable as a matter of law, the Bank will be deemed to have,
and at all times to have had, a security interest in such property, and the Collateral will be
deemed to include, and at all times to have included, such property.
Section 2. Obligations Hereby Secured. The lien and security interest herein granted and
provided for is made and given to secure, and shall secure, the payment and performance of (a) all
“Obligations,” “Hedging Liability,” and “Funds Transfer and Deposit Account Liability,” as such
terms are defined in the Credit Agreement, including, without limitation, all obligations with
respect to Loans made and to be made under the Credit Agreement (whether or not evidenced by a Note
issued thereunder), all obligations of the Borrower to reimburse the Secured Party for the amount
of all drawings on all Letters of Credit issued pursuant to the Credit Agreement and all other
obligations of the Borrower under all Applications for Letters of Credit, all obligations of the
Debtors, and of any of them individually, with respect to any Hedging Liability, all obligations of
the Debtors, and of any of them individually, with respect to any Funds Transfer and Deposit
Account Liability, and all obligations of the Debtors, and of any of them individually, arising
under any guaranty issued by it relating to the foregoing or any part thereof, in each case whether
now existing or hereafter arising (and whether arising before or after the filing of a petition in
bankruptcy and including all interest, costs, fees, and charges after the entry of an order for
relief against a Debtor in a case under Title 11 of the United States Bankruptcy Code or any
similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim
against such Debtor in such proceeding), due or to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired, and (b) any and all expenses and charges,
legal or otherwise, suffered or incurred by the Secured Party in collecting or enforcing any of
such indebtedness, obligations, or liabilities or in realizing on or protecting or preserving any
security therefor, including, without limitation, the lien and security interest granted hereby
(all of the foregoing being hereinafter referred to as the “Secured Obligations”). Notwithstanding
anything in this Agreement to the contrary, the right of recovery against any Debtor (other than
the Borrower to which this limitation shall not apply) under this Agreement shall not exceed $1.00
less than the lowest amount that would render such Debtor’s obligations under this Agreement void
or voidable under applicable law, including fraudulent conveyance law.
Section 3. Covenants, Agreements, Representations and Warranties. The Debtors hereby covenant
and agree with, and represents and warrants to, the Secured Party that:
(a) Each Debtor is duly organized and validly existing in good standing under the laws of the
jurisdiction of its organization. No Debtor shall change its jurisdiction of organization without
the Secured Party’s prior written consent. Each Debtor is the sole and lawful owner of
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its Collateral, and has full right, power, and authority to enter into this Agreement and to perform
each and all of the matters and things herein provided for. The execution and delivery of this
Agreement, and the observance and performance of each of the matters and things herein set forth,
will not (i) contravene or constitute a default under any provision of law or any judgment,
injunction, order, or decree binding upon any Debtor which could reasonably be expected to result
in a Material Adverse Effect or any provision of any Debtor’s organizational documents (e.g.,
charter, articles or certificate of incorporation and by-laws, articles or certificate of formation and limited liability company operating agreement,
partnership agreement, or other similar organizational documents) or any covenant, indenture, or
agreement of or affecting any Debtor or any of its property or (ii) result in the creation or
imposition of any lien or encumbrance on any property of any Debtor except for Permitted Liens.
Each Debtor’s organizational registration number (if any) is set forth under its name under Column
1 on Schedule A.
(b) Each Debtor’s respective chief executive office is at the location listed under Column 2
on Schedule A attached hereto opposite such Debtor’s name; and such Debtor has no other executive
offices or places of business other than those listed under Column 3 on Schedule A attached hereto
opposite such Debtor’s name. The Collateral owned or leased by each Debtor is and shall remain in
such Debtor’s possession or control at the locations listed under Columns 2 and 3 on Schedule A
attached hereto opposite such Debtor’s name (collectively for each Debtor, as such locations may be
amended or supplemented from time to time with written notice to the Secured Party as provided
below, the “Permitted Collateral Locations”). If for any reason any Collateral is at any time kept
or located at a location other than a Permitted Collateral Location, the Secured Party shall
nevertheless have and retain a lien on and security interest therein. The Debtors own and shall at
all times own all Permitted Collateral Locations, except to the extent otherwise disclosed under
Columns 2 and 3 on Schedule A. No Debtor shall move its chief executive office or maintain a place
of business at a location other than those specified under Columns 2 or 3 on Schedule A or permit
the Collateral to be located at a location other than those specified under Columns 2 or 3 on
Schedule A, in each case without first providing the Secured Party 30 days’ prior written notice of
such Debtor’s intent to do so (at which time Schedule A will be deemed amended or supplemented with
such additional or modified locations); provided that each Debtor shall at all times maintain its
chief executive office and, unless otherwise specifically agreed to in writing by the Secured
Party, Permitted Collateral Locations in the United States of America and, with respect to any new
chief executive office or place of business or location of Collateral, such Debtor shall have taken
all action reasonably requested by the Secured Party to maintain the lien and security interest of
the Secured Party in the Collateral at all times fully perfected and in full force and effect.
(c) Each Debtor’s legal name and jurisdiction of organization is correctly set forth under
Column 1 on Schedule A of this Agreement. No Debtor has transacted business at any time during the
immediately preceding five-year period, and does not currently transact business, under any other
legal names or trade names other than the prior legal names and trade names (if any) set forth on
Schedule B attached hereto. No Debtor shall change its legal name or transact business under any
other trade name without first giving 30 days’ prior written notice of its intent to do so to the
Secured Party.
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(d) The Collateral and every part thereof is and shall be free and clear of all security
interests, liens (including, without limitation, mechanics’, laborers’ and statutory liens),
attachments, levies, and encumbrances of every kind, nature and description, whether voluntary or
involuntary, except Permitted Liens. Each Debtor shall warrant and defend the Collateral against
any claims and demands of all persons at any time claiming the same or any interest in the
Collateral adverse to the Secured Party.
(e) Each Debtor shall promptly pay when due all taxes, assessments, and governmental charges
and levies upon or against such Debtor or any of its Collateral, in each case before the same
become delinquent and before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings which prevent foreclosure or other
realization upon any of the Collateral and preclude interference with the operation of such
Debtor’s business in the ordinary course, and such Debtor shall have established adequate reserves
therefor.
(f) No Debtor shall use, manufacture, sell, or distribute any Collateral in violation of any
statute, ordinance, or other governmental requirement which could reasonably be expected to have a
Material Adverse Effect. No Debtor shall waste or destroy the Collateral or any material part
thereof or be negligent in the care or use of any material Collateral. Each Debtor shall perform
in all material respects its obligations under any contract or other agreement constituting part of
the Collateral, it being understood and agreed that the Secured Party has no responsibility to
perform such obligations.
(g) Subject to Sections 4(b), 6(b), 6(c), and 7(c) hereof and the terms of the Credit
Agreement (including, without limitation, Section 8.10 thereof), no Debtor shall, without the
Secured Party’s prior written consent, sell, assign, mortgage, lease, or otherwise dispose of the
Collateral or any interest therein.
(h) The Debtors shall at all times insure the Collateral consisting of tangible personal
property against such risks and hazards as other persons similarly situated insure against, and
including in any event loss or damage by fire, theft, burglary, pilferage, loss in transit and such
other hazards as the Secured Party may reasonably specify. All insurance required hereby shall be
maintained in amounts and under policies and with insurers reasonably acceptable to the Secured
Party, and all such policies shall contain loss payable clauses naming the Secured Party as loss
payee as its interest may appear (and, if the Secured Party requests, naming the Secured Party as
an additional insured therein) in a form reasonably acceptable to the Secured Party. All premiums
on such insurance shall be paid by the Debtors. Certificates of insurance evidencing compliance
with the foregoing and, at the Secured Party’s request, the policies of such insurance shall be
delivered by the Debtors to the Secured Party. All insurance required hereby shall provide that
any loss shall be payable to the Secured Party notwithstanding any act or negligence of any Debtor,
shall provide that no cancellation thereof shall be effective until at least 15 days after receipt
by the relevant Debtor and the Secured Party of written notice thereof, and shall be reasonably
satisfactory to the Secured Party in all other respects. In case of any material loss, damage to
or destruction of the Collateral or any part thereof, the relevant Debtor shall promptly give
written notice thereof to the Secured Party generally describing the nature and extent of such
damage or destruction. In case of any loss, damage to or destruction of the Collateral or
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any part thereof, the relevant Debtor, whether or not the insurance proceeds, if any, received on account of
such damage or destruction shall be sufficient for that purpose, at such Debtor’s cost and expense,
shall promptly repair or replace the Collateral so lost, damaged, or destroyed, except to the
extent such Collateral is not necessary for or of importance to the proper conduct of such Debtor’s
business in the ordinary course. In the event any Debtor shall receive any proceeds of such
insurance, such Debtor shall immediately pay over such proceeds to the Secured Party which will
thereafter be applied to the reduction of the Secured Obligations (whether or not then due) or held
as collateral security therefor, as the Secured Party may then determine in accordance with the
Credit Agreement; provided, however, that the Secured Party agrees to release such insurance
proceeds to the relevant Debtor for replacement or restoration of the portion of the Collateral
lost, damaged or destroyed if, but only if, (i) at the time of release no Event of Default exists,
(ii) written application for such release is received by the Agent from the relevant Debtor within
120 days after such Collateral is lost, damaged or destroyed, and (iii) the Secured Party has
received evidence reasonably satisfactory to it that the Collateral lost, damaged or destroyed has
been or will be replaced or restored to its condition immediately prior to the loss, destruction or
other event giving rise to the payment of such insurance proceeds. Each Debtor hereby authorizes
the Secured Party, at the Secured Party’s option, to adjust, compromise, and settle any losses
under any insurance afforded and each Debtor does hereby irrevocably constitute the Secured Party,
and each of its nominees, officers, agents, attorneys, and any other person whom the Secured Party
may designate, as such Debtor’s attorneys-in-fact, with full power and authority to effect such
adjustment, compromise, and/or settlement and to endorse any drafts drawn by an insurer of the
Collateral or any part thereof and to do everything necessary to carry out such purposes and to
receive and receipt for any unearned premiums due under policies of such insurance. Unless the
Secured Party elects to adjust, compromise, or settle losses as aforesaid, any adjustment,
compromise, and/or settlement of any losses under any insurance shall be made by the relevant
Debtor subject to final approval of the Secured Party (regardless of whether or not an Event of
Default shall have occurred) in the case of losses exceeding $250,000. All insurance proceeds
shall be subject to the lien and security interest of the Secured Party hereunder.
