EXHIBIT 10.49
EXECUTION COPY
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
PARAGON HEALTH NETWORK, INC.
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Collateral Agent
Dated as of November 4, 1997
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS................................................................................ 2
1.1 Definitions.................................................................................... 2
-----------
1.2 Other Definitional Provisions.................................................................. 5
-----------------------------
SECTION 2. GUARANTEE.................................................................................... 7
2.1 Guarantee...................................................................................... 7
---------
2.2 Right of Contribution.......................................................................... 7
---------------------
2.3 No Subrogation................................................................................. 7
--------------
2.4 Amendments, etc. with respect to the Borrower Obligations...................................... 8
---------------------------------------------------------
2.5 Guarantee Absolute and Unconditional........................................................... 8
------------------------------------
2.6 Reinstatement.................................................................................. 9
-------------
2.7 Payments....................................................................................... 9
--------
SECTION 3. GRANT OF SECURITY INTEREST................................................................... 9
SECTION 4. REPRESENTATIONS AND WARRANTIES............................................................... 10
4.1 Representations in Corporate Credit Agreement.................................................. 10
---------------------------------------------
4.2 Title; No Other Liens.......................................................................... 10
---------------------
4.3 Perfected First Priority Liens................................................................. 10
------------------------------
4.4 Chief Executive Office......................................................................... 11
----------------------
4.5 Inventory and Equipment........................................................................ 11
-----------------------
4.6 Farm Products.................................................................................. 11
-------------
4.7 Pledged Securities............................................................................. 11
------------------
4.8 Receivables.................................................................................... 11
-----------
4.9 Intellectual Property.......................................................................... 11
---------------------
SECTION 5. COVENANTS.................................................................................... 12
5.1 Covenants in Corporate Credit Agreement........................................................ 12
---------------------------------------
5.2 Delivery of Instruments and Chattel Paper...................................................... 12
-----------------------------------------
5.3 Maintenance of Insurance....................................................................... 12
------------------------
5.4 Payment of Obligations......................................................................... 13
----------------------
5.5 Maintenance of Perfected Security Interest; Further Documentation.............................. 13
-----------------------------------------------------------------
5.6 Changes in Locations, Name, etc................................................................ 13
-------------------------------
5.7 Notices........................................................................................ 14
-------
5.8 Pledged Securities............................................................................. 14
------------------
5.9 Receivables.................................................................................... 15
-----------
5.10 Intellectual Property......................................................................... 15
---------------------
SECTION 6. REMEDIAL PROVISIONS.......................................................................... 16
6.1 Certain Matters Relating to Receivables........................................................ 16
---------------------------------------
6.2 Communications with Obligors; Grantors Remain Liable........................................... 17
----------------------------------------------------
6.3 Pledged Stock.................................................................................. 17
-------------
6.4 Proceeds to be Turned Over To Collateral Agent................................................. 18
----------------------------------------------
6.5 Application of Proceeds........................................................................ 18
-----------------------
6.6 Code and Other Remedies........................................................................ 19
-----------------------
Page
----
6.7 Registration Rights.......................................................................... 19
-------------------
6.8 Waiver; Deficiency........................................................................... 20
------------------
6.9 Governmental Obligor Limited Receivables..................................................... 20
----------------------------------------
SECTION 7. THE COLLATERAL AGENT....................................................................... 21
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc...................................... 21
-------------------------------------------------------
7.2 Duty of Collateral Agent..................................................................... 22
------------------------
7.3 Execution of Financing Statements............................................................ 22
---------------------------------
7.4 Authority of Collateral Agent................................................................ 23
-----------------------------
SECTION 8. MISCELLANEOUS.............................................................................. 23
8.1 Amendments in Writing........................................................................ 23
---------------------
8.2 Notices...................................................................................... 23
-------
8.3 No Waiver by Course of Conduct; Cumulative Remedies.......................................... 23
---------------------------------------------------
8.4 Enforcement Expenses; Indemnification........................................................ 23
-------------------------------------
8.5 Successors and Assigns....................................................................... 24
----------------------
8.6 Set-Off...................................................................................... 24
-------
8.7 Counterparts................................................................................. 24
------------
8.8 Severability................................................................................. 24
------------
8.9 Section Headings............................................................................. 25
----------------
8.10 Integration................................................................................. 25
-----------
8.11 GOVERNING LAW............................................................................... 25
-------------
8.12 Submission To Jurisdiction; Waivers......................................................... 25
-----------------------------------
8.13 Acknowledgements............................................................................ 25
----------------
8.14 WAIVER OF JURY TRIAL........................................................................ 26
--------------------
8.15 Additional Grantors......................................................................... 26
-------------------
8.16 Releases.................................................................................... 26
---------
1
GUARANTEE AND COLLATERAL AGREEMENT, dated as of November 4, 1997, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of THE CHASE
--------
MANHATTAN BANK, as collateral agent (in such capacity, the "Collateral Agent")
----------------
for
(i) the banks and other financial institutions or entities (the
"Corporate Lenders") from time to time parties to the Credit Agreement,
------------------
dated as of the date hereof (as amended, supplemented or otherwise modified
from time to time, the "Corporate Credit Agreement"), among Paragon Health
--------------------------
Network, Inc. (the "Borrower"), the Corporate Lenders, The Chase Manhattan
--------
Bank, as administrative agent for the Corporate Lenders (in such capacity,
the "Administrative Agent"), and NationsBank, N.A., as documentation agent
--------------------
(in such capacity, the "Documentation Agent"); and
-------------------
(ii) the banks and other financial institutions (the "Synthetic
---------
Lenders"; collectively with the Corporate Lenders, the "Lenders") from time
------- -------
to time parties to the Amended and Restated Credit Agreement, dated as of
the date hereof (as amended, supplemented or otherwise modified from time
to time, the "Synthetic Credit Agreement"; collectively with the Corporate
--------------------------
Credit Agreement, the "Credit Agreements"), among FBTC Leasing Corp.
