Exhibit 10.2
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EXECUTION COPY
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COLLATERAL AND GUARANTEE AGREEMENT
dated as of
March 21, 2005
between
HEALTHSOUTH CORPORATION
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
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TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement.................................................1
SECTION 1.02. Other Defined Terms..............................................1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee 6
SECTION 2.02. Guarantee of Payment.............................................6
SECTION 2.03. No Limitations...................................................6
SECTION 2.04. Reinstatement....................................................7
SECTION 2.05. Agreement To Pay; Subrogation....................................7
SECTION 2.06. Information......................................................8
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge ..........................................................8
SECTION 3.02. Delivery of Pledged Intercompany Notes...........................9
SECTION 3.03. Representations, Warranties and Covenants........................9
SECTION 3.04. Certification of Limited Liability Company and
Limited Partnership Interests...................................10
SECTION 3.05. Voting Rights; Dividends and Interest...........................11
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest...............................................12
SECTION 4.02. Representations and Warranties..................................14
SECTION 4.03. Covenants 16
SECTION 4.04. Other Actions...................................................20
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral..22
ARTICLE V
Limitations on Obligations Guaranteed and Secured by the Subsidiary Parties
SECTION 5.01. Obligations Guaranteed and Secured by Subsidiary Parties........24
SECTION 5.02. Maintenance of Records..........................................25
ARTICLE VI
Remedies
SECTION 6.01. Remedies Upon Default...........................................25
SECTION 6.02. Application of Proceeds.........................................27
SECTION 6.03. Grant of License to Use Intellectual Property...................27
SECTION 6.04. Securities Act..................................................28
SECTION 6.05. Registration....................................................29
ARTICLE VII
Indemnity, Subrogation and Subordination
SECTION 7.01. Indemnity and Subrogation.......................................29
SECTION 7.02. Contribution and Subrogation....................................30
SECTION 7.03. Subordination...................................................30
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices ........................................................30
SECTION 8.02. Waivers; Amendment..............................................30
SECTION 8.03. Collateral Agent's Fees and Expenses; Indemnification...........31
SECTION 8.04. Successors and Assigns..........................................32
SECTION 8.05. Survival of Agreement...........................................32
SECTION 8.06. Counterparts; Effectiveness; Several Agreement..................32
SECTION 8.07. Severability....................................................32
SECTION 8.08. Right of Set-Off................................................33
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process......33
SECTION 8.10. WAIVER OF JURY TRIAL............................................34
SECTION 8.11. Headings .......................................................34
SECTION 8.12. Security Interest Absolute......................................34
SECTION 8.13. Termination or Release..........................................34
SECTION 8.14. Additional Subsidiaries.........................................35
SECTION 8.15. Collateral Agent Appointed Attorney-in-Fact.....................35
Schedules
Schedule I Pledged Stock; Debt Securities
Schedule II Intellectual Property
Schedule III Insurance Requirements
Schedule IV Commercial Tort Claims
Schedule V Limited Liability Company and Limited Partnership
Interest Certificates
Schedule VI Intercompany Indebtedness
Schedule VII Specified Borrower Litigation
Schedule VIII Specified Third Party Litigation
Exhibits
Exhibit I Form of Supplement
Exhibit II Form of Perfection Certificate
COLLATERAL AND GUARANTEE AGREEMENT dated as of
March 21, 2005, among HEALTHSOUTH CORPORATION, a Delaware
corporation (the "Borrower") and JPMORGAN CHASE BANK, N.A.,
as Collateral Agent.
Reference is made to the Amended and Restated Credit Agreement dated
as of March 21, 2005 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, JPMorgan Chase Bank,
N.A., as administrative agent and collateral agent, Wachovia Bank, National
Association, as syndication agent, and Deutsche Bank Trust Company Americas, as
documentation agent. The Lenders have agreed to extend credit to the Borrower
on the terms and subject to the conditions set forth in the Credit Agreement.
The obligations of the Lenders to extend such credit are conditioned upon,
among other things, the execution and delivery by the parties hereto of this
Agreement. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement (including the preamble hereto) and not otherwise defined herein have
the meanings specified in the Credit Agreement. All terms defined in the New
York UCC (as defined herein) and not defined in this Agreement or in the Credit
Agreement have the meanings specified therein; the term "instrument" shall have
the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of
the Credit Agreement shall also apply to this Agreement.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Account Debtor" means any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Article 9 Collateral" has the meaning assigned to such term in
Section 4.01.
"Cash Management Arrangements" means agreements and other arrangements
in respect of treasury, depository and other cash management services,
including cash pooling, zero balance and sweep accounts, purchasing card
accounts and intra-day and overdraft facilities and other similar facilities in
various currencies.