Unless the Debtors provide the Secured Party with evidence of the insurance coverage
required by this Agreement, the Secured Party may purchase insurance at the Debtors’ expense to
protect the Secured party’s interests in the Collateral. This insurance may, but need not, protect
the debtors’ interests in the Collateral. The coverage purchased by the Secured Party may not pay
any claims that any Debtor makes or any claim that is made against any Debtor in connection with
the Collateral. The relevant Debtor may later cancel any such insurance purchased by the Secured
Party, but only after providing the Secured Party with evidence that such Debtor has obtained
insurance as required by this Agreement. If the Secured Party purchases insurance for the
Collateral, the Debtors will be responsible for the costs of that insurance, including interest and
any other charges that the Secured Party may impose in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Secured Obligations secured
hereby. The costs of the insurance
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may be more than the cost of insurance the Debtors may be able
to obtain on its own.
(i) Each Debtor shall at all times allow the Secured Party and its representatives free access
to and right of inspection of the Collateral; provided that, unless an Event of Default exists, any
such access or inspection shall only be permitted during the relevant Debtor’s normal business
hours and after reasonable notice to the relevant Debtor.
(j) If any Collateral is in the possession or control of any of any agents or processors of a
Debtor and the Secured Party so requests, such Debtor agrees to notify such agents or processors in
writing of the Secured Party’s security interest therein and instruct them to hold all such
Collateral for the Secured Party’s account and subject to the Secured Party’s instructions. Each
Debtor shall, upon the reasonable request of the Secured Party, authorize and instruct all bailees
and other parties, if any, at any time processing, labeling, packaging, holding, storing, shipping,
or transferring all or any part of the Collateral to permit the Secured Party and its
representatives to examine and inspect any of the Collateral then in such party’s possession and to
verify from such party’s own books and records any information concerning the Collateral or any
part thereof which the Secured Party or its representatives may seek to verify. As to any premises
not owned by a Debtor wherein any of the Collateral is located, the relevant Debtor shall, at the
Secured Party’s request, use commercially reasonable efforts to cause each party having any right,
title or interest in, or lien on, any of such premises to enter into an agreement (any such
agreement to contain a legal description of such premises) (each a
“Landlord Agreement”) whereby
such party disclaims any right, title and interest in, and lien on, the Collateral and allows the
removal of such Collateral by the Secured Party and is otherwise in form and substance reasonably
acceptable to the Secured Party. Each Debtor agrees that it will not keep any books and records
(other than copies thereof) relating to the Collateral at any location for which it has not
delivered to the Secured Party a Landlord Agreement in form and substance reasonably satisfactory
to the Secured Party.
(k) Each Debtor agrees from time to time to deliver to the Secured Party such evidence of the
existence, identity, and location of its Collateral and of its availability as collateral security
pursuant hereto (including, without limitation, schedules describing all Receivables created or
acquired by such Debtor, copies of customer invoices or the equivalent, and original shipping or
delivery receipts for all merchandise and other goods sold or leased or services rendered, together
with such Debtor’s warranty of the genuineness in all material respects thereof, and reports
stating the book value of Inventory and Equipment by major category and location), in each case as
the Secured Party may reasonably request. The Secured Party shall have the right to verify all or
any part of the Collateral in any manner, and through any medium, which the Secured Party considers
appropriate and reasonable, and each Debtor agrees to furnish all assistance and information, and
perform any acts, which the Secured Party may reasonably require in connection therewith.
(l) Each Debtor shall comply in all material respects with the terms and conditions of all
leases, easements, right-of-way agreements, and other similar agreements binding upon such Debtor
or affecting the Collateral or any part thereof, and all orders, ordinances, laws, and statutes of
any city, state, or other governmental entity, department, or agency having
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jurisdiction with respect to the premises wherein such Collateral is located or the conduct of business thereon.
(m) Schedule C attached hereto contains a true, complete, and current listing of all patents,
trademarks, tradestyles, copyrights, and other intellectual property rights (including all
registrations and applications therefor) owned by the Debtors as of the date hereof that are
registered with any governmental authority. The Debtors shall promptly notify the Secured Party in
writing of any additional intellectual property rights acquired or arising after the date hereof,
and shall submit to the Secured Party a supplement to Schedule C to reflect such additional rights
(provided any Debtor’s failure to do so shall not impair the Secured Party’s security interest
therein). Each Debtor owns or possesses rights to use all franchises, licenses, patents,
trademarks, trade names, tradestyles, copyrights, and rights with respect to the foregoing which
are required to conduct its business. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such rights, and the
Debtors are not liable to any person for infringement under applicable law with respect to any such
rights as a result of its business operations, which could reasonably be expected to result in a
Material Adverse Effect.
(n) Schedule F attached hereto contains a true, complete and current listing of all Commercial
Tort Claims held by the Debtors as of the date hereof, each described by reference to the specific
incident giving rise to the claim. Subject to Section 4.2 of the Credit Agreement, each Debtor
agrees to execute and deliver to the Secured Party a supplement to this Agreement in the form
attached hereto as Schedule G, or in such other form reasonably acceptable to the Secured Party,
promptly upon becoming aware of any other Commercial Tort Claim held or maintained by such Debtor
arising after the date hereof (provided such Debtor’s failure to do so shall not impair the Secured
Party’s security interest therein).
(o) Each Debtor agrees to execute and deliver to the Secured Party such further agreements,
assignments, instruments, and documents and to do all such other things as the Secured Party may
reasonably deem necessary or appropriate to assure the Secured Party its lien and security interest
hereunder, including, without limitation, (i) such financing statements, and amendments thereof or
supplements thereto, and such other instruments and documents as the Secured Party may from time to
time reasonably require in order to comply with the UCC and any other applicable law, (ii) such
agreements with respect to patents, trademarks, copyrights, and similar intellectual property
rights as the Secured Party may from time to time reasonably require to comply with the filing
requirements of the United States Patent and Trademark Office and the United States Copyright
Office, and (iii) such control agreements with respect to all Deposit Accounts, Investment
Property, Letter-of-Credit Rights, and electronic Chattel Paper, and to cause the relevant
depository institutions, financial intermediaries, and issuers to execute and deliver such control
agreements, as the Secured Party may from time to time reasonably require. Each Debtor hereby
agrees that a carbon, photographic, or other reproduction of this Agreement or any such financing
statement is sufficient for filing as a financing statement by the Secured Party without notice
thereof to such Debtor wherever the Secured Party in its sole discretion desires to file the same.
Each Debtor hereby authorizes the Secured Party to file any and all financing statements covering
the Collateral or any part thereof as the Secured Party may require, including financing statements
describing the Collateral as “all assets” or “all personal
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property” or words of like meaning. The Secured Party may order lien searches from time to time against each Debtor and the Collateral, and
the Debtor shall promptly reimburse the Secured Party for all reasonable costs and expenses
incurred in connection with such lien searches. In the event for any reason the law of any
jurisdiction other than Illinois becomes or is applicable to the Collateral or any part thereof, or
to any of the Secured Obligations, each Debtor agrees to execute and deliver all such instruments
and documents and to do all such other things as the Secured Party in its sole discretion deems
necessary or appropriate to preserve, protect, and enforce the lien and security interest of the
Secured Party under the law of such other jurisdiction. Each Debtor agrees to xxxx its books and
records to reflect the lien and security interest of the Secured Party in the Collateral.