-----------------
("FBTC"), the Synthetic Lenders and The Chase Manhattan Bank, as
----
administrative agent for the Synthetic Lenders (in such capacity, the
"Synthetic Agent"; collectively with the Administrative Agent, the
----------------
"Agents").
------
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Corporate Credit Agreement, the Corporate
Lenders have severally agreed to make extensions of credit to the Borrower upon
the terms and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Corporate
Credit Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Corporate Credit
Agreement;
WHEREAS, pursuant to the Synthetic Credit Agreement, the Synthetic
Lenders have severally agreed to make extensions of credit to FBTC upon the
terms and subject to the conditions set forth therein;
WHEREAS, the Grantors (in such capacity, the "Synthetic Guarantors"),
--------------------
under the Amended and Restated Guarantee, dated as of the date hereof (the
"Synthetic Guarantee"), in favor of the Synthetic Agent for the benefit of the
--------------------
Synthetic Lenders, have guaranteed the obligations of the FBTC under the
Synthetic Credit Agreement, subject to certain limitations set forth therein;
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower and FBTC under the
respective Credit Agreements that
2
the Grantors shall have executed and delivered this Agreement to the Collateral
Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the respective Credit Agreements and to
induce the Lenders to make their respective extensions of credit to the Borrower
and FBTC thereunder (as applicable), each Grantor hereby agrees with the
Collateral Agent, for the ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Corporate Credit Agreement and used herein shall have the meanings given
to them in the Corporate Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York on the
date hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, Instruments, Inventory and Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Corporate Credit Agreement after the maturity of the Loans and
Reimbursement Obligations and interest accruing at the then applicable rate
provided in the Corporate Credit Agreement after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding) to the
Administrative Agent, any Lender or the Collateral Agent (or, in the case
of any Hedge Agreement referred to below, any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Corporate Credit Agreement, this Agreement, the other
Loan Documents, any Letter of Credit or any Hedge Agreement entered into by
the Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent, to the
Lenders or to the Collateral Agent that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
Collateral Agent as provided in Section 6.1, 6.4 or 6.9.
"Collateral Agent Agreement": the Collateral Agent Agreement, dated as
--------------------------
of the date hereof, among the Corporate Lenders, the Corporate Agent, the
Synthetic Lenders, the Synthetic Agent, FBTC and the Collateral Agent.
3
"Copyrights": (i) all copyrights arising under the laws of the United
----------
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
----------
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
------------------
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
----------
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, to the extent, in each case
where any Grantor is a licensee under any such written agreement, the grant
by such Grantor of a security interest pursuant to this Agreement is not
prohibited by such written agreement.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); provided, that
--------
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
"Governmental Obligor Limited Receivables": any amount payable to a
----------------------------------------
Grantor under or in connection with any Receivable where the obligor on any
such Receivable is a Governmental Authority or a governmental program
(including, but not limited to, Medicare and Medicaid) which pursuant to
applicable law (including, but not limited to, the Federal Assignment of
Claims Act) may not be sold by any Grantor or collected directly from, or
enforced directly against, such obligor or Account holder by the holder of
a security interest therein.
"Guarantor Obligations": with respect to any Guarantor, the
---------------------
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Collateral Agent, to the Administrative Agent or to the
Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
4
"Guarantors": the collective reference to each Grantor other than the
----------
Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps
----------------
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to xxx at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
-----------------
Grantor to the Borrower or any of its Subsidiaries.
"Issuers": the collective reference to each issuer of a Pledged
-------
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, (ii) in the case of each Guarantor, its Guarantor Obligations
and (iii) the Synthetic Obligations.
"Patents": (i) all letters patent of the United States, any other
-------
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in Schedule 6, (ii) all
----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
--------
6, and (iii) all rights to obtain any reissues or extensions of the
-
foregoing.
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6, to the extent,
----------
in each case where any Grantor is a grantee under any such agreement, the
grant by such Grantor of a security interest pursuant to this Agreement is
not prohibited by such agreement.
"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ----------
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business) or any Investment Property.
"Pledged Securities": the collective reference to the Pledged Notes
------------------
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect or any Investment Property.
5
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon
or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Support Letter of Credit": an irrevocable letter of credit delivered
------------------------
pursuant to Section 8.16 to an Issuing Lender in connection with any Letter
of Credit which shall remain outstanding after the termination of this
Agreement naming such Issuing Lender as beneficiary thereunder, and which
letter of credit shall in all respects be satisfactory to such Issuing
Lender and the Collateral Agent.
"Synthetic Obligations": with respect to any Grantor, all obligations
---------------------
and liabilities of such Grantor which may arise under or in connection with
the Synthetic Guarantee whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Synthetic Agent or to the Synthetic Lenders that are required to be
paid by such Grantor pursuant to the terms of this Agreement or the
Synthetic Guarantee).
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and (ii) the
----------
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
-----------------
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 6, to the extent, in each case where any Grantor is a grantee
----------
under any such agreement, the grant by such Grantor of a security interest
pursuant to this Agreement is not prohibited by such agreement.