"Collateral" means Article 9 Collateral and Pledged Collateral.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any right to any Grantor under any copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" has the meaning assigned to such term in the
preliminary statement of this Agreement.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.
"Federal Securities Laws" has the meaning assigned to such term in
Section 6.04.
"General Intangibles" means all choses in action and causes of action,
all other intangible personal property of every kind and nature (other than
Accounts) now owned or hereafter acquired by any Grantor and all other "general
intangibles", as defined in the New York UCC (other than Accounts), including
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap
Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts.
"Grantors" means the Borrower and the Subsidiary Parties.
"Guarantors" means the Subsidiary Parties.
"Intellectual Property" means all intellectual and similar property of
every kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how,
show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party, including those listed on Schedule II.
"Loan Document Obligations" means (a) the due and punctual payment of
(i) the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of LC
Disbursements, interest thereon (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) and
obligations to provide cash collateral, and (iii) all other monetary
obligations of the Borrower to any of the Secured Parties under the Credit
Agreement and each of the other Loan Documents, including obligations to pay
fees, expense reimbursement obligations and indemnification obligations,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrower under or pursuant to the Credit
Agreement and each of the other Loan Documents, and (c) the due and punctual
payment and performance of all the obligations of each other Loan Party under
or pursuant to this Agreement and each of the other Loan Documents.
"New York UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"Obligations" means (a) the Loan Document Obligations and (b) the due
and punctual payment and performance of all obligations of each Loan Party
under each Swap Agreement and each Cash Management Arrangement that (i) is in
effect on the Amendment Effective Date with a counterparty that is a Lender or
an Affiliate of a Lender as of the Amendment Effective Date or (ii) is entered
into after the Amendment Effective Date with any counterparty that is a Lender
or an Affiliate of a Lender at the time such Swap Agreement is entered into;
provided, that notwithstanding the immediately preceding clause (b), the
Borrower shall not be obligated to pledge Collateral hereunder to secure any of
the obligations set forth in such clause (b) to the extent that such pledge is
not permitted under the Senior Subordinated Credit Agreement or any Restrictive
Indenture, after giving effect to all exceptions and baskets provided for in
the Senior Subordinated Credit Agreement and the Restrictive Indentures and all
prior utilization of such exceptions and baskets (other than any utilization
thereof under any Loan Document).
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"Patents" means all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule II, and (b)
all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.
"Perfection Certificate" means a certificate substantially in the form
of Exhibit II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.
"Permitted Restraint" means a right of first refusal at fair market
value with respect to Equity Interests of the Borrower that (i) are organized
after the Amendment Effective Date and (ii) constitute joint ventures of the
Borrower entered into in the ordinary course of business at least a majority of
whose revenues result from healthcare related businesses and facilities.
"Pledged Collateral" has the meaning assigned to such term in Section
3.01.
"Pledged Debt Securities" has the meaning assigned to such term in
Section 3.01.
"Pledged Intercompany Note" has the meaning assigned to such term in
Section 3.02.
"Pledged Securities" means any promissory notes, stock certificates or
other securities now or hereafter included in the Pledged Collateral, including
all certificates, instruments or other documents representing or evidencing any
Pledged Collateral.
"Pledged Stock" has the meaning assigned to such term in Section 3.01.
"Proceeds" has the meaning specified in Section 9-102 of the New York
UCC.
"Restrictive Indentures" means each Indenture that prohibits or
restricts the ability of any Subsidiary to Guarantee, or grant any Lien to
secure, any portion of the Obligations, which Indentures are specifically
identified on Schedule 1.01.A to the Credit Agreement, as such Indentures shall
be amended or supplemented from time to time (but without giving effect to any
amendment thereto after the date hereof that would impose additional
limitations on the ability of any Subsidiary Party or the Subsidiary Parties
collectively to guarantee or grant Liens to secure any Obligation).
"Secured Parties" means (a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent, (d) each Issuing Bank, (e) each counterparty to any
Swap Agreement with a Loan Party the obligations under which constitute
Obligations, (f) the beneficiaries of each indemnification obligation
undertaken by any Loan Party under any Loan Document, (g) any other Person to
which any Obligation is owed and (h) the successors and assigns of each of the
foregoing.
"Security Interest" has the meaning assigned to such term in Section
4.01.
"Senior Subordinated Credit Agreement" means the Senior Subordinated
Credit Agreement dated as of January 16, 2004, among the Borrower, the lenders
from time to time party thereto and Credit Suisse First Boston, as
administrative agent, syndication agent and arranger, as amended from time to
time (but without giving effect to any amendment thereto after the date hereof
that would impose additional limitations on the ability of any Subsidiary Party
or the Subsidiary Parties collectively to guarantee or grant Liens to secure
any Obligation).