(p) On failure of any Debtor to perform any of the covenants and agreements herein contained,
the Secured Party may, at its option, perform the same and in so doing may expend such sums as the
Secured Party may reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, liens, and
encumbrances, expenditures made in defending against any adverse claims, and all other expenditures
which the Secured Party may be compelled to make by operation of law or which the Secured Party may
make by agreement or otherwise for the protection of the security hereof. All such sums and
amounts so expended shall be repayable by the relevant Debtor immediately without notice or demand,
shall constitute additional Secured Obligations secured hereunder and shall bear interest from the
date said amounts are expended at the rate per annum (computed on the basis of a 360-day year for
the actual number of days elapsed) determined by adding 2.0% to the rate per annum from time to
time announced by Bank of Montreal as its prime commercial rate with any change in such rate per
annum as so determined by reason of a change in such prime commercial rate to be effective on the
date of such change in said prime commercial rate (such rate per annum as so determined being
hereinafter referred to as the “Default Rate”). No such performance of any covenant or agreement
by the Secured Party on behalf of any Debtor, and no such advancement or expenditure therefor,
shall relieve the Debtor of any default under the terms of this Agreement or in any way obligate
the Secured Party to take any further or future action with respect thereto. The Secured Party, in
making any payment hereby authorized, may do so according to any xxxx, statement, or estimate
procured from the appropriate public office or holder of the claim to be discharged without inquiry
into the accuracy of such xxxx, statement, or estimate or into the validity of any tax assessment,
sale, forfeiture, tax lien, or title or claim. The Secured Party, in performing any act hereunder,
shall be the sole judge of whether any Debtor is required to perform same under the terms of this
Agreement. The Secured Party is hereby authorized to charge any account of the relevant Debtor
maintained with the Secured Party for the amount of such sums and amounts so expended.
Section 4. Special Provisions Re: Receivables.
(a) As of the time any Receivable owned by a Debtor becomes subject to the security interest
provided for hereby, and at all times thereafter, such Debtor shall be deemed to have warranted as
to each and all of such Receivables that all warranties of such Debtor set forth in this Agreement
are true and correct with respect to each such Receivable; that each Receivable and all papers and
documents relating thereto are genuine and in all material respects what they
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purport to be; that each Receivable is valid and subsisting; that no such Receivable is evidenced by any Instrument or
Chattel Paper unless such Instrument or Chattel Paper has theretofore been endorsed by such Debtor
and delivered to the Secured Party (except to the extent the Secured Party specifically requests
such Debtor not to do so with respect to any such Instrument or Chattel Paper); that no surety bond
was required or given in connection with such Receivable or the contracts or purchase orders out of
which the same arose; that the amount of the Receivable represented as owing is the correct amount
actually and unconditionally owing, except for normal cash discounts on normal trade terms in the
ordinary course of business; and that the amount of such Receivable represented as owing is not
disputed and is not subject to any set-offs, credits, deductions, or countercharges other than
those arising in the ordinary course of such Debtor’s business which are disclosed to the Secured
Party in writing promptly upon such Debtor becoming aware thereof. Without limiting the foregoing,
if any Receivable arises out of a contract with the United States of America, or any state or
political subdivision thereof, or any department, agency, or instrumentality of any of the
foregoing, each Debtor agrees to notify the Secured Party and, at the Secured Party’s request,
execute whatever instruments and documents are required by the Secured Party in order that such
Receivable shall be assigned to the Secured Party and that proper notice of such assignment shall
be given under the federal Assignment of Claims Act (or any successor statute) or any similar state
or local statute, as the case may be.
(b) Unless and until an Event of Default occurs and is continuing, any merchandise or other
goods which are returned by a customer or account debtor or otherwise recovered may be resold by a
Debtor in the ordinary course of its business as presently conducted in accordance with Section
6(b) hereof or Section 8.10 of the Credit Agreement; and, during the existence of any Event of
Default, such merchandise and other goods shall be set aside at the request of the Secured Party
and held by the relevant Debtor as trustee for the Secured Party and shall remain part of the
Secured Party’s Collateral. Unless and until an Event of Default occurs and is continuing, the
Debtors may settle and adjust disputes and claims with its customers and account debtors, handle
returns and recoveries, and grant discounts, credits, and allowances in the ordinary course of its
business as presently conducted for amounts and on terms which the relevant Debtor in good faith
considers advisable; and, during the existence of any Event of Default, at the Secured Party’s
request, the Debtors shall notify the Secured Party promptly of all returns and recoveries and, on
the Secured Party’s request, deliver any such merchandise or other goods to the Secured Party.
During the existence of any Event of Default, at the Secured Party’s request, the Debtor shall also
notify the Secured Party promptly of all disputes and claims and settle or adjust them at no
expense to the Secured Party, but no discount, credit, or allowance other than on normal trade
terms in the ordinary course of business as presently conducted shall be granted to any customer or
account debtor and no returns of merchandise or other goods shall be accepted by any Debtor without
the Secured Party’s consent. The Secured Party may, at all times during the existence of any Event
of Default, settle or adjust disputes and claims directly with customers or account debtors for
amounts and upon terms which the Secured Party considers advisable.
(c) Unless delivered to the Secured Party or its agent, all tangible Chattel Paper and
Instruments shall contain a legend reasonably acceptable to the Secured Party indicating that such
Chattel Paper or Instrument is subject to the security interest of the Secured Party contemplated
by this Agreement.
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Section 5. Collection of Receivables.
(a) Except as otherwise provided in this Agreement, the Debtors shall make collection of all
Receivables and may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.
(b) In the event the Secured Party requests any Debtor to do so during the existence of an
Event of Default:
(i) all Instruments and Chattel Paper at any time constituting part of the Receivables
or any other Collateral (including any postdated checks) shall, upon receipt by such Debtor,
be immediately endorsed to and deposited with the Secured Party; and/or
(ii) such Debtor shall instruct all customers and account debtors to remit all payments
in respect of Receivables or any other Collateral to a lockbox or lockboxes under the sole
custody and control of the Secured Party and which are maintained at post office(s) in
Chicago, Illinois selected by the Secured Party.
(c) Upon the occurrence and during the continuation of any Event of Default, whether or not
the Secured Party has exercised any or all of its rights under other provisions of this Section 5,
the Secured Party or its designee may notify the Debtors’ customers and account debtors at any time
that Receivables or any other Collateral have been assigned to the Secured Party or of the Secured
Party’s security interest therein, and either in its own name, or the relevant Debtor’s name, or
both, demand, collect (including, without limitation, through a lockbox analogous to that described
in Section 5(b)(ii) hereof), receive, receipt for, xxx for, compound, and give acquittance for any
or all amounts due or to become due on Receivables or any other Collateral, and in the Secured
Party’s discretion file any claim or take any other action or proceeding which the Secured Party
may deem reasonably necessary or appropriate to protect or realize upon the security interest of
the Secured Party in the Receivables or any other Collateral.
(d) Any proceeds of Receivables or other Collateral transmitted to or otherwise received by
the Secured Party pursuant to any of the provisions of Sections 5(b) or 5(c) hereof may be handled
and administered by the Secured Party in and through a remittance account at the Secured Party, and
the Debtors acknowledge that the maintenance of such remittance account by the Secured Party is
solely for the Secured Party’s convenience and that the Debtors do not have any right, title, or
interest in such remittance account. The Secured Party may, after the occurrence and during the
continuation of any Event of Default, apply all or any part of any proceeds of Receivables or other
Collateral received by it from any source to the payment of the Secured Obligations (whether or not
then due and payable), such applications to be made in such amounts, in such manner and order and
at such intervals as the Secured Party may from time to time in its discretion determine, but not
less often than once each week. The Secured Party need not apply or give credit for any item
included in proceeds of Receivables or other Collateral until the Secured Party has received final
payment therefor at its office in cash or final solvent credits current in Chicago, Illinois,
acceptable to the Secured Party as such. However, if the Secured Party does give credit for any
item prior to receiving final payment therefor and the Secured
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Party fails to receive such final payment or an item is charged back to the Secured Party for any reason, the Secured Party may at
its election in either instance charge the amount of such item back against the remittance account
or any account of the relevant Debtor maintained with the Secured Party, together with interest
thereon at the Default Rate. Concurrently with each transmission of any proceeds of Receivables or
other Collateral to the remittance account, upon the reasonable request of the Secured Party, each
Debtor shall furnish the Secured Party with a report in such form as the Secured Party shall
reasonably require identifying the particular Receivable or other Collateral from which the same
arises or relates. Unless and until an Event of Default shall have occurred and be continuing, the
Secured Party will release proceeds of Collateral which the Secured Party has not applied to the
Secured Obligations as provided above from the remittance account from time to time promptly after
receipt thereof. Each Debtor hereby indemnifies the Secured Party from and against all liabilities,
damages, losses, actions, claims, judgments, reasonable out-of-pocket costs, expenses, charges and
attorneys’ fees suffered or incurred by the Secured Party because of the maintenance of the
foregoing arrangements; provided, however, that no Debtor shall be required to indemnify the
Secured Party for any of the foregoing to the extent they arise solely from the gross negligence or
willful misconduct of the Secured Party. The Secured Party shall have no liability or
responsibility to any Debtor for accepting any check, draft or other order for payment of money
bearing the legend “payment in full” or words of similar import or any other restrictive legend or
endorsement whatsoever or be responsible for determining the correctness of any remittance.