"Vehicles": all cars, trucks, trailers, construction and earth moving
--------
equipment and other vehicles covered by a certificate of title law of any
state and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof,"
-----------------------------
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
6
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
7
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Collateral Agent,
for the ratable benefit of the Corporate Lenders and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Collateral Agent, the Administrative
Agent or any Corporate Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Corporate Credit Agreement the Borrower may be free from any
Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent, the Collateral Agent or any Corporate Lender from the Borrower, any of
the Guarantors, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
---------------------
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Collateral Agent, Administrative Agent and the Corporate
Lenders, and each Guarantor shall remain liable to the Collateral Agent, the
Administrative Agent and the Corporate Lenders for the full amount guaranteed by
such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Collateral Agent, the Administrative Agent or any Corporate Lender, no
Guarantor shall be entitled to be subrogated to any of the rights of the
8
Collateral Agent, the Administrative Agent or any Corporate Lender against the
Borrower or any other Guarantor or any collateral security or guarantee or right
of offset held by the Collateral Agent, the Administrative Agent or any
Corporate Lender for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Collateral Agent, the Administrative
Agent and the Corporate Lenders by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Collateral Agent, the Administrative Agent and the
Corporate Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent
in the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Collateral Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Collateral Agent
may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
---------------------------------------------------------
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Collateral Agent, the Administrative Agent or any
Corporate Lender may be rescinded by the Collateral Agent, the Administrative
Agent or such Corporate Lender and any of the Borrower Obligations continued,
and the Borrower Obligations, or the liability of any other Person upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Collateral Agent, the Administrative Agent or any
Corporate Lender, and the Corporate Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the requisite number of Lenders under the Corporate
Credit Agreement, as the case may be) may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Collateral Agent, the Administrative Agent or any Corporate Lender for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Collateral Agent, the Administrative Agent nor any
Corporate Lender shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Borrower Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Collateral Agent,
the Administrative Agent or any Corporate Lender upon the guarantee contained in
this Section 2 or acceptance of the guarantee contained in this Section 2; the
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the
Collateral Agent, the Administrative Agent and the Corporate Lenders, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Corporate Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect
9
thereto at any time or from time to time held by the Collateral Agent, the
Administrative Agent or any Corporate Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Collateral Agent, the Administrative Agent or any Corporate Lender, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Collateral Agent, the Administrative Agent or any Corporate Lender may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Collateral Agent, the Administrative Agent or any Corporate
Lender to make any such demand, to pursue such other rights or remedies or to
collect any payments from the Borrower, any other Guarantor or any other Person
or to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Collateral Agent, the Administrative Agent
or any Corporate Lender against any Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Collateral Agent, the
Administrative Agent or any Corporate Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Collateral Agent without set-off or counterclaim
in Dollars at the office of the Collateral Agent located at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the ratable benefit of the Lenders, a
security interest in, all of the following property now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
-----------
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
10
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Investment Property;
(j) all Pledged Securities;
(k) all books and records pertaining to the Collateral; and
(l) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreements and to induce the Lenders to make their respective extensions of
credit to the Borrower or FBTC, as the case may be, thereunder, each Grantor
hereby represents and warrants to each Agent and each Lender that:
4.1 Representations in Corporate Credit Agreement. In the case of
---------------------------------------------
each Guarantor, the representations and warranties set forth in Section 4 of the
Corporate Credit Agreement as they relate to such Guarantor or to the Loan
Documents to which such Guarantor is a party, each of which is hereby
incorporated herein by reference, are true and correct, and the Collateral
Agent, the Agents and each Lender shall be entitled to rely on each of them as
if they were fully set forth herein, provided that each reference in each such
--------
representation and warranty to the Borrower's knowledge shall, for the purposes
of this Section 4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest granted
---------------------
to the Collateral Agent for the ratable benefit of the Lenders pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by the
Corporate Credit Agreement, such Grantor owns each item of the Collateral free
and clear of any and all Liens or claims of others. No financing statement or
other public notice with respect to all or any part of the Collateral is on file
or of record in any public office, except such as have been filed in favor of
the Collateral Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Corporate Credit Agreement.
4.3 Perfected First Priority Liens. The security interests granted
------------------------------
pursuant to this Agreement (a) upon delivery to the Collateral Agent of stock
certificates or other documents representing the Pledged Stock (together with
undated stock powers duly executed in blank relating thereto), delivery to the
Collateral Agent of the Pledged Notes, duly endorsed in blank by the appropriate
Grantor and completion of the filings specified on Schedule 3 (which, in the
----------
case of all filings referred to on said Schedule, have been delivered to the
Collateral Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the Collateral
Agent, for the
11
ratable benefit of the Lenders, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor (except, in each case, under the circumstances provided to the
contrary in the New York UCC or in the Uniform Commercial Code in effect in any
applicable jurisdiction) and (b) are prior to all other Liens on the Collateral
in existence on the date hereof except for (i) unrecorded Liens permitted by the
Corporate Credit Agreement which have priority over the Liens on the Collateral
by operation of law and (ii) Liens described on Schedule 7.
----------
4.4 Chief Executive Office. On the date hereof, such Grantor's
----------------------
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
----------
4.5 Inventory and Equipment. On the date hereof, the Inventory and
-----------------------
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
----------
4.6 Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock pledged by
------------------
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor in the case of
Domestic Subsidiaries, and 65% of the issued and outstanding shares of all
classes of the Capital Stock of each Issuer that is a Foreign Subsidiary which
is owned by such Grantor.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.
4.8 Receivables. (a) No amount payable to such Grantor under or in
-----------
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Collateral Agent.