"Specified Borrower Litigation" means litigation described in Schedule
VII.(1)
"Specified Deposit Accounts" means all concentration accounts,
investment accounts, automated clearing house accounts and similar accounts
maintained by the Borrower.
"Specified Third Party Litigation" means litigation described in
Schedule VIII.(2)
_____________________
(1) Specified Borrower Litigation will consist of claims brought by or on behalf
of the Borrower in connection with the restatement of its financial statements.
(2) Specified Third Party Litigation will consist of claims brought by third
parties against the Borrower in connection with the restatement of the
Borrower's financial statements.
"Subsidiary Parties" means the Subsidiaries that become parties to
this Agreement after the Amendment Effective Date.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark now or
hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office
or any similar offices in any State of the United States or any other country
or any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule II, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
ARTICLE II
Guarantee
SECTION 2.01. Guarantee. Subject, in the case of the Subsidiary
Parties, to Section 5.01, each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, the due and punctual payment and performance of the Obligations. Each
of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation. Each of the Guarantors waives presentment to, demand
of payment from and protest to the Borrower or any other Loan Party of any of
the Obligations, and also waives notice of acceptance of its guarantee and
notice of protest for nonpayment.
SECTION 2.02. Guarantee of Payment. Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had
by the Collateral Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.
SECTION 2.03. No Limitations. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 8.13 and as
set forth in Section 5.01, the obligations of each Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by (i) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any right or remedy under the provisions of any Loan Document or
otherwise; (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, any Loan Document or any other
agreement, including with respect to any other Guarantor under this Agreement;
(iii) the release of, or any impairment of or failure to perfect any Lien on or
security interest in, any security held by the Collateral Agent or any other
Secured Party for the Obligations or any of them; (iv) any default, failure or
delay, wilful or otherwise, in the performance of the Obligations; or (v) any
other act or omission that may or might in any manner or to any extent vary the
risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of
all the Obligations). Each Guarantor expressly authorizes the Secured Parties
to take and hold security in accordance with the provisions of this Agreement
for the payment and performance of the Obligations, to exchange, waive or
release any or all such security (with or without consideration), to enforce or
apply such security and direct the order and manner of any sale thereof in
their sole discretion or to release or substitute any one or more other
guarantors or obligors upon or in respect of the Obligations, all without
affecting the obligations of any Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each Guarantor
waives any defense based on or arising out of any defense of the Borrower or
any other Loan Party or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower or any other Loan Party, other than the indefeasible payment in full
in cash of all the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more
of them in accordance with the provisions of this Agreement by one or more
judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with the Borrower or any other Loan Party or exercise any
other right or remedy available to them against the Borrower or any other Loan
Party, without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Obligations have been fully and indefeasibly
paid in full in cash. To the fullest extent permitted by applicable law, each
Guarantor waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other Loan Party, as the case may be, or
any security.
SECTION 2.04. Reinstatement. Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower or any
other Loan Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral
Agent for distribution to the applicable Secured Parties in cash the amount of
such unpaid Obligation. Upon payment by any Guarantor of any sums to the
Collateral Agent as provided above, all rights of such Guarantor against the
Borrower or any other Loan Party arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subject to Article VII.
SECTION 2.06. Information. Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's and each other Loan
Party's financial condition and assets and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Collateral Agent or the other Secured Parties will have any duty to
advise such Guarantor of information known to it or any of them regarding such
circumstances or risks.
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge. Subject, in the case of each Grantor that is a
Subsidiary Party, to Section 5.01, as security for the payment or performance,
as the case may be, in full of the Obligations, each Grantor hereby assigns and
pledges to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, and hereby grants to the Collateral Agent, its successors
and assigns, for the benefit of the Secured Parties, a security interest in,
all of such Grantor's right, title and interest in, to and under (i) the shares
of capital stock and other Equity Interests owned by it on the date hereof
(including all such shares and Equity Interests listed on Schedule I) and any
other Equity Interests obtained in the future by such Grantor, and the
certificates representing all the foregoing shares and Equity Interests (the
"Pledged Stock"); provided that the Pledged Stock shall not include more than
65% of the issued and outstanding voting Equity Interests of any Foreign
Subsidiary; (ii) all debt securities or Indebtedness (including intercompany
Indebtedness) held by it on the date hereof (including all such debt securities
or Indebtedness listed on Schedule I) and any debt securities or Indebtedness
in the future issued to or held by such Grantor, and the promissory notes and
any other instruments evidencing such debt securities or Indebtedness (the
"Pledged Debt Securities"); (iii) all other property that may be pledged to the
Collateral Agent pursuant to the terms of this Section 3.01; (iv) all payments
of principal or interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of, in
exchange for or upon the conversion of, and all other Proceeds received in
respect of, the securities referred to in clauses (i) and (ii) above; (v) all
rights and privileges of such Grantor with respect to the securities and other
property referred to in clauses (i), (ii), (iii) and (iv) above; and (vi) all
Proceeds of any of the foregoing (the items referred to in clauses (i) through
(vi) above being collectively referred to as the "Pledged Collateral");
provided, however, that Pledged Collateral shall not include any Capital Stock
in any Subsidiary or other Person to the extent that a pledge of such Capital
Stock hereunder shall not be required by reason of the last paragraph of the
definition of "Collateral and Guarantee Requirement" in the Credit Agreement.