Section 6. Special Provisions Re: Inventory and Equipment.
(a) Each Debtor shall at its own cost and expense maintain, keep and preserve the Inventory in
good and merchantable condition and keep and preserve the Equipment in good repair, working order
and condition, ordinary wear and tear excepted, and, without limiting the foregoing, make all
necessary and proper repairs, replacements and additions to the Equipment so that the efficiency
thereof shall be fully preserved and maintained, except (i) to the extent, in the reasonable
judgment of the relevant Debtor, any such Equipment is no longer necessary for the proper
conduct of the business of such Debtor or (ii) except where failure to do so could not reasonably
be expected to have a Material Adverse Effect.
(b) Each Debtor may, until an Event of Default has occurred and is continuing and thereafter
until otherwise notified by the Secured Party, use, consume and sell the Inventory in the ordinary
course of its business, but a sale in the ordinary course of business and as otherwise permitted by
Section 8.10 of the Credit Agreement shall not under any circumstance include any transfer or sale
in satisfaction, partial or complete, of a debt owing by such Debtor.
(c) Each Debtor may, until an Event of Default has occurred and is continuing and thereafter
until otherwise notified by the Secured Party, sell or otherwise dispose of Equipment to the extent
permitted by Section 8.10 of the Credit Agreement.
(d) As of the time any Inventory or Equipment becomes subject to the security interest
provided for hereby and at all times thereafter, the relevant Debtor shall be deemed to have
warranted as to any and all of such Inventory and Equipment that all warranties of such Debtor set
forth in this Agreement are true and correct with respect to such Inventory and Equipment;
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that all of such Inventory and Equipment is located at a location set forth pursuant to Section 3(b) hereof;
and that, in the case of Inventory, such Inventory is new and unused and in good and merchantable
condition. Each Debtor warrants and agrees that no Inventory owned by it is or will be consigned
to any other person without the Secured Party’s prior written consent.
(e) Upon the Secured Party’s reasonable request, each Debtor shall at its own cost and expense
cause the lien of the Secured Party in and to any portion of the Collateral subject to a
certificate of title law to be duly noted on such certificate of title or to be otherwise filed in
such manner as is prescribed by law in order to perfect such lien and shall cause all such
certificates of title and evidences of lien to be deposited with the Secured Party.
(f) None of the Equipment is or will be attached to real estate in such a manner that the same
may become a fixture.
(g) If any of the Inventory is at any time evidenced by a document of title, upon Secured
Party’s reasonable request, such document shall be promptly delivered by the relevant Debtor to the
Secured Party.
Section 7. Special Provisions Re: Investment Property and Deposits.
(a) Unless and until an Event of Default has occurred and is continuing and thereafter until
notified to the contrary by the Secured Party pursuant to Section 9(d) hereof:
(i) the Debtors shall be entitled to exercise all voting and/or consensual powers
pertaining to the Investment Property or any part thereof, for all purposes not inconsistent
with the terms of this Agreement or any other document evidencing or otherwise relating to
any Secured Obligations; and
(ii) the Debtors shall be entitled to receive and retain all cash dividends paid upon
or in respect of the Investment Property.
(b) All Investment Property (including all securities, certificated or uncertificated,
securities accounts, and commodity accounts) of the Debtors on the date hereof is listed and
identified on Schedule E attached hereto and made a part hereof. Each Debtor shall promptly notify
the Secured Party of any other Investment Property acquired or maintained by such Debtor after the
date hereof, and shall submit to the Secured Party a supplement to Schedule E to reflect such
additional rights (provided such Debtor’s failure to do so shall not impair the Secured Party’s
security interest therein). Certificates for all certificated securities now or at any time
constituting Investment Property shall be promptly delivered by the Debtors to the Secured Party
duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or
an appropriate undated stock power or powers, in every case sufficient to transfer title thereto,
including, without limitation, all stock received in respect of a stock dividend or resulting from
a split-up, revision, or reclassification of the Investment Property or any part thereof
or received in addition to, in substitution of, or in exchange for the Investment Property or any part thereof as a result of a
merger, consolidation, or otherwise. With respect to any uncertificated securities or any
Investment Property held by a securities intermediary,
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commodity intermediary, or other financial intermediary of any kind, at the Secured Party’s request, the Debtors shall execute and deliver,
and shall cause any such issuer or intermediary to execute and deliver, an agreement among the
relevant Debtor, the Secured Party, and such issuer or intermediary in form and substance
reasonably satisfactory to the Secured Party which provides, among other things, for the
intermediary’s agreement that it shall comply with entitlement orders, and apply any value
distributed on account of any such Investment Property, as directed by the Secured Party without
further consent by any Debtor. The Secured Party may at any time, after the occurrence and during
the continuation of an Event of Default, cause to be transferred into its name or the name of its
nominee or nominees all or any part of the Investment Property hereunder.
(c) Unless and until an Event of Default has occurred and is continuing, the Debtors may sell
or otherwise dispose of any Investment Property to the extent permitted by the Credit Agreement,
provided that except to the extent permitted by the Credit Agreement no Debtor shall sell or
otherwise dispose of any capital stock of or other equity interests in any direct or indirect
subsidiary without the prior written consent of the Secured Party. After the occurrence and during
the continuation of any Event of Default, no Debtor shall sell all or any part of the Investment
Property without the prior written consent of the Secured Party.
(d) The Debtors represent that on the date of this Agreement, none of the Investment Property
consists of margin stock (as such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System) except to the extent the Debtors have delivered to the Secured Party a duly
executed and completed Form U-1 with respect to such stock. If at any time the Investment Property
or any part thereof consists of margin stock, the Debtors shall promptly so notify the Secured
Party and deliver to the Secured Party a duly executed and completed Form U-1 and such other
instruments and documents reasonably requested by the Secured Party in form and substance
reasonably satisfactory to the Secured Party.
(e) Notwithstanding anything to the contrary contained herein, in the event any Investment
Property is subject to the terms of a separate security agreement in favor of the Secured Party,
the terms of such separate security agreement shall govern and control unless otherwise agreed to
in writing by the Secured Party.
(f) All Deposit Accounts of the Debtors on the date hereof are listed and identified (by
account number and depository institution) on Schedule E attached hereto and made a part hereof.
Each Debtor shall promptly notify the Secured Party of any other Deposit Account opened or
maintained by such Debtor after the date hereof, and shall submit to the Secured Party a supplement
to Schedule E to reflect such additional accounts (provided such Debtor’s failure to do so shall
not impair the Secured Party’s security interest therein). With respect to any Deposit Account
maintained by a depository institution other than the Secured Party, and as a condition to the
establishment and maintenance of any such Deposit Account except as otherwise permitted by the
Credit Agreement, such Debtor, the depository institution, and the Secured Party shall execute and
deliver an account control agreement in form and substance reasonably satisfactory to the Secured
Party which provides, among other things, for the depository institution’s agreement that it will
comply with instructions originated by the Secured Party
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directing the disposition of the funds in the Deposit Account without further consent by such Debtor.
(g) The Borrower shall, until the Cash Collateral Release Date, maintain that certain money
market account number 000-000-0 (the “Cash Collateral Account”) at Xxxxxx X.X. (the “Depositary
Bank”) on the terms and conditions provided for herein and in the Credit Agreement.
(h) The Borrower hereby agrees that, upon request of the Secured Party, it shall deposit an
amount equal to $5,000,000 into the Cash Collateral Account.
(i) Until the Cash Collateral Release Date, the Borrower shall not terminate the Cash
Collateral Account without the Secured Party’s prior written consent. Until the Cash Collateral
Release Date, the Borrower hereby agrees no funds or other amounts in the Cash Collateral Account
may be withdrawn by the Borrower, notwithstanding any provisions to the contrary contained in any
other agreement between the Borrower and the Depositary Bank; provided that, so long as no Event of
Default (as hereinafter defined) has occurred and is continuing, the Borrower shall be entitled to
all payments with respect to interest (if any) on the Cash Collateral Account.
(j) The Cash Collateral Account, until the Cash Collateral Release Date, shall at all times be
subject to a control agreement reasonably satisfactory to the Secured Party.
(k) Upon the existence of an Event of Default, the Secured Party may at any time direct the
Depositary Bank to withdraw the Cash Collateral or any part thereof from the Cash Collateral
Account, and deliver such Cash Collateral to the Secured Party and/or to transfer such Cash
Collateral or any part thereof into the Secured Party’s name or into the name of its nominee or
nominees, for application to the Secured Obligations in accordance with the Credit Agreement.
(l) The Borrower shall cause the Depositary Bank to, and hereby irrevocably authorizes and
directs the Depositary Bank to, furnish to the Secured Party a copy of each monthly statement
pertaining to the Cash Collateral Account and the Cash Collateral and such other information
regarding the Cash Collateral as is requested from time to time by the Secured Party which would
ordinarily be available if requested by the Borrower.
(m) The Depositary Bank shall be fully protected in, and shall not in any way be liable to the
Borrower for, acting on any order or direction of the Secured Party respecting the Cash Collateral
Account or the Cash Collateral, or any interest therein, without making any inquiry whatsoever as
to the Secured Party’s right or authority to give such order or direction or as to the application
of any payment made pursuant thereto, and any payment in respect of the Cash Collateral Account or
the Cash Collateral made to the Secured Party pursuant to any such order or direction shall satisfy
and discharge any liability of the Depositary Bank to the Borrower to the extent of such payment.
The Borrower hereby irrevocably authorizes and directs the Depositary Bank to comply solely with
instructions of the Secured Party with respect to the Cash Collateral Account and the Cash
Collateral, and all transfers, withdrawals, and other dispositions
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of funds from the Cash Collateral Account or otherwise representing the Cash Collateral, without further consent of the
Borrower. The Borrower agrees that the Depositary Bank shall have no liability to the Borrower, or
its estate, personal representatives, successors, or assigns, for any loss or damage that it may
claim to have suffered or incurred, either directly or indirectly, by reason of this Agreement,
unless the Depositary Bank’s actions or omissions are due to its gross negligence or willful
misconduct. In no event will the Depositary Bank be liable for any special, indirect, exemplary or
consequential damages, including but not limited to lost profits. The Depositary Bank will be
excused from failing to act or delay in acting, and no such failure or delay shall constitute a
breach of this Agreement or otherwise give rise to any liability of the Depositary Bank, if (i)
such failure or delay is caused by circumstances beyond the Depositary Bank’s reasonable control,
including but not limited to legal constraint, emergency conditions, action or inaction of
governmental, civil or military authority, fire, strike, lockout or other labor dispute, war, riot,
theft, flood, earthquake or other natural disaster, breakdown of public or private or common
carrier communications or transmission facilities, equipment failure, or act, negligence or default
of the Borrower or Secured Party or (ii) such failure or delay resulted from the Depositary Bank’s
reasonable belief that the action would have violated any court order, any guideline, rule or
regulation of any governmental authority, or any applicable law.
Section 8. Power of Attorney. In addition to any other powers of attorney contained herein,
each Debtor hereby appoints the Secured Party, its nominee, and any other person whom the Secured
Party may designate, as such Debtor’s attorney-in-fact, with full power and authority upon the
occurrence and during the continuation of any Event of Default to sign such Debtor’s name on
verifications of Receivables and other Collateral; to send requests for verification of Collateral
to such Debtor’s customers, account debtors, and other obligors; to endorse such Debtor’s name on
any checks, notes, acceptances, money orders, drafts, and any other forms of payment or security
that may come into the Secured Party’s possession or on any assignments, stock powers, or other
instruments of transfer relating to the Collateral or any part thereof; to sign such Debtor’s name
on any invoice or xxxx of lading relating to any Collateral, on claims to enforce collection of any
Collateral, on notices to and drafts against customers and account debtors and other obligors, on
schedules and assignments of Collateral, on notices of assignment and on public records; to notify
the post office authorities to change the address for delivery of such Debtor’s mail to an address
designated by the Secured Party; to receive, open and dispose of all mail addressed to such Debtor;
and to do all things necessary to carry out this Agreement. Each Debtor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Secured Party nor any such
attorney will be liable for any acts or omissions or for any error of judgment or mistake of fact
or law other than such person’s gross negligence or willful misconduct. The foregoing powers of
attorney, being coupled with an interest, are irrevocable until the Secured Obligations have been
fully paid and satisfied and all agreements of the Secured Party to extend credit to or for the
account of the Borrower have expired or otherwise have been terminated.
Section 9. Defaults and Remedies.
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(a) The occurrence of any one or more of the following events shall constitute an “Event of
Default” hereunder:
(i) default in the payment when due (whether by demand, lapse of time, acceleration or
otherwise) of any principal portion the Secured Obligations or any part thereof or default
for a period of three (3) Business Days of any interest, fee, or other portion of the
Secured Obligations; or
(ii) default in the observance or performance of any covenant set forth in Sections
5(b), 7(b), or 7(f) hereof or of any provision hereof requiring the maintenance of insurance
on the Collateral or dealing with the use or remittance of proceeds of Collateral; or
(iii) default in the observance or performance of any other provision hereof which is
not remedied within 30 days after the earlier of (a) the date on which such default shall
first become known to any officer of any Debtor or (b) written notice thereof is given to
the Debtors by the Secured Party; or
(iv) any representation or warranty made by any Debtor herein, or in any statement or
certificate furnished by it pursuant hereto, or in connection with any loan or extension of
credit made to or on behalf of or at the request of any Debtor by the Secured Party, shall
be false in any material respect as of the date of the issuance or making thereof; or
(v) any event shall occur or condition shall exist which is specified as an “Event of
Default” under the Credit Agreement, or any other default shall occur in the observance or
performance of any terms or provisions of any instrument or document evidencing or securing
any Secured Obligations or setting forth terms and conditions applicable thereto or
otherwise relating thereto, in each case, subject to any applicable cure periods, or this
Agreement shall for any reason not be or shall cease to be in full force and effect or is
declared to be null and void.
(b) Upon the occurrence and during the continuation of any Event of Default, the Secured Party
shall have, in addition to all other rights provided herein or by law, the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the
rights or remedies are asserted and regardless of whether the UCC applies to the affected
Collateral), and further the Secured Party may, without demand and, to the extent permitted by
applicable law, without advertisement, notice, hearing, or process of law, all of which the Debtors
hereby waive, to the extent permitted by applicable law, at any time or times, sell and deliver all
or any part of the Collateral (and any other property of the Debtors attached thereto or found
therein) held by or for it at public or private sale, for cash, upon credit, or otherwise, at such
prices and upon such terms as the Secured Party deems advisable, in its sole discretion. In
addition to all other sums due the Secured Party hereunder, the Debtors shall pay the Secured Party
all reasonable out-of-pocket costs and expenses incurred by the Secured Party, including reasonable
attorneys’ fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or
the Secured Obligations or in the prosecution or defense of any action
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or proceeding by or against the Secured Party or any Debtor concerning any matter arising out of or connected with this
Agreement or the Collateral or the Secured Obligations, including, without limitation, any of the
foregoing arising in, arising under or related to a case under the United States Bankruptcy Code
(or any successor statute). Any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to each Debtor in accordance with Section 12(b)
hereof at least 10 days before the time of sale or other event giving rise to the requirement of
such notice; provided however, no notification need be given to any Debtor if such Debtor has
signed, after an Event of Default has occurred, a statement renouncing any right to notification of
sale or other intended disposition. The Secured Party shall not be obligated to make any sale or
other disposition of the Collateral regardless of notice having been given. The Secured Party may
be the purchaser at any such sale. Each Debtor hereby waives all of its rights of redemption from
any such sale. The Secured Party may postpone or cause the postponement of the sale of all or any
portion of the Collateral by announcement at the time and place of such sale, and such sale may,
without further notice, be made at the time and place to which the sale was postponed or the
Secured Party may further postpone such sale by announcement made at such time and place. The
Secured Party has no obligation to prepare the Collateral for sale. The Secured Party may sell or
otherwise dispose of the Collateral without giving any warranties as to the Collateral
or any part thereof, including disclaimers of any warranties of title or the like, and each Debtor
acknowledges and agrees that the absence of such warranties shall not render the disposition
commercially unreasonable.
(c) Without in any way limiting the foregoing, upon the occurrence and during the continuation
of any Event of Default, the Secured Party shall have the right, in addition to all other rights
provided herein or by law, to take physical possession of any and all of the Collateral and
anything found therein, the right for that purpose to enter without legal process any premises
where the Collateral may be found (provided such entry be done lawfully), and the right to maintain
such possession on the relevant Debtor’s premises (each Debtor hereby agreeing to the extent it may
lawfully do so to lease such premises without cost or expense to the Secured Party or its designee
if the Secured Party so requests) or to remove the Collateral or any part thereof to such other
places as the Secured Party may desire. Upon the occurrence and during the continuation of any
Event of Default, the Secured Party shall have the right to exercise any and all rights with
respect to all Deposit Accounts of each Debtor including, without limitation, the right to direct
the disposition of the funds in each Deposit Account and to collect, withdraw, and receive all
amounts due or to become due or payable under each such Deposit Account. Upon the occurrence and
during the continuation of any Event of Default, each Debtor shall, upon the Secured Party’s
demand, promptly assemble the Collateral and make it available to the Secured Party at a place
designated by the Secured Party. If the Secured Party exercises its right to take possession of
the Collateral, the relevant Debtor shall also at its expense perform any and all other steps
requested by the Secured Party to preserve and protect the security interest hereby granted in the
Collateral, such as placing and maintaining signs indicating the security interest of the Secured
Party, appointing overseers for the Collateral, and maintaining Collateral records.