(b) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate (except for immaterial inadvertent inaccuracies).
4.9 Intellectual Property. (a) Schedule 6 lists all Intellectual
--------------------- ----------
Property owned by such Grantor in its own name on the date hereof.
12
(b) On the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and, to the best
of such Grantor's knowledge, does not infringe the intellectual property rights
of any other Person, subject to the disclosure made in Schedule 6.
----------
(c) Except as set forth in Schedule 6, on the date hereof, none of
----------
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) Except as disclosed in Schedule 6, no action or proceeding is
----------
pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any Intellectual
Property or such Grantor's ownership interest therein, or (ii) which, if
adversely determined, would have a material adverse effect on the value of any
Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent, the
Agents and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 Covenants in Corporate Credit Agreement. In the case of each
---------------------------------------
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries, subject in each instance to the applicable grace and cure periods,
if any, provided in the Corporate Credit Agreement or any other Loan Document to
which such Guarantor is a party.
5.2 Delivery of Instruments and Chattel Paper. If any amount payable
-----------------------------------------
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper not constituting Investment Property, such
Instrument or Chattel Paper shall promptly be delivered to the Collateral Agent,
duly indorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
------------------------
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Collateral Agent
and (ii) insuring such Grantor, the Collateral Agent, the Agents and the Lenders
against liability for personal injury and property damage relating to such
Inventory, Equipment and Vehicles, such policies to comply with the requirements
of Section 6.5 of the Corporate Credit Agreement and to be in such form as may
be reasonably satisfactory to the Collateral Agent. The Collateral Agent
acknowledges that such policies in effect as of the date hereof are reasonably
satisfactory with respect to coverages, forms and amounts.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Collateral Agent of
written notice thereof, (ii) name the Collateral Agent as an additional insured
party or
13
loss payee, (iii) if reasonably requested by the Collateral Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Collateral Agent.
(c) The Borrower shall annually deliver to the Collateral Agent, the
Agents and the Lenders a renewal notice of a reputable insurance broker with
respect to such insurance at least 15 days prior to the expiration of such
insurance and reports of a reputable insurance broker with respect to such
insurance as the Collateral Agent may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.5 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest (to the extent the security
interest in such Collateral can be perfected by filing of one or more financing
statements or by possession of such Collateral by the Collateral Agent) having
at least the priority described in Section 4.3 and shall defend such security
interest against the claims and demands of all Persons whomsoever, except for
Permitted Liens.
(b) Such Grantor will furnish to the Collateral Agent, the Agents and
the Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of
the Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon 15 days' prior written notice to the Collateral Agent and delivery to the
Collateral Agent of (a) subject to Section 6.10(a) of the Corporate Credit
Agreement, all additional executed financing statements and other documents
requested by the Collateral Agent to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if applicable, a
written supplement to Schedule 5 showing any additional location at which
----------
Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on Schedule 5;
----------
14
(ii) change the location of its chief executive office or sole place
of business, as the case may be, from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Collateral Agent in
connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Collateral Agent, the
-------
Agents and the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Corporate Credit Agreement) on any of the Collateral which
would adversely affect the ability of the Collateral Agent to exercise any of
its remedies hereunder; and
(b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Pledged Securities. (a) If such Grantor shall become entitled
------------------
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer or any Investment Property, whether
in addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Collateral Agent, the Agents and the
Lenders, hold the same in trust for the Collateral Agent, the Agents and the
Lenders and deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by such Grantor to the Collateral Agent, if required,
together with an undated stock power covering such certificate duly executed in
blank by such Grantor and with, if the Collateral Agent so requests, signature
guaranteed, to be held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of the Pledged Securities upon the liquidation or dissolution of any
Issuer shall be paid over to the Collateral Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or in respect of the Pledged Securities or any
property shall be distributed upon or with respect to the Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the
Collateral Agent, be delivered to the Collateral Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged Securities
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Collateral Agent, hold such money or
property in trust for the Lenders, segregated from other funds of such Grantor,
as additional collateral security for the Obligations.
(b) Without the prior written consent of the Collateral Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Securities or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Corporate Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in favor
of, or any claim of any Person with respect to, any of the Pledged Securities or
Proceeds thereof, or any interest therein, except for the security interests
15
created by this Agreement or otherwise permitted by the Corporate Credit
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Collateral Agent to sell, assign or transfer
any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
------- --------
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Pledged Securities issued by it.
5.9 Receivables. (a) Other than in the ordinary course of business
-----------
consistent with industry standards, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Collateral Agent a copy of each
demand, notice or document received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the aggregate amount (for the
Grantors as a whole) of the then outstanding Receivables.
5.10 Intellectual Property. (a) Such Grantor (either itself or
---------------------
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods, if any, or services as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in full
force free from any claim of abandonment for non-use, (ii) maintain as in the
past the quality of products, if any, and services offered under such Trademark,
(iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any xxxx which is confusingly similar or a colorable imitation of
such Trademark unless the Collateral Agent, for the ratable benefit of the
Lenders, shall obtain a perfected security interest in such xxxx pursuant to
this Agreement, and (v) not do (and use commercially reasonable efforts to
prevent any licensee or sublicensee thereof from doing) any act or knowingly
omit to do any act whereby such Trademark may become invalidated or impaired in
any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not do (and will use commercially
reasonable efforts to prevent any licensee or sublicensee thereof from doing)
any act or knowingly omit to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired if such impairment would
have a Material Adverse Effect. Such Grantor will not (either itself or through
licensees) do any act whereby any material portion of the Copyrights may fall
into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any Intellectual Property to infringe the intellectual
property rights of any other Person if such infringement could reasonably be
expected to have a Material Adverse Effect.