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, during the term of this Agreement; subject, however, to
the terms, covenants, conditions and termination and release provisions
hereinafter set forth.
SECTION 3.02. Delivery of Pledged Intercompany Notes. (a) Each Grantor
will cause any Indebtedness (other than Indebtedness under the Borrower's cash
management system) owed to such Grantor by any Affiliate of such Grantor to be
evidenced by a duly executed promissory note (a "Pledged Intercompany Note")
that is pledged and delivered to the Collateral Agent pursuant to the terms of
Section 3.01; provided that the Borrower shall not be required to comply with
this provision prior to the 30th day after the Amendment Effective Date.
(b) Upon delivery to the Collateral Agent, any Pledged Intercompany
Notes shall be accompanied by instruments of transfer reasonably satisfactory
to the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Intercompany
Notes shall be accompanied by a schedule describing such notes, which schedule
shall be attached hereto as Schedule I and made a part hereof; provided that
failure to attach any such schedule hereto shall not affect the validity of
such pledge of such Pledged Intercompany Notes. Each schedule so delivered
shall supplement any prior schedules so delivered.
(c) Schedule VI sets forth all Indebtedness owed to a Grantor by any
Affiliate of such Grantor as of December 31, 2003; and within 30 days after the
Amendment Effective Date, each Grantor shall provide a list of all such
Indebtedness owed to such Grantor as of December 31, 2004.
SECTION 3.03. Representations, Warranties and Covenants. The Grantors
jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule I correctly sets forth the percentage of the issued and
outstanding units of each class of the Equity Interests of the issuer thereof
represented by the Pledged Stock and includes all Equity Interests, debt
securities and promissory notes required to be pledged hereunder in order to
satisfy the Collateral and Guarantee Requirement;
(b) the Pledged Stock and Pledged Debt Securities have been duly and
validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged
Debt Securities, are legal, valid and binding obligations of the issuers
thereof;
(c) except for the security interests granted hereunder, each of the
Grantors (i) is and, subject to any transfers made in compliance with the
Credit Agreement, will continue to be the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule I as owned by such
Grantor, (ii) holds the same free and clear of all Liens, other than Liens
created by this Agreement, Liens permitted pursuant to Section 6.06 of the
Credit Agreement and transfers made in compliance with the Credit Agreement,
(iii) will make no assignment, pledge, hypothecation or transfer of, or create
or permit to exist any security interest in or other Lien on, the Pledged
Collateral, other than Liens created by this Agreement, Liens permitted
pursuant to Section 6.06 of the Credit Agreement and transfers made in
compliance with the Credit Agreement, and (iv) will defend its title or
interest thereto or therein against any and all Liens (other than the Lien
created by this Agreement and Liens permitted pursuant to Section 6.06 of the
Credit Agreement), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations imposed or permitted by
the Loan Documents, including restrictions and limitations permitted under
Section 6.07 of the Credit Agreement, or securities laws generally and except
for Permitted Restraints, the Pledged Collateral is and will continue to be
freely transferable and assignable, and none of the Pledged Collateral is or
will be subject to any option, right of first refusal, shareholders agreement,
charter or by-law provisions or contractual restriction of any nature that
might prohibit, impair, delay or otherwise affect the pledge of such Pledged
Collateral hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the validity of
the pledge effected hereby (other than such as have been obtained and are in
full force and effect);
(g) by virtue of the execution and delivery by the Grantors of this
Agreement, when (i) any Pledged Intercompany Notes are delivered to the
Collateral Agent in accordance with this Agreement or (ii) the appropriate
Uniform Commercial Code filings and other appropriate filings, recordings or
registrations prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in Schedule 2 to the
Perfection Certificate (or specified by notice from the Borrower to the
Collateral Agent after the Amendment Effective Date in the case of filings,
recordings or registrations required by Section 5.15 of the Credit Agreement)
are made with respect to the other Pledged Securities, the Collateral Agent
will obtain a legal, valid and perfected lien upon and security interest in the
Pledged Securities as security for the payment and performance of the
Obligations; and
(h) the pledge effected hereby is effective to vest in the Collateral
Agent, for the benefit of the Secured Parties, the rights of the Collateral
Agent in the Pledged Collateral as set forth herein.