(d) Without in any way limiting the foregoing, upon the occurrence and during the continuation
of any Event of Default, all rights of each Debtor to exercise the voting and/or consensual powers
which it is entitled to exercise pursuant to Section 7(a)(i) hereof and/or to receive and retain
the distributions which it is entitled to receive and retain pursuant to Section 7(a)(ii) hereof,
shall, at the option of the Secured Party, cease and thereupon become vested in the Secured Party,
which, in addition to all other rights provided herein or by law, shall then be entitled solely and
exclusively to exercise all voting and other consensual powers pertaining to the Investment
Property (including, without limitation, the right to deliver notice of control with respect to any
Investment Property held in a securities account or commodity account and deliver all entitlement
orders with respect thereto) and/or to receive and retain the distributions which any Debtor would
otherwise have been authorized to retain pursuant to
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Section 7(a)(ii) hereof and shall then be entitled solely and exclusively to exercise any and all rights of conversion, exchange, or
subscription or any other rights, privileges, or options pertaining to any Investment Property as
if the Secured Party were the absolute owner thereof, including without limitation, the
right to exchange, at its discretion, any and all of the Investment Property upon the merger,
consolidation, reorganization, recapitalization, or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Secured Party of any right,
privilege, or option pertaining to any Investment Property and, in connection therewith, to deposit
and deliver any and all of the Investment Property with any committee, depositary, transfer agent,
registrar, or other designated agency upon such terms and conditions as the Secured Party may
determine. In the event the Secured Party in good faith believes any of the Collateral constitutes
restricted securities within the meaning of any applicable securities laws, any disposition thereof
in compliance with such laws shall not render the disposition commercially unreasonable.
(e) Without in any way limiting the foregoing, each Debtor hereby grants to the Secured Party
a royalty-free irrevocable license and right to use all of such Debtor’s patents, patent
applications, patent licenses, trademarks, trademark registrations, trademark licenses, trade
names, trade styles, copyrights, copyright applications, copyright licenses, and similar
intangibles in connection with any foreclosure or other realization by the Secured Party on all or
any part of the Collateral to the extent permitted by applicable law. The license and right
granted the Secured Party hereby shall be without any royalty or fee or charge whatsoever.
(f) The powers conferred upon the Secured Party hereunder are solely to protect its interest
in the Collateral and shall not impose on it any duty to exercise such powers. The Secured Party
shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral
in its possession or control if such Collateral is accorded treatment substantially equivalent to
that which the Secured Party accords its own property, consisting of similar type assets, it being
understood, however, that the Secured Party shall have no responsibility for ascertaining or taking
any action with respect to calls, conversions, exchanges, maturities, tenders, or other matters
relating to any such Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters. This Agreement constitutes an assignment of rights only and not an assignment of any
duties or obligations of the Debtors, or any of them, in any way related to the Collateral, and the
Secured Party shall have no duty or obligation to discharge any such duty or obligation. The
Secured Party shall have no responsibility for taking any necessary steps to preserve rights
against any parties with respect to any Collateral or initiating any action to protect the
Collateral against the possibility of a decline in market value. Neither the Secured Party nor any
party acting as attorney for the Secured Party shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross negligence or willful
misconduct.
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(g) Failure by the Secured Party to exercise any right, remedy, or option under this Agreement
or any other agreement between the Debtors, or any of them, and the Secured Party or provided by
law, or delay by the Secured Party in exercising the same, shall not operate as a waiver; and no
waiver by the Secured Party shall be effective unless it is in writing and then only to the extent
specifically stated. The rights and remedies of the Secured Party under this Agreement shall be
cumulative and not exclusive of any other right or remedy which the Secured Party may have. For
purposes of this Agreement, an Event of Default shall be construed as continuing after its
occurrence until waived in writing by the Secured Party.
Section 10. Application of Proceeds. The proceeds and avails of the Collateral at any time
received by the Secured Party after the occurrence and during the continuation of any Event of
Default shall, when received by the Secured Party in cash or its equivalent, be applied by the
Secured Party as follows:
(i) first, to the payment and satisfaction of all sums paid and costs and expenses
incurred by the Secured Party hereunder or otherwise in connection herewith, including such
monies paid or incurred in connection with protecting, preserving or realizing upon the
Collateral or enforcing any of the terms hereof, including attorneys’ fees and court costs,
together with any interest thereon (but without preference or priority of principal over
interest or of interest over principal), to the extent the Secured Party is not reimbursed
therefor by the Debtors; and
(ii) second, to the payment and satisfaction of the remaining Secured Obligations,
whether or not then due (in whatever order the Secured Party elects), both for interest and
principal.
The Debtors shall remain liable to the Secured Party for any deficiency. Any surplus remaining
after the full payment and satisfaction of the foregoing shall be returned to the Debtors or to
whomsoever the Secured Party reasonably determines is lawfully entitled thereto.
Section 11. Continuing Agreement. This Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect until all of the Secured Obligations, both for
principal and interest, have been fully paid and satisfied and all commitments of the Secured Party
to extend credit to or for the account of the Borrower under the Credit Agreement have expired or
otherwise have been terminated. Upon such termination of this Agreement, the Secured Party shall,
upon the request and at the expense of the Debtors, forthwith release its liens and security
interest hereunder.
Section 12. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the rights, privileges,
remedies, and options given to the Secured Party hereunder shall inure to the benefit of its
successors and permitted assigns, and all the terms, conditions, covenants, agreements,
representations, and warranties of and in this Agreement shall bind the Debtors and their legal
representatives, successors and assigns, provided that no Debtor may assign its rights or delegate
its duties hereunder without the Secured Party’s prior written consent.
-21-
(b) Except as otherwise specified herein, all notices hereunder shall be in writing
(including, without limitation, notice by telecopy) and shall be given to the relevant party at its
address or telecopier number set forth below (or, if no such address is set forth below, at the
address of the relevant Debtor as shown on the records of the Secured Party), or such other address
or telecopier number as such party may hereafter specify by notice to the other given by courier,
by United States certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices hereunder shall be
addressed:
to the Debtors at:
|
to the Secured Party at: | |
| Bank of Montreal | ||
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
|
000 Xxxxx XxXxxxx Xxxxxx | |
Xxxxxxx, Xxxxxxxx 00000
|
Xxxxxxx, Xxxxxxxx 00000 | |
Attention: Xxxx Xxxxxxxx, General Counsel
|
Attention: Xxxxxxxxx Xxxxx | |
Telephone: (000) 000-0000
|
Telephone: (000) 000-0000 | |
Telecopy: (000) 000-0000
|
Telecopy: (000) 000-0000 |
Each such notice, request or other communication shall be effective (i) if given by telecopier,
when such telecopy is transmitted to the telecopier number specified in this Section and a
confirmation of such telecopy has been received by the sender, (ii) if given by mail, five (5) days
after such communication is deposited in the mail, certified or registered with return receipt
requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the
addresses specified in this Section.
(c) In the event and to the extent that any provision hereof shall be deemed to be invalid or
unenforceable by reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall to such extent be construed as not containing such
provision, but only as to such jurisdictions where such law or interpretation is operative, and the
invalidity or unenforceability of such provision shall not affect the validity of any remaining
provisions hereof, and any and all other provisions hereof which are otherwise lawful and valid
shall remain in full force and effect. Without limiting the generality of the foregoing, in the
event that this Agreement shall be deemed to be invalid or otherwise unenforceable with respect to
any Debtor, such invalidity or unenforceability shall not affect the validity of this Agreement
with respect to the other Debtors.