16
(e) Such Grantor will promptly notify the Collateral Agent if it
knows of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material Intellectual Property
or such Grantor's right to register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Collateral Agent as part of the Borrower's quarterly Compliance
Certificate required pursuant to Section 6.2(b) of the Corporate Credit
Agreement with respect to the fiscal quarter in which such filing occurs. Upon
request of the Collateral Agent, such Grantor shall execute and deliver, and
have recorded, any and all agreements, instruments, documents, and papers as the
Collateral Agent may request to evidence the Collateral Agent's, the Agents' and
the Lenders' security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(g) Such Grantor will take all commercially reasonable steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
(i) Nothing contained in this Section 5.10 shall operate or be
construed to require any Grantor to initiate or file any new applications to
register any Trademark or Copyright.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Collateral
---------------------------------------
Agent shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Collateral
Agent may reasonably require in connection with such test verifications. At any
time and from time to time, upon the Collateral Agent's reasonable request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Collateral Agent to furnish to
the Collateral Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Collateral Agent hereby authorizes each Grantor to collect
such Grantor's Receivables, subject to the Collateral Agent's direction and
control, and the Collateral Agent may curtail or terminate said authority at any
time after the occurrence and during the continuance of an Event of
17
Default. If required by the Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default, any payments of Receivables,
when collected by any Grantor, (i) shall be forthwith (and, in any event, within
two Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Collateral Agent if required, in a Collateral
Account maintained under the sole dominion and control of the Collateral Agent,
subject to withdrawal by the Collateral Agent for the account of the Lenders
only as provided in Section 65, and (ii) until so turned over, shall be held by
such Grantor in trust for the Collateral Agent, the Agents and the Lenders,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(c) At the Collateral Agent's request, each Grantor shall deliver to
the Collateral Agent all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping
receipts, though such Grantor may retain copies thereof for its records.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Collateral Agent in its own name or in the name of others may at any time after
the occurrence and during the continuance of an Event of Default communicate
with obligors under the Receivables to verify with them to the Collateral
Agent's satisfaction the existence, amount and terms of any Receivables.
(b) Upon the request of the Collateral Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Collateral Agent for the ratable benefit of the Lenders and that payments in
respect thereof shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Collateral Agent, either Agent nor any Lender shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Collateral Agent,
either Agent or any Lender of any payment relating thereto, nor shall the
Collateral Agent, either Agent or any Lender be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Collateral Agent shall have given notice to
the relevant Grantor of the Collateral Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer, to the extent permitted in the
Corporate Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however, that no vote shall be cast
-------- -------
or corporate right exercised or other action taken which, in the Collateral
Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Corporate
Credit Agreement, this Agreement or any other Loan Document, the Synthetic
Guarantee or the Collateral Agent Agreement.
18
(b) If an Event of Default shall occur and be continuing and the
Collateral Agent shall give notice of its intent to exercise such rights to the
relevant Grantor or Grantors, (i) the Collateral Agent shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Pledged Securities and make application thereof to the Obligations in
such order as the Collateral Agent may determine in accordance with the
Collateral Agent Agreement, and (ii) any or all of the Pledged Securities shall
be registered in the name of the Collateral Agent or its nominee, and the
Collateral Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by any Grantor or
the Collateral Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Collateral Agent may determine), all without liability except
to account for property actually received by it, but the Collateral Agent shall
have no duty to any Grantor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing.
(c) Each Issuer acknowledges and consents to the pledge herein of the
Pledged Stock issued by it. Each Grantor hereby authorizes and instructs each
Issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply
with any instruction received by it from the Collateral Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Collateral Agent.
6.4 Proceeds to be Turned Over To Collateral Agent. In addition to
----------------------------------------------
the rights of the Collateral Agent, the Agents and the Lenders specified in
Sections 6.1 and 6.9 with respect to payments of Receivables, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Collateral Agent, the Agents and the Lenders,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Collateral Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Collateral Agent,
if required). All Proceeds received by the Collateral Agent hereunder shall be
held by the Collateral Agent in a Collateral Account maintained under its sole
dominion and control. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Collateral Agent, the
Agents and the Lenders) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 65.
6.5 Application of Proceeds. If an Event of Default shall have
-----------------------
occurred and be continuing, at any time at the Collateral Agent's election, the
Collateral Agent may apply all or any part of Proceeds held in any Collateral
Account in payment of the Obligations in such order as the Collateral Agent may
elect in accordance with the Collateral Agent Agreement, and any part of such
funds which the Collateral Agent elects not so to apply and deems not required
as collateral security for the Obligations shall be paid over from time to time
by the Collateral Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the
19
Commitments shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Collateral Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below or any notice otherwise expressly required in
the Loan Documents) to or upon any Grantor or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Collateral Agent, either Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Collateral Agent, either Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Collateral Agent's request, to assemble the Collateral
and make it available to the Collateral Agent at places which the Collateral
Agent shall reasonably select, whether at such Grantor's premises or elsewhere.
The Collateral Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Collateral Agent, the Agents and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the
Collateral Agent may elect in accordance with the Collateral Agent Agreement,
and only after such application and after the payment by the Collateral Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the New York UCC, need the Collateral Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Collateral Agent, either Agent or any Lender arising out of
the exercise by them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 days before such sale or
other disposition.