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests. Each interest in any limited liability company or
limited partnership controlled by any Grantor and pledged hereunder shall not
be represented by a certificate, other than as set forth in Schedule V, and the
Loan Parties shall not take any action, or permit any action to be taken, that
could reasonably be expected to result in any such interest (i) constituting a
"security" within the meaning of Article 8 of the New York UCC or (ii)
otherwise being governed by Article 8 of the New York UCC.
SECTION 3.05. Voting Rights; Dividends and Interest. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.05 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of
this Agreement, the Credit Agreement and the other Loan Documents; provided
that such rights and powers shall not be exercised in any manner that could
reasonably be expected to materially and adversely affect the rights inuring
to a holder of any Pledged Securities or the rights and remedies of any of
the Collateral Agent or the other Secured Parties under this Agreement or
the Credit Agreement or any other Loan Document or the ability of the
Secured Parties to exercise the same.
(ii) The Collateral Agent shall promptly execute and deliver to each
Grantor, or cause to be promptly executed and delivered to such Grantor, all
such proxies, powers of attorney and other instruments as such Grantor may
reasonably request for the purpose of enabling such Grantor to exercise the
voting and/or consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or
distributed in respect of the Pledged Securities to the extent and only to
the extent that such dividends, interest, principal and other distributions
are permitted by, and otherwise paid or distributed in accordance with, the
terms and conditions of the Credit Agreement, the other Loan Documents and
applicable laws; provided that any noncash dividends, interest, principal or
other distributions that would constitute Pledged Stock or Pledged Debt
Securities, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the Pledged
Collateral, and, if received by any Grantor, shall not be commingled by such
Grantor with any of its other funds or property but shall be held separate
and apart therefrom and shall be held in trust for the benefit of the
Collateral Agent.
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.05, all
rights of any Grantor to dividends, interest, principal or other distributions
that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of
this Section 3.05 shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to receive and retain such dividends, interest, principal or
other distributions. All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of this Section 3.05 shall
be held in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Grantor and shall be forthwith delivered
to the Collateral Agent upon demand in the form in which so received (with any
necessary endorsement). Any and all money and other property paid over to or
received by the Collateral Agent pursuant to the provisions of this paragraph
(b) shall be retained by the Collateral Agent in an account to be established
by the Collateral Agent upon receipt of such money or other property and shall
be applied in accordance with the provisions of Section 6.02. After all Events
of Default have been cured or waived and the Borrower has delivered to the
Collateral Agent a certificate to that effect, the Collateral Agent shall
promptly repay to each Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be permitted
to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.05 that
shall remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.05, all
rights of any Grantor to exercise the voting and consensual rights and powers
it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.05,
and the obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 3.05, shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Grantors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.05 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one
or more of the Grantors at the same or different times and (iii) may suspend
the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its
sole and absolute discretion) and without waiving or otherwise affecting the
Collateral Agent's rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest. (a) Subject, in the case of each
Grantor that is a Subsidiary Party, to Section 5.01, as security for the
payment or performance, as the case may be, in full of the Obligations, each
Grantor hereby assigns and pledges to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, a security interest (the "Security Interest") in, all right, title or
interest in or to any and all of the following assets and properties 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 "Article 9 Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-Credit rights;
(xi) all rights and claims in respect of Federal, state or other
tax refunds;
(xii) all commercial tort claims set forth in Schedule IV;
(xiii) all books and records pertaining to the Article 9
Collateral; and
(xiv) 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.
Notwithstanding anything herein to the contrary, in no event shall (i)
Article 9 Collateral include any Capital Stock in any Subsidiary or other
Person to the extent that a pledge of such Capital Stock hereunder shall not be
required by reason of the last paragraph of the definition of "Collateral and
Guarantee Requirement" in the Credit Agreement or (ii) the Pledged Stock
include more than 65% of the issued and outstanding voting Equity Interests of
any Foreign Subsidiary.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that (i) indicate the
Collateral as all assets of such Grantor or words of similar effect as being of
an equal or lesser scope or with greater detail, and (ii) contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (a) whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor and (b) in
the case of a financing statement filed as a fixture filing or covering Article
9 Collateral constituting minerals or the like to be extracted or timber to be
cut, a sufficient description of the real property to which such Article 9
Collateral relates. Each Grantor agrees to provide such information to the
Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral Agent
to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting,
confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way alter
or modify, any obligation or liability of any Grantor with respect to or
arising out of the Article 9 Collateral.