(d) The lien and security interest herein created and provided for stand as direct and primary
security for the Secured Obligations of the Borrower arising under or otherwise relating to the
Credit Agreement as well as for any of the other Secured Obligations secured hereby. No
application of any sums received by the Secured Party in respect of the Collateral or any
disposition thereof to the reduction of the Secured Obligations or any part thereof shall in any
manner entitle any Debtor to any right, title or interest in or to the Secured Obligations or any
collateral or security therefor, whether by subrogation or otherwise, unless and until all Secured
Obligations (other than claims not yet asserted, including indemnification claims, that by their
express terms survive the termination hereof and termination of the Credit Agreement) have been
fully paid and satisfied and all commitments to extend credit to or for the account of each Debtor
under the Credit Agreement have expired or otherwise have been terminated. Each Debtor
-22-
acknowledges that the lien and security interest hereby created and provided are absolute and
unconditional and shall not in any manner be affected or impaired by any acts of omissions
whatsoever of the Secured Party or any other holder of any Secured Obligations, and without
limiting the generality of the foregoing, the lien and security interest hereof shall not be
impaired by any acceptance by the Secured Party or any other holder of any Secured Obligations of
any other security for or guarantors upon any of the Secured Obligations or by any failure, neglect
or omission on the part of the Secured Party or any other holder of any Secured Obligations to
realize upon or protect any of the Secured Obligations or any collateral or security therefor. The
lien and security interest hereof shall not in any manner be impaired or affected by (and the
Secured Party, without notice to anyone, is hereby authorized to make from time to time) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification or disposition of any of the Secured Obligations or
of any collateral or security therefor, or of any guaranty thereof, or of any instrument or
agreement setting forth the terms and conditions pertaining to any of the foregoing. The Secured
Party may at its discretion at any time grant credit to any Debtor without notice to the other
Debtors in such amounts and on such terms as the Secured Party may elect (all of such to constitute
additional Secured Obligations hereby secured) without in any manner impairing the lien and
security interest created and provided for herein. In order to realize hereon and to exercise the
rights granted the Secured Party hereunder and under applicable law, there shall be no obligation
on the part of the Secured Party or any other holder of any Secured Obligations at any time to
first resort for payment to any one or more Debtors or to any guaranty of the Secured Obligations
or any portion thereof or to resort to any other collateral, security, property, liens or any other
rights or remedies whatsoever, and the Secured Party shall have the right to enforce this Agreement
against any Debtor or any of its Collateral irrespective of whether or not other proceedings or
steps seeking resort to or realization upon or from any of the foregoing are pending.
(e) In the event the Secured Party shall at any time in its discretion permit a substitution
of Debtors hereunder or a party shall wish to become a Debtor hereunder, such substituted or
additional Debtor shall, upon executing an agreement in the form attached hereto as Schedule H,
become a party hereto and be bound by all the terms and conditions hereof to the same extent as
though such Debtor had originally executed this Agreement and, in the case of a substitution, in
lieu of the Debtor being replaced. Any such agreement shall contain information as to such Debtor
necessary to update Schedule A, B, C, D, E, and F hereto with respect to it. No such substitution
shall be effective absent the written consent of the Secured Party nor shall it in any manner
affect the obligations of the other Debtors hereunder.
(f) This Agreement shall be deemed to have been made in the State of Illinois and shall be
governed by, and construed in accordance with, the laws of the State of Illinois. The headings in
this Agreement are for convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
(g) This Agreement may be executed in any number of counterparts and by different parties
hereto on separate counterpart signature pages, each constituting an original, but all together one
and the same instrument. Each Debtor acknowledges that this Agreement is and shall be effective
upon its execution and delivery by such Debtor to the Secured Party, and it
-23-
shall not be necessary for the Secured Party to execute this Agreement or any other acceptance
hereof or otherwise to signify or express its acceptance hereof.
(h) Each Debtor hereby submits to the non-exclusive jurisdiction of the United States District
Court for the Northern District of Illinois and of any Illinois state court sitting in the City of
Chicago for purposes of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each Debtor irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient form. The Debtors and the Secured Party each hereby
irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
[Signature Page to Follow]
-24-
In Witness Whereof, the Debtors have caused this Security Agreement to be duly
executed and delivered as of the date and year first above written.
| Accretive Health, Inc. |
||||
| By | /s/ Xxxx X. Xxxxxx | |||
| Name Xxxx X. Xxxxxx | ||||
| Title Chief Financial Officer | ||||
| SDI Acquisition, Inc. |
||||
| By | /s/ Xxxx Xxxxxxxx | |||
| Name Xxxx Xxxxxxxx | ||||
| Title President | ||||
Accepted and agreed to in Chicago, Illinois, as of the date and year first above written.
| Bank of Montreal |
||||
| By | /s/ Xxxxxxxxx X. Xxxxx | |||
| Name Xxxxxxxxx X. Xxxxx | ||||
| Title Director | ||||
Accepted and agreed to in Chicago, Illinois, as of the date and year first above written.
| Xxxxxx X.X., as Depositary Bank |
||||
| By | ||||
| Name |
||||
| Title |
||||
-25-
Schedule A
Locations
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | ||||
| If Record Owner is | ||||||||
| other Debtor, list | ||||||||
| Nature of Location | ||||||||
| Name of Debtor | Additional Places of | (i.e., business office, | ||||||
| (and State of | Business and | warehouse, location | ||||||
| Organization and | Collateral | If Record Owner is | where significant | |||||
| Organizational | Chief Executive Office | Locations (and name | other than Debtor, | inventory or | ||||
| Registration | (and name of record | of record owner of | list Address of | equipment is stored, | ||||
| Number) | owner of such Location) | such Locations) | Record Owner | etc.) | ||||
Accretive
Health, Inc., a Delaware
Corporation (020698101)
|
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000 Record Owner: Xxxxxx 401 Realty Group Xxxxxxx Xxxxxxx 000 X. Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000 Previous Location: 000 X. Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000 |
1. 000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000 2. 000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000 3. 0000 Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxx, XX
00000 4. 000 X. Xxxxxxx X0X
Xxxxxxx, XX 00000
|
1. First State Investors-
225-229&245 X. Xxxx
Xx. Xxxxxxxxx, XX 00000
(Xxxxxx Volitica) 2. First National
Xxxxxxxx-000 Xxxxxxxx
Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
(Xxxx Xxxxxxxx) |
1.
Business Office 2. Business Office 3. Business Office 4. Business Office |
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | ||||
3. DTL Properties, LLC-
0000 Xxxxxxxxxxx
Xxxxx
Xxxx Xxxxxxxxx, XX
00000 (Xxxx Xxxxxxxxxxx) 4. X. Xxxxxx Management
Fl-c/o Seacoast National
Bank
000 X. Xxxxxxxxxx
Xxxx
Xxxxxxx, XX 00000 (Xxxxxx Gonzonlis) |
||||||||
SDI Acquisition, Inc., a
Delaware corporation
(00-0000000)
|
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
(Record Owner: Xxxxxx 401
Realty Group) Previous Location: 000 X. Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 |
1. 000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000 2. 000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000 3. 0000 Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxx, XX
00000 4. 000 X. Xxxxxxx X0X
Xxxxxxx, XX 00000
|
1. First State
Investors- 225-229&245 X. Xxxx Xx. Xxxxxxxxx, XX 00000 (Xxxxxx Volitica) 2. First National
Xxxxxxxx-000 Xxxxxxxx Xxxxxx Xxxxx 0000 Xxxxxxx, XX 00000 (Xxxx Xxxxxxxx) |
1. Business Office 2. Business Office 3. Business Office 4. Business Office |
-2-
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | ||||
3. DTL Properties, LLC-
0000 Xxxxxxxxxxx
Xxxxx
Xxxx Xxxxxxxxx, XX
00000 (Xxxx Xxxxxxxxxxx) 4. X. Xxxxxx Management
Fl-c/o Seacoast National
Bank
000 X. Xxxxxxxxxx
Xxxx
Xxxxxxx, XX 00000 (Xxxxxx Gonzonlis) |
-3-
Schedule B
Other Names
A. Prior Legal Names |
||||
Name of Debtor
|
Prior Legal Name and Date of Such Change (and to the extent the prior legal name is the result of a merger, list the state of incorporation and collateral locations of the merged company) |
|||
| Healthcare Services, Inc. | ||||
SDI Acquisition, Inc.
|
SureDecisions, Inc., a Missouri corporation | |||
B. Trade Names |
||||
Name of Debtor
|
Tradename | |||
| (and if invoices use tradename only, please indicate) | ||||
| Accretive Health | ||||
SDI Acquisition, Inc.
|
SureDecisions Inc. |
Schedule C
Intellectual Property Rights
| Name of Intellectual | ||||||||
| Property (i.e., patent, | ||||||||
| trademark, | Registration or | Registration or | ||||||
| Name of Debtor | copyright,etc.) | Application No. | Application Date | |||||
| Trademark | 77776634 | 7/8/09 | ||||||
| Trademark | 77768580 | 6/25/09 | ||||||
| Trademark | 77768576 | 6/25/09 | ||||||
| Trademark | 77768587 | 6/25/09 | ||||||
| Trademark | 77767246 | 6/24/09 | ||||||
| Trademark | 77767283 | 6/24/09 | ||||||
| Trademark | 77767257 | 6/24/09 | ||||||
| Trademark | 77714463 | 4/15/09 | ||||||
| Trademark | 77714619 | 4/15/09 | ||||||
| Trademark | 77714478 | 4/15/09 | ||||||
| Trademark | 77714563 | 4/15/09 | ||||||
| Trademark | 77710873 | 4/9/09 | ||||||
| Trademark | 77711027 | 4/9/09 | ||||||
| Patent | [**] | 4/26/07 (pending) | ||||||
| Patent | [**] | 8/20/08 (pending) | ||||||
| Patent | [**] | 2/20/09 (pending) | ||||||
| Patent | [**] | 4/28/09 (pending) | ||||||
SDI Acquisition, Inc.
|
None. | |||||||
Schedule D
Real Estate Legal Descriptions
None.
Schedule E
Investment Property and Deposits
A. Investment Property
| Name and | Cusip Number | |||||||||||||||||||||||
| Location of | Percentage of | (if | ||||||||||||||||||||||
| Pledgor | Name of Issuer | Issuer’s Stock | No. of Shares | Class | Certificate No. | applicable) | ||||||||||||||||||
Accretive Health, |
SDI Acquisition, Inc. | 100 | % | 100 | Common | 2 | N/A | |||||||||||||||||
Inc. |
||||||||||||||||||||||||
B. Deposits
| Deposit Accounts (i.e., name of depository | ||
| Name of Debtor | institution, account number, type of account) | |
| US Bank — [**] (checking) | ||
| US Bank — [**] (trust) | ||
| US Bank — [**] (payroll) | ||
| US Bank — [**] (letter of credit) | ||
| US Bank — [**] (eurodollar sweep) | ||
| US Bank — [**] (investment account) | ||
SDI Acquisition, Inc.
|
US Bank — [**] (checking) | |
| US Bank — [**] (escrow account) |
Schedule F
Commercial Tort Claims
None.
Schedule G
Supplement to Security Agreement
This
Supplement to Security Agreement (the “Supplement”) is dated as of this
day of
, 20
, from
, a(n)
corporation/limited liability company/partnership (the “Debtor”), to (the “Secured
Party”).
Preliminary Statements
A. The Debtor and certain affiliates of the Debtor and the Secured Party are parties to that
certain Security Agreement dated as of September 30, 2009 (such Security Agreement, as the same may
from time to time be amended, modified or restated, being hereinafter referred to as the “Security
Agreement”). All capitalized terms used herein without definition shall have the same meanings
herein as such terms are defined in the Security Agreement.
B. Pursuant to the Security Agreement, the Debtor granted to the Secured Party, among other
things, a continuing security interest in all Commercial Tort Claims.
C. The Debtor has acquired a Commercial Tort Claim, and executes and delivers this Supplement
to confirm and assure the Secured Party’s security interest therein.
Now, Therefore, in consideration of the benefits accruing to the Debtor, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. In order to secure payment of the Secured Obligations, whether now existing or hereafter
arising, the Debtor does hereby grant to the Secured Party a continuing lien on and security
interest in the Commercial Tort Claim described below:
2. Schedule F (Commercial Tort Claims) to the Security Agreement is hereby amended to include
reference to the Commercial Tort Claim referred to in Section 1 above. The Commercial Tort Claim
described herein is in addition to, and not in substitution or replacement for, the Commercial Tort
Claims heretofore described in and subject to the Security Agreement, and nothing contained herein
shall in any manner impair the priority of the liens and security interests heretofore granted by
the Debtor in favor of the Secured Party under the Security Agreement.
3. The Debtor agrees to execute and deliver such further instruments and documents and do such
further acts and things as the Secured Party may deem necessary or proper to carry out more
effectively the purposes of this Supplement.
4. No reference to this Supplement need be made in the Security Agreement or in any other
document or instrument making reference to the Security Agreement, any reference to the Security
Agreement in any of such items to be deemed a reference to the Security Agreement as supplemented
hereby. The Debtor acknowledges that this Supplement shall be effective upon its execution and
delivery by the Debtor to the Secured Party, and it shall not be necessary for the Secured Party to
execute this Supplement or any other acceptance hereof or otherwise to signify or express its
acceptance hereof.
5. This Agreement shall be governed by and construed in accordance with the laws of the State
of Illinois (without regard to principles of conflicts of law).
| [Insert Name of Debtor] | ||||||||||||
| By | ||||||||||||
| Name | ||||||||||||
| Title | ||||||||||||
Schedule H
Assumption and Supplemental Security Agreement
This
Agreement dated as of this day of , 20___ from [new debtor],
a
corporation/limited liability company/partnership (the
“New Debtor”), to
(the “Secured Party”).
Witnesseth that:
Whereas, Accretive Health, Inc. (the “Borrower”) and certain other parties have
executed and delivered to the Secured Party that certain Security Agreement dated as of September
30, 2009 (such Security Agreement, as the same may from time to time be modified or amended,
including supplements thereto which add additional parties as Debtors thereunder, being hereinafter
referred to as the “Security Agreement”), pursuant to which such parties (the “Existing Debtors”)
have granted to the Secured Party a lien on and security interest in each such Existing Debtor’s
Collateral (as such term is defined in the Security Agreement) to secure the Secured Obligations
(as such term is defined in the Security Agreement); and
Whereas, the Borrower provides the New Debtor with substantial financial, managerial,
administrative, technical and other support and the New Debtor will directly and substantially
benefit from credit and other financial accommodations extended and to be extended by the Secured
Party to the Borrower;
Now, therefore, for value received, and in consideration of advances made or to be
made, or credit accommodations given or to be given, to the Borrower by the Secured Party from time
to time, the New Debtor hereby agrees as follows:
1. The New Debtor acknowledges and agrees that it shall become a “Debtor” party to the
Security Agreement effective upon the date the New Debtor’s execution of this Agreement and the
delivery of this Agreement to the Secured Party, and that upon such execution and delivery, all
references in the Security Agreement to the terms “Debtor” or “Debtors” shall be deemed to include
the New Debtor. Without limiting the generality of the foregoing, the New Debtor hereby repeats
and reaffirms all grants (including the grant of a lien and security interest), covenants,
agreements, representations and warranties contained in the Security Agreement as amended hereby,
each and all of which are and shall remain applicable to the Collateral from time to time owned by
the New Debtor or in which the New Debtor from time to time has any rights. Without limiting the
foregoing, in order to secure payment of the Secured Obligations, whether now existing or hereafter
arising, the New Debtor does hereby grant to the Secured Party, and hereby agrees that the Secured
Party has and shall continue to have a continuing lien on and security interest in, among other
things, all of the New Debtor’s Collateral (as such term is defined in the Security Agreement),
including, without limitation, all of the New Debtor’s Accounts, Chattel Paper, Instruments,
Documents, General Intangibles, Letter-of-Credit Rights, Supporting Obligations, Deposit Accounts,
Investment Property, Inventory, Equipment, Fixtures,
Commercial Tort Claims, and all Proceeds thereof and all of the other Collateral described in the
granting clauses of the Security Agreement, each and all of such granting clauses being
incorporated herein by reference with the same force and effect as if set forth in their entirety
except that all references in such clauses to the Existing Debtors or any of them shall be deemed
to include references to the New Debtor. Nothing contained herein shall in any manner impair the
priority of the liens and security interests heretofore granted in favor of the Secured Party under
the Security Agreement.
2. Schedules A (Locations), Schedule B (Other Names), Schedule C (Intellectual Property
Rights), Schedule D (Real Estate), Schedule E (Investment Property and Deposits), and Schedule F
(Commercial Tort Claims) to the Security Agreement shall be supplemented by the information stated
below with respect to the New Debtor:
Supplement to Schedule A
| Additional Places of |
||||
| Name of Debtor(and |
Business and Collateral |
|||
| State of Organization |
Chief Executive Office (and |
Locations (and name of |
||
| and Organizational |
name of record owner of |
record owner of such |
||
| Registration Number) | such location) | locations) | ||
Supplement to Schedule B
| Name of Debtor | Prior Legal Names and Trade Names of Such Debtor |
|
Supplement to Schedule C
Intellectual Property Rights
Supplement to Schedule D
Real Estate Legal Descriptions
Supplement to Schedule E
Investment Property and Deposits
Supplement to Schedule F
Commercial Tort claims
3. The New Debtor hereby acknowledges and agrees that the Secured Obligations are secured by
all of the Collateral according to, and otherwise on and subject to, the terms and conditions of
the Security Agreement to the same extent and with the same force and effect as if the New Debtor
had originally been one of the Existing Debtors under the Security Agreement and had originally
executed the same as such an Existing Debtor.
4. All capitalized terms used in this Agreement without definition shall have the same meaning
herein as such terms have in the Security Agreement, except that any reference to the term “Debtor”
or “Debtors” and any provision of the Security Agreement providing meaning to such term shall be
deemed a reference to the Existing Debtors and the New Debtor. Except as specifically modified
hereby, all of the terms and conditions of the Security Agreement shall stand and remain unchanged
and in full force and effect.
5. The New Debtor agrees to execute and deliver such further instruments and documents and do
such further acts and things as the Secured Party may reasonably deem necessary or proper to carry
out more effectively the purposes of this Agreement.
6. No reference to this Agreement need be made in the Security Agreement or in any other
document or instrument making reference to the Security Agreement, any reference to the Security
Agreement in any of such to be deemed a reference to the Security Agreement as modified hereby.
7. This Agreement shall be governed by and construed in accordance with the laws of the State
of Illinois (without regard to principles of conflicts of law).
| [Insert Name of New Debtor] | ||||
| By | ||||
| Name
|
||||
| Title |
||||
Accepted and agreed to as of the date first above written.
| Bank of Montreal | ||||
| By | ||||
| Name |
||||
| Title |
||||