6.7 Registration Rights. (a) If the Collateral Agent shall
-------------------
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the opinion of the Collateral Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will
cause the Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Collateral Agent, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the opinion of the Collateral Agent, are necessary
or advisable, all in conformity with the requirements of the Securities Act and
the rules and
20
regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Collateral Agent may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Collateral Agent, the
Agents and the Lenders, that the Collateral Agent, the Agents and the Lenders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Corporate Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
------------------
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Collateral Agent, either Agent or any Lender to collect such deficiency.
6.9 Governmental Obligor Limited Receivables. Notwithstanding the
----------------------------------------
provisions of Section 6.1, the Collateral Agent shall not collect or enforce
payment of any Governmental Obligor Limited Receivable if and to the extent that
such collection or enforcement is prohibited under 42 U.S.C. (S)(S) 1395(g) or
1396(a) or under any comparable provision of federal or state law. To the
extent the Collateral Agent's rights as to any Governmental Obligor Limited
Receivable are limited pursuant to this Section 6.9, upon the occurrence and
during the continuation of an Event of Default, each Grantor will (i) use its
reasonable and diligent best efforts to collect and enforce payment of such
Governmental Obligor Limited Receivable, (ii) immediately deposit in the exact
form received, duly indorsed by such Grantor to the Collateral Agent if
required, in a Collateral Account maintained under the sole dominion and control
of the Collateral Agent, subject to withdrawal by the Collateral Agent for the
account of the Lenders only as provided in Section 65, and until so turned over,
shall be held by such Grantor in trust for the Collateral Agent, the Agents and
the Lenders, segregated from other funds of such Grantor and (iii) upon written
demand by the Collateral Agent at any time and from time to time, remit (and
cause the depository bank for such Collateral Account to remit) directly to the
Collateral Agent, as Proceeds of the
21
Collateral and for application to the payment of the Obligations pursuant to
Section 6.5, all finally collected funds on deposit in such Collateral Account.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc. (a)
-------------------------------------------------------
Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of such Grantor and in the name of such Grantor or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Grantor
hereby gives the Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Receivable or with respect
to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Collateral Agent may request to evidence the Collateral
Agent's, the Agents' and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (ii) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (iii) sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (iv) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (v) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (vi) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral Agent may
deem appropriate; (vii) assign any Copyright, Patent or Trademark (along
with the goodwill
22
of the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Collateral Agent shall in its sole discretion
determine; and (viii) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and do, at the Collateral Agent's option and such
Grantor's expense, at any time, or from time to time, all acts and things
which the Collateral Agent deems necessary to protect, preserve or realize
upon the Collateral and the Collateral Agent's, the Agents' and the
Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due ABR Loans under the Corporate Credit Agreement, from
the date of payment by the Collateral Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Collateral Agent on
demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Collateral Agent. The Collateral Agent's sole duty with
------------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, either Agent, any
Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent,
the Agents and the Lenders hereunder are solely to protect the Collateral
Agent's, the Agents' and the Lenders' interests in the Collateral and shall not
impose any duty upon the Collateral Agent, either Agent or any Lender to
exercise any such powers. The Collateral Agent, the Agents and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the New York UCC and any other applicable law, each Grantor authorizes the
Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Collateral
Agent reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this
23
Agreement. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.
7.4 Authority of Collateral Agent. Each Grantor acknowledges that
-----------------------------
the rights and responsibilities of the Collateral Agent under this Agreement
with respect to any action taken by the Collateral Agent or the exercise or non-
exercise by the Collateral Agent of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as among the Collateral Agent, the Agents and the Lenders, be
governed by the Corporate Credit Agreement or the Synthetic Guarantee (as the
case may be) and the Collateral Agent Agreement, and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with subsection 10.1 of the Corporate Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
-------
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 10.2 of the Corporate Credit Agreement; provided that
--------
any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 1 and provided,
---------- ---------
further, that each reference in such subsection to the Administrative Agent
--------
shall, for the purposes of this Section 8.2, be deemed to be a reference to the
Collateral Agent.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
---------------------------------------------------
Collateral Agent, either Agent nor any Lender shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Collateral Agent, either Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent,
either Agent or any Lender of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Collateral
Agent, such Agent or such Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
-------------------------------------
agrees to pay or reimburse each Lender, each Agent and the Collateral Agent for
all its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement, the other Loan Documents to which such Guarantor is
a party, the Synthetic Guarantee and the Collateral Agent Agreement, including,
without limitation, the fees and disbursements of counsel to each of the
Lenders, the Agents and the Collateral Agent.
24
(b) Each Guarantor agrees to pay, and to save the Collateral Agent,
the Agents and the Lenders and their respective officers, directors, trustees,
investment advisors, employees, affiliates, agents and controlling persons
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Collateral Agent,
the Agents and the Lenders and their respective officers, directors, trustees,
investment advisors, employees, affiliates, agents and controlling persons
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to subsection 10.5 of the Corporate Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Corporate Credit Agreement,
the other Loan Documents and the Synthetic Guarantee.