SECTION 4.02. Representations and Warranties. The Grantors jointly and
severally represent and warrant to the Collateral Agent and the Secured Parties
that:
(a) Each Grantor has good and valid rights in and title to the Article
9 Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Collateral
Agent, for the benefit of the Secured Parties, the Security Interest in such
Article 9 Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval that has
been obtained.
(b) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Grantor, is correct and complete as of the Amendment Effective Date.
The Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations prepared
by the Collateral Agent based upon the information provided to the Collateral
Agent in the Perfection Certificate for filing in each governmental, municipal
or other office specified in Schedule 2 to the Perfection Certificate (or
specified by notice from the Borrower to the Collateral Agent after the
Amendment Effective Date in the case of filings, recordings or registrations
required by Section 6.15 of the Credit Agreement), are all the filings,
recordings and registrations (other than filings required to be made in the
United States Patent and Trademark Office and the United States Copyright
Office in order to perfect the Security Interest in Article 0 Xxxxxxxxxx
xxxxxxxxxx xx Xxxxxx Xxxxxx Patents, Trademarks and Copyrights) that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral Agent
(for the benefit of the Secured Parties) in respect of all Article 9 Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements. Each Grantor represents and warrants that a
fully executed copy of this Agreement, containing a description of all Article
9 Collateral consisting of Intellectual Property with respect to United States
Patents and United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and United States
registered Copyrights, has been delivered to the Collateral Agent for recording
by the United States Patent and Trademark Office and the United States
Copyright Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C.
ss. 205 and the regulations thereunder, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction, to protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent (for the benefit of the Secured Parties) in
respect of all Article 9 Collateral consisting of registered or issued Patents,
Trademarks and Copyrights in which a security interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to
perfect the Security Interest with respect to any Article 9 Collateral
consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).
(c) The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance
of the Obligations (or such part thereof as shall be secured as provided in
Section 5.01), (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the
Uniform Commercial Code or other applicable law in such jurisdictions and (iii)
subject to the filings described in Section 4.02(b), a security interest that
shall be perfected in all Article 9 Collateral in which a security interest may
be perfected upon the receipt and recording of this Agreement with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction. The Security Interest is and shall be prior to any
other Lien on any of the Article 9 Collateral, other than Permitted Liens that
have priority as a matter of law.
(d) The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.06 of
the Credit Agreement. None of the Grantors has filed or consented to the filing
of (i) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Article 9 Collateral,
(ii) any assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with the
United States Patent and Trademark Office or the United States Copyright
Office, other than Liens permitted pursuant to Section 6.06 of the Credit
Agreement, or (iii) any assignment in which any Grantor assigns any Article 9
Collateral or any security agreement or similar instrument covering any Article
9 Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.06 of the Credit Agreement.
SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify
the Collateral Agent in writing of any change (i) in corporate name, (ii) in
its identity or type of organization or corporate structure, (iii) in its
Federal Taxpayer Identification Number or organizational identification number
or (iv) in its jurisdiction of organization. Each Grantor agrees to promptly
provide the Collateral Agent with certified organizational documents reflecting
any of the changes described in the first sentence of this paragraph. Each
Grantor agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Collateral Agent to continue at
all times following such change to have a valid, legal and perfected first
priority security interest in all the Article 9 Collateral. Each Grantor agrees
promptly to notify the Collateral Agent if any material portion of the Article
9 Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Article 9 Collateral owned by
it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Article 9 Collateral, and, at such time or times as
the Collateral Agent may reasonably request, promptly to prepare and deliver to
the Collateral Agent a duly certified schedule or schedules in form and detail
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Article 9 Collateral.
(c) Each year, upon the request of the Collateral Agent, at the time
of delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.01(a) of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (i) setting forth the information
required pursuant to the Perfection Certificate or confirming that there has
been no change in such information since the date of such certificate or the
date of the most recent certificate delivered pursuant to this Section 4.03(c)
and (ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings
recordings or registrations, including all refilings, recordings and
registrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) of this Section 4.03 to the
extent necessary to protect any perfect the Security Interest for a period of
not less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period). Each certificate delivered pursuant to this Section 4.03(c) shall
identify in the format of Schedule II all registered or applied for
Intellectual Property of any Grantor in existence on the date thereof and not
then listed on such Schedules or previously so identified to the Collateral
Agent.
(d) Each Grantor shall, at its own expense, take any and all actions
reasonably necessary to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent in the
Article 9 Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 6.06 of the Credit Agreement.
