Guarantee And Collateral Agreement

EXHIBIT 10.4


EXECUTION COPY


- --------------------------------------------------------------------------------


GUARANTEE AND COLLATERAL AGREEMENT


dated as of


March 27, 2003,


among


AMERIPATH, INC.,


AMERIPATH HOLDINGS, INC.,


the Subsidiaries of AMERIPATH, INC.,


identified herein,


and


CREDIT SUISSE FIRST BOSTON,


as Collateral Agent


- --------------------------------------------------------------------------------


TABLE OF CONTENTS


Page
----
ARTICLE I


DEFINITIONS


SECTION 1.01. Credit Agreement....................................................................1 SECTION 1.02. Other Defined Terms.................................................................1


ARTICLE II


GUARANTEE


SECTION 2.01. Guarantee...........................................................................5 SECTION 2.02. Guarantee of Payment................................................................5 SECTION 2.03. No Limitations, Etc.................................................................5 SECTION 2.04. Reinstatement.......................................................................6 SECTION 2.05. Agreement To Pay; Subrogation.......................................................6 SECTION 2.06. Information.........................................................................7


ARTICLE III


PLEDGE OF SECURITIES


SECTION 3.01. Pledge..............................................................................7 SECTION 3.02. Delivery of the Pledged Collateral..................................................8 SECTION 3.03. Representations, Warranties and Covenants...........................................8 SECTION 3.04. Certification of Limited Liability Company Interests and Limited
Partnership Interests..............................................................9 SECTION 3.05. Registration in Nominee Name; Denominations........................................10 SECTION 3.06. Voting Rights; Dividends and Interest, etc.........................................10


ARTICLE IV


SECURITY INTERESTS IN PERSONAL PROPERTY


SECTION 4.01. Security Interest..................................................................12 SECTION 4.02. Representations and Warranties.....................................................14 SECTION 4.03. Covenants..........................................................................15 SECTION 4.04. Other Actions......................................................................18 SECTION 4.05. Covenants regarding Patent, Trademark and Copyright Collateral.....................21


2


ARTICLE V


REMEDIES


SECTION 5.01. Remedies upon Default..............................................................23 SECTION 5.02. Application of Proceeds............................................................24 SECTION 5.03. Grant of License to Use Intellectual Property......................................25 SECTION 5.04. Securities Act, etc................................................................25


ARTICLE VI


INDEMNITY, SUBROGATION AND SUBORDINATION


SECTION 6.01. Indemnity and Subrogation..........................................................26 SECTION 6.02. Contribution and Subrogation.......................................................26 SECTION 6.03. Subordination......................................................................27


ARTICLE VII


MISCELLANEOUS


SECTION 7.01. Notices............................................................................27 SECTION 7.02. Security Interest Absolute.........................................................27 SECTION 7.03. Survival of Agreement..............................................................28 SECTION 7.04. Binding Effect; Several Agreement..................................................28 SECTION 7.05. Successors and Assigns.............................................................28 SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification..............................28 SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact........................................29 SECTION 7.08. Applicable Law.....................................................................30 SECTION 7.09. Waivers; Amendment.................................................................30 SECTION 7.10. Waiver of Jury Trial...............................................................30 SECTION 7.11. Severability.......................................................................31 SECTION 7.12. Counterparts.......................................................................31 SECTION 7.13. Headings...........................................................................31 SECTION 7.14. Jurisdiction; Consent to Service of Process........................................31 SECTION 7.15. Termination or Release.............................................................32 SECTION 7.16. Additional Grantors................................................................33 SECTION 7.17. Right of Setoff....................................................................33


3


SCHEDULES


Schedule I Subsidiary Guarantors Schedule II Capital Stock; Debt Securities Schedule III Intellectual Property


EXHIBITS


Exhibit I Form of Supplement Exhibit II Form of Perfection Certificate


GUARANTEE AND COLLATERAL AGREEMENT dated as of
March 27, 2003, among AMERIPATH, INC., a Delaware
corporation (the "BORROWER"), AMERIPATH HOLDINGS, INC., a
Delaware corporation ("HOLDINGS"), the Subsidiaries of the
Borrower identified herein and CREDIT SUISSE FIRST BOSTON
("CSFB") as collateral agent (in such capacity, the
"COLLATERAL AGENT").


Reference is made to the Credit Agreement dated as of March 27, 2003 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, Holdings, the lenders from time to time party thereto (the "LENDERS") and CSFB, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT"). The Lenders have agreed to extend credit to the Borrower pursuant to, and upon the terms and conditions specified in, the Credit Agreement. The obligations of the Lenders to extend such credit to the Borrower are conditioned upon, among other things, the execution and delivery of this Agreement by Holdings, the Borrower and the Subsidiary Guarantors. Holdings and the Subsidiary Guarantors are affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


SECTION 1.01. CREDIT AGREEMENT. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; all references to the Uniform Commercial Code shall mean the New York UCC; the term "INSTRUMENT" shall have the meaning specified in Article 9 of the New York UCC.