8.5 Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent, the Agents and the Lenders and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
--------
obligations under this Agreement without the prior written consent of the
Collateral Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
-------
Collateral Agent, the Agents and each Lender at any time and from time to time
during the continuance of an Event of Default, without prior notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Collateral Agent, such Agent or such Lender to or for the credit or
the account of such Grantor, or any part thereof in such amounts as the
Collateral Agent, such Agent or such Lender may elect, against and on account of
the obligations and liabilities of such Grantor to the Collateral Agent, such
Agent or such Lender hereunder and claims of every nature and description of the
Collateral Agent, such Agent or such Lender against such Grantor, in any
currency, whether arising hereunder, under the Corporate Credit Agreement, any
other Loan Document, the Synthetic Guarantee, the Collateral Agent Agreement or
otherwise, as the Collateral Agent, such Agent or such Lender may elect, whether
or not the Collateral Agent, either Agent or any Lender has made any demand for
payment and although such obligations, liabilities and claims may be contingent
or unmatured. The Collateral Agent, each Agent and each Lender shall notify
such Grantor promptly of any such set-off and the application made by the
Collateral Agent, such Agent or such Lender of the proceeds thereof, provided
--------
that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of the Collateral Agent, each Agent and each
Lender under this Section 8.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Collateral
Agent, such Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
25
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement, the other Loan Documents, the
-----------
Synthetic Guarantee and the Collateral Agent Agreement represent the agreement
of the Grantors, the Collateral Agent, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Collateral Agent, either
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein, in the other Loan Documents, the Synthetic
Guarantee or the Collateral Agent Agreement.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, the other Loan Documents to which it
is a party and the Synthetic Guarantee or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
26
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party and the Synthetic Guarantee;
(b) neither the Collateral Agent, either Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement, any of the other Loan Documents, the
Synthetic Guarantee or the Collateral Agent Agreement, and the relationship
between the Grantors, on the one hand, and the Collateral Agent, the Agents
and the Lenders, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or the Synthetic Guarantee or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Grantors
and the Lenders.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE SYNTHETIC GUARANTEE, OR THE
COLLATERAL AGENT AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
-------------------
required to become a party to this Agreement pursuant to subsection 6.10 of the
Corporate Credit Agreement shall become a Grantor for all purposes of this
Agreement and party to the Collateral Agent Agreement upon execution and
delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1
hereto.
8.16 Releases. (a) At such time as the Loans, the Reimbursement
--------
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding
(except, with respect to any outstanding Letter of Credit, to the extent a
corresponding Support Letter of Credit has been delivered to the Issuing Lender
of such Letter of Credit and delivery thereof has been confirmed in writing to
the Collateral Agent by such Issuing Lender), the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Collateral Agent
and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral, except any Support Letter of Credit, shall revert to the Grantors.
At the request and sole expense of any Grantor following any such termination,
the Collateral Agent shall deliver to such Grantor any Collateral held by the
Collateral Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Corporate Credit
Agreement, then the Collateral Agent, at the request and sole expense of such
Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Guarantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Corporate Credit Agreement;
provided that the Borrower shall have delivered to the Collateral Agent, at
--------
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Guarantor and the terms of the sale
or other disposition in reasonable detail, including the price thereof and any
expenses in connection
27
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Corporate Credit Agreement, the other Loan
Documents and the Synthetic Guarantee.
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
PARAGON HEALTH NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: Executive Vice President
and Chief Financial Officer
AMERICAN-CAL MEDICAL SERVICES, INC.
AMS GREEN TREE, INC.
AMS PROPERTIES, INC.
CONNERWOOD HEALTHCARE, INC.
COORDINATED HOME HEALTH SERVICES, INC.
CORNERSTONE HEALTH MANAGEMENT COMPANY
EH ACQUISITION CORP.
EH ACQUISITION CORP. II
EH ACQUISITION CORP. III
EVERGREEN HEALTHCARE, INC.
EVERGREEN HEALTHCARE LTD., L.P.
GC SERVICES, INC.
GCI BELLA VITA, INC.
GCI CAMELLIA CARE CENTER, INC.
GCI XXXXXX VILLAGE, INC.
GCI EAST VALLEY MEDICAL & REHABILITATION CENTER, INC.
GCI FAITH NURSING HOME, INC.
GCI HEALTH CARE CENTERS, INC.
GCI XXXXXX ACRES, INC.
GCI PALM COURT, INC.
GCI PRINCE XXXXXX, INC.
GCI REALTY, INC.
GCI REHAB, INC.
GCI SPRINGDALE VILLAGE, INC.
GCI THERAPIES, INC.
GCI VALLEY MANOR HEALTH CARE CENTER, INC.
GCI VILLAGE GREEN, INC.
GCI-CAL HEALTH CARE CENTERS, INC.
GCI-CAL THERAPIES COMPANY
GCI-WISCONSIN PROPERTIES, INC.
GRANCARE GPO SERVICES, INC.
GRANCARE HOME HEALTH SERVICES, INC.
GRANCARE, INC.
GRANCARE NURSING SERVICES AND HOSPICE, INC.
GRANCARE OF MICHIGAN, INC.
GRANCARE OF NORTH CAROLINA, INC.
GRANCARE OF NORTHERN CALIFORNIA, INC.
GRANCARE SOUTH CAROLINA, INC.
GRANCARE TRADING, INC.
HERITAGE OF LOUISIANA, INC.
HMI CONVALESCENT CARE, INC.
HOSTMASTERS, INC.
NATIONAL HERITAGE REALTY, INC.
OMEGA/INDIANA CARE CORPORATION
RENAISSANCE MENTAL HEALTH CENTER, INC.
STONECREEK MANAGEMENT COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: Vice President
AMERICAN PHARMACEUTICAL SERVICES, INC.
AMERICAN REHABILITY MANAGEMENT, INC.
AMERICAN REHABILITY SERVICES, INC.
AMERICAN SENIOR HEALTH SERVICES, INC.
APS HOLDING COMPANY, INC.
APS PHARMACY MANAGEMENT, INC.
XXXXX CENTER HEALTH & REHABILITATION/TAMPA, INC.
XXXXX CENTER HEALTH & RETIREMENT/ALLEGHANY, INC.