(e) Except as otherwise agreed to in Section 3.02, each Grantor
agrees, at its own expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all such actions
as the Collateral Agent may from time to time reasonably request to better
assure, preserve, protect and perfect the Security Interest and the rights and
remedies created hereby, including the payment of any fees and taxes required
in connection with the execution and delivery of this Agreement, the granting
of the Security Interest and the filing of any financing statements (including
fixture filings) or other documents in connection herewith or therewith.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II or adding additional
schedules hereto to specifically identify any asset or item that may constitute
registered or applied for Copyrights, Licenses, registered or applied for
Patents or registered or applied for Trademarks; provided that any Grantor
shall have the right, exercisable within 10 Business Days after it has been
notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral. Each Grantor agrees that it will use its reasonable efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
(f) The Collateral Agent and such Persons as the Collateral Agent may
reasonably designate shall have the right, at the Grantors' own cost and
expense and with at least 10 Business Days prior notice, to inspect the Article
9 Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Article 9 Collateral is
located, to discuss the Grantors' affairs with the officers of the Grantors and
their independent accountants and to verify under reasonable procedures, in
accordance with Section 5.07 of the Credit Agreement, the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Article 9 Collateral, including, in the case of Accounts or Article 9
Collateral in the possession of any third person, by contacting Account Debtors
or the third person possessing such Article 9 Collateral for the purpose of
making such a verification, provided that (i) such inspection, discussion and
verification shall be during normal business hours and shall not be materially
disruptive to the business of the applicable Grantor, (ii) unless a Default or
Event of Default shall have occurred and be continuing, there shall be no more
than four separate instances of such inspections, discussions and verifications
in any calendar year and (iii) no prior notice in respect of any such
inspections, discussions and verifications shall be required if a Default or
Event of Default shall have occurred and be continuing. The Collateral Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party.
(g) At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not permitted
pursuant to Section 6.06 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided that nothing in this
paragraph shall be interpreted as excusing any Grantor from the performance of,
or imposing any obligation on the Collateral Agent or any Secured Party to cure
or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan
Documents.
(h) If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent; provided that this requirement shall not
apply to security interests that, in the aggregate, apply to property with a
value of $1,000,000 or less. Such assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest
against creditors of and transferees from the Account Debtor or other Person
granting the security interest.
(i) Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.
(j) Except as permitted by the Credit Agreement, this Agreement or any
other Loan Document, none of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral, shall grant
any other Lien in respect of the Article 9 Collateral or make or permit to be
made any transfer of the Article 9 Collateral, and the Article 9 Collateral
owned by each Grantor shall remain at all times in possession of the Borrower
or a Subsidiary of the Borrower; provided, however, that if the Collateral
Agent shall notify the Grantors that an Event of Default shall have occurred
and be continuing, during the continuance thereof the Grantors shall not sell,
convey, lease, assign, transfer or otherwise dispose of any Article 9
Collateral (which notice may be given by telephone if promptly confirmed in
writing). Without limiting the generality of the foregoing, each Grantor agrees
that it shall not permit any Inventory (other than Inventory that, in the
aggregate, has a value of $1,000,000 or less) to be in the possession or
control of any warehouseman, agent, bailee, or processor at any time unless
such warehouseman, bailee, agent or processor shall have been notified of the
Security Interest and shall have acknowledged in writing, in form and substance
reasonably satisfactory to the Collateral Agent, that such warehouseman, agent,
bailee or processor holds the Inventory for the benefit of the Collateral Agent
subject to the Security Interest and shall act upon the instructions of the
Collateral Agent without further consent from the Grantor, and that such
warehouseman, agent, bailee or processor further agrees to waive and release
any Lien held by it with respect to such Inventory, whether arising by
operation of law or otherwise.
(k) None of the Grantors will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of any Accounts
included in the Article 9 Collateral, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, compromises, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent
with its current practices and in accordance with such prudent and standard
practice used in industries that are the same as or similar to those in which
such Grantor is engaged.
(l) The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Schedule III hereto
and Section 6.05 of the Credit Agreement. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent (and attorney-in-fact) for the purpose, during the continuance of an
Event of Default, of making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Grantors hereunder or any Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take
any other actions with respect thereto as the Collateral Agent deems advisable.
All sums disbursed by the Collateral Agent in connection with this paragraph,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.
(m) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
SECTION 4.04. Other Actions. In order to further ensure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security Interest, each Grantor agrees, in each case at such
Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
(a) Deposit Accounts. For each Specified Deposit Account that any
Grantor at any time opens or maintains, such Grantor shall, cause the
depositary bank to agree to comply with instructions from the Collateral Agent
to such depositary bank directing the disposition of funds from time to time
credited to such Specified Deposit Account, without further consent of such
Grantor or any other Person, pursuant to an agreement satisfactory to the
Collateral Agent. The Collateral Agent agrees with each Grantor that the
Collateral Agent shall not give any such instructions or withhold any
withdrawal rights from any Grantor unless an Event of Default has occurred and
is continuing, or, after giving effect to any withdrawal would occur. The
provisions of this paragraph shall not apply to (A) any deposit account for
which any Grantor, the depositary bank and the Collateral Agent have entered
into a cash collateral agreement specially negotiated among such Grantor, the
depositary bank and the Collateral Agent for the specific purpose set forth
therein and (B) deposit accounts for which the Collateral Agent is the
depositary.
(b) Investment Property. Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any Pledged
Intercompany Notes, such Grantor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer
or assignment duly executed in blank as the Collateral Agent may from time to
time specify; provided, that the Borrower shall not be required to comply with
this provision until the 30th day after the Amendment Effective Date. With
respect to any securities now or hereafter acquired by any Grantor, such
Grantor shall promptly notify the Collateral Agent thereof and, at the
Collateral Agent's request and option, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, either (i) cause the
issuer to agree to comply with instructions from the Collateral Agent as to
such securities, without further consent of any Grantor or such nominee, or
(ii) arrange for the Collateral Agent to become the registered owner of the
securities. If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by any Grantor are held by such
Grantor or its nominee through a securities intermediary or commodity
intermediary, such Grantor shall promptly notify the Collateral Agent thereof
and, at the Collateral Agent's request and option, pursuant to an agreement in
form and substance reasonably satisfactory to the Collateral Agent, either (i)
cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other instructions
from the Collateral Agent to such securities intermediary as to such security
entitlements, or (as the case may be) to apply any value distributed on account
of any commodity contract as directed by the Collateral Agent to such commodity
intermediary, in each case without further consent of any Grantor or such
nominee, or (ii) in the case of Financial Assets or other Investment Property
held through a securities intermediary, arrange for the Collateral Agent to
become the entitlement holder with respect to such investment property, with
the Grantor being permitted, only with the consent of the Collateral Agent, to
exercise rights to withdraw or otherwise deal with such investment property.
The requirements set forth in the two immediately preceding sentences shall not
apply to securities acquired or held by the Grantors which, in the aggregate,
have a value of $1,000,000 or less. The Collateral Agent agrees with each of
the Grantors that the Collateral Agent shall not give any such entitlement
orders or instructions or directions to any such issuer, securities
intermediary or commodity intermediary, and shall not withhold its consent to
the exercise of any withdrawal or dealing rights by any Grantor, unless an
Event of Default has occurred and is continuing, or, after giving effect to any
such investment and withdrawal rights would occur. The provisions of this
paragraph shall not apply to any financial assets credited to a securities
account for which the Collateral Agent is the securities intermediary.
(c) Electronic Chattel Paper and Transferable Records. If any Grantor
at any time holds or acquires an interest in any electronic chattel paper or
any "transferable record," as that term is defined in Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request of the Collateral Agent, shall take such action as
the Collateral Agent may reasonably request to vest in the Collateral Agent
control under New York UCC Section 9-105 of such electronic chattel paper or
control under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record; provided that this requirement shall not apply to any such
interests in electronic chattel paper or transferable records which, in the
aggregate, have a value of $1,000,000 or less. The Collateral Agent agrees with
such Grantor that the Collateral Agent will arrange, pursuant to procedures
reasonably satisfactory to the Collateral Agent and so long as such procedures
will not result in the Collateral Agent's loss of control, for the Grantor to
make alterations to the electronic chattel paper or transferable record
permitted under UCC Section 9-105 or, as the case may be, Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act for a party in control to allow
alterations without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by such
Grantor with respect to such electronic chattel paper or transferable record.
(d) Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of such
Grantor, such Grantor shall promptly notify the Collateral Agent thereof and,
at the request and option of the Collateral Agent, such Grantor shall, pursuant
to an agreement in form and substance reasonably satisfactory to the Collateral
Agent, either (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Collateral Agent of the proceeds of
any drawing under the letter of credit or (ii) arrange for the Collateral Agent
to become the transferee beneficiary of the letter of credit, with the
Collateral Agent agreeing, in each case, that the proceeds of any drawing under
the letter of credit are to be paid to the applicable Grantor unless an Event
of Default has occurred or is continuing; provided that this requirement shall
not apply to all such letters of credit which, in the aggregate, are in an
amount of $1,000,000 or less.
(e) Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to exceed
$1,000,000 the Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor including a summary description of such claim
and grant to the Collateral Agent in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Collateral
Agent; provided that, unless an Event of Default shall have occurred and be
continuing, (i) upon delivery of a certificate of a Financial Officer to the
Collateral Agent setting forth the amount of any monetary judgments,
settlements and costs associated therewith of the Borrower or any Subsidiary
resulting from any Specified Third Party Litigation and stating the amount of
any proceeds from any Specified Borrower Litigation that the Borrower or any
Subsidiary will apply to the payment of such judgments, settlements and
associated costs, the Borrower shall