(b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.


SECTION 1.02. OTHER DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below:


"ACCOUNT DEBTOR" means any person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.


"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right, title and interest in any returned goods, together will all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and


2


resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.


"ARTICLE 9 COLLATERAL" has the meaning assigned to such term in Section 4.01.


"COLLATERAL" means Article 9 Collateral and Pledged Collateral.


"COPYRIGHT LICENSE" means any written agreement, now or hereafter in effect, granting any right to any third party under any copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.


"COPYRIGHTS" means all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any successor office or any similar office in any other country), including those listed on Schedule III.


"CREDIT AGREEMENT" has the meaning assigned to such term in the preliminary statement of this Agreement.


"EQUITY INTERESTS" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any person, or any obligations convertible into or exchangeable for, or giving any person a right, option or warrant to acquire such equity interests or such convertible or exchangeable obligations.


"GENERAL INTANGIBLES" means all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.


"GRANTORS" means Holdings, the Borrower and the Subsidiary Guarantors.


"GUARANTORS" means Holdings and the Subsidiary Guarantors.


3


"INTELLECTUAL PROPERTY" means all intellectual and similar property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.


"LICENSE" means any Patent License, Trademark License, Copyright License or other license or sublicense agreement to which any Grantor is a party, including those listed on Schedule III.


"LOAN DOCUMENT OBLIGATIONS" means (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of the Borrower to any of the Secured Parties under the Credit Agreement and each of the other Loan Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to the Credit Agreement and each of the other Loan Documents, and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.


"NEW YORK UCC" means the Uniform Commercial Code as from time to time in effect in the State of New York.


"OBLIGATIONS" means (a) the Loan Document Obligations and (b) the due and punctual payment and performance of all obligations of each Loan Party under each Hedging Agreement that (i) is in effect on the Closing Date with a counterparty that is a Lender or an Affiliate of a Lender as of the Closing Date or (ii) is entered into after the Closing Date with any counterparty that is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is entered into.


"PATENT LICENSE" means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any


4


invention on which a patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement,


"PATENTS" means all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office (or any successor or any similar offices in any other country), including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.


"PERFECTION CERTIFICATE" means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by two Financial Officers.


"PLEDGED COLLATERAL" has the meaning assigned to such term in Section 3.01.


"PLEDGED DEBT SECURITIES" has the meaning assigned to such term in Section 3.01.


"PLEDGED SECURITIES" means any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.


"PLEDGED STOCK" has the meaning assigned to such term in Section 3.01.


"PROCEEDS" has the meaning specified in Section 9-102 of the New York UCC.


"SECURED PARTIES" means (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to any Hedging Agreement with a Loan Party that either (i) is in effect on the Closing Date if such counterparty is a Lender or an Affiliate of a Lender as of the Closing Date or (ii) is entered into after the Closing Date if such counterparty is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is entered into, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and assigns of each of the foregoing.


"SECURITY INTEREST" has the meaning assigned to such term in Section 4.01.


"SUBSIDIARY GUARANTORS" means (a) the Subsidiaries identified on Schedule I and (b) each other Subsidiary that becomes a party to this Agreement as a Subsidiary Guarantor after the Closing Date.


5


"TRADEMARK LICENSE" means any written agreement, now or hereafter in effect, granting to any third party any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.


"TRADEMARKS" means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office (or any successor office) or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.


ARTICLE II


GUARANTEE


SECTION 2.01. GUARANTEE. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each of the Guarantors further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Each of the Guarantors waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.


SECTION 2.02. GUARANTEE OF PAYMENT. Each of the Guarantors further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other person.


SECTION 2.03. NO LIMITATIONS, ETC. (a) Except for termination of a Guarantor's obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the


6


foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement; (iii) the release of any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them; (iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations; or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). Each Guarantor expressly authorizes the Collateral Agent to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in its sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.


(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.


SECTION 2.04. REINSTATEMENT. Each of the Guarantors agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise.


SECTION 2.05. AGREEMENT TO PAY; SUBROGATION. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Obligation when and as the


7


same shall become due, whether at maturity, by acceleration after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against the Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.


SECTION 2.06. INFORMATION. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower's and each other Loan Party's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.


ARTICLE III


PLEDGE OF SECURITIES


SECTION 3.01. PLEDGE. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in, all of such Grantor's right, title and interest in, to and under (a) Equity interests owned by it and listed on Schedule II and any other Equity Interests obtained in the future by such Grantor and the certificates representing all such Equity Interests (the "PLEDGED STOCK"); PROVIDED that the Pledged Stock (x) shall not include any Equity Interests which may not be pledged, assigned or otherwise encumbered pursuant to applicable Federal, state or local laws, rules or regulations related to the practice of medicine or the healthcare industry generally and (y) shall not include more than 65% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary; (b)(i) the debt securities listed opposite the name of such Grantor on Schedule II, (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such debt s ...