XXXXX CENTER HEALTH & RETIREMENT/XXXXXXX, INC.
XXXXX CENTER HEALTH & RETIREMENT/XXXXXXX, INC.
XXXXX CENTER MANAGEMENT CORPORATION
XXXXX CENTER NURSING CARE/AUSTELL, INC.
XXXXX CENTER NURSING CARE/FINCASTLE, INC.
XXXXX CENTER NURSING CARE/HICKORY, INC.
XXXXX CENTER NURSING CARE/POWDER SPRINGS, INC.
XXXXX CENTER OF ASHEBORO, INC.
XXXXX CENTER OF CENTRAL COLUMBIA, INC.
XXXXX CENTERS HEALTH & RETIREMENT/XXXXXXX, INC.
DEVCON HOLDING COMPANY
EXTENDED ACUTE HOSPITALS OF AMERICA, INC.
GULF COAST PHYSICAL THERAPY GROUP, INC.
HOME HEALTH MANAGEMENT ASSOCIATES OF AMERICA, INC.
HOMECARE ASSOCIATES OF AMERICA, INC.
HOSPICE ASSOCIATES OF AMERICA, INC.
HOSPICE CARE OF TENNESSEE, INC.
HOSPICE MANAGEMENT PARTNERS, INC.
LC MANAGEMENT COMPANY
LCA OPERATIONAL HOLDING COMPANY
LCR, INC.
LIVING CENTERS DEVELOPMENT COMPANY
LIVING CENTERS - EAST, INC.
LIVING CENTERS HOLDING COMPANY
LIVING CENTERS LTCP DEVELOPMENT COMPANY
LIVING CENTERS OF TEXAS, INC.
LIVING CENTERS - ROCKY MOUNTAIN, INC.
LIVING CENTERS - SOUTHEAST DEVELOPMENT CORPORATION
LIVING CENTERS - SOUTHEAST, INC.
MED-CARE SALES AND RENTALS, INC.
MED-THERAPY REHABILITATION SERVICES, INC.
PROFESSIONAL RX SYSTEMS, INC.
PROGRESSIVE CARE CENTERS OF AMERICA, INC.
REHABILITY HEALTH SERVICES, INC.
REHABILITY HOSPITAL SERVICES, INC.
THERACARE HOME HEALTH AGENCY, INC.
THERAPY MANAGEMENT INNOVATIONS, INC.
TOICA, INC.
WORKHEALTH HEALTHCARE MANAGEMENT INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Title: Vice President
Schedule 1
----------
NOTICE ADDRESSES OF GUARANTORS
Schedule 2
----------
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of Shares
----------------------------- ------------------- --------------------------------- -------------------
PLEDGED NOTES:
Issuer Payee Principal Amount
--------------------------------- ------------------- ------------------------------
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
See Annex A to this Schedule 3
Patent and Trademark Filings
----------------------------
Notice of the Collateral Agent's security interest in the Intellectual
Property listed on Schedule 6 shall be filed with the PTO and/or USCO,
as the case may be.
Schedule 4
----------
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
------- --------
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
Schedule 6
----------
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
Schedule 7
----------
EXISTING PRIOR LIENS
Annex 1 to
Guarantee and Collateral Agreement
----------------------------------
ASSUMPTION AGREEMENT, dated as of ________________, _____, made by
______________________________, a ______________ corporation (the "Additional
----------
Grantor"), in favor of THE CHASE MANHATTAN BANK, as collateral agent (in such
-------
capacity, the "Collateral Agent") for the Lenders. All capitalized terms not
----------------
defined herein shall have the meaning ascribed to them in the Guarantee and
Collateral Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Corporate Lenders, the Administrative Agent
and the Documentation Agent have entered into the Corporate Credit Agreement;
WHEREAS, FBTC, the Synthetic Lenders and the Synthetic Agent have
entered into the Synthetic Credit Agreement;
WHEREAS, in connection with the Corporate Credit Agreement and the
Synthetic Guarantee, the Borrower and certain of its Affiliates (other than the
Additional Grantor) have entered into the Guarantee and Collateral Agreement,
dated as of November 4, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Guarantee and Collateral Agreement"), in favor of the
----------------------------------
Collateral Agent for the benefit of the Lenders;
WHEREAS, the Corporate Credit Agreement requires the Additional
Grantor to become a party to the Guarantee and Collateral Agreement and to the
Collateral Agent Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement and the Collateral Agent Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Assumption Agreement, the Additional Grantor, as provided in Section 8.15
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder and to the Collateral
Agent Agreement, in each case with the same force and effect as if originally
named therein as a Grantor or a party thereto and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor under the Guarantee and Collateral Agreement and a
party to the Collateral Agent Agreement. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules ____________/*/
to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
_______________________________
* Refer to each Schedule which needs to be supplemented.
2
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:______________________
Name:
Title:
ACKNOWLEDGEMENT AND CONSENT*
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement, dated as of November 4, 1997 (the "Agreement"), made by
---------
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Collateral Agent. The undersigned agrees for the benefit of the Collateral
Agent, the Agents and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Collateral Agent promptly in writing of
the occurrence of any of the events described in Section 5.8(a) of the
Agreement.
3. The terms of Sections 6.3 and 6.7 of the Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
------- --------
pursuant to Section 6.3 or 6.7 of the Agreement.
[NAME OF ISSUER]
By _______________________________
Title ____________________________
Address for Notices:
__________________________________
__________________________________
Fax: _____________________________
* To be delivered by any Issuer which is not party to this Guarantee and
Collateral Agreement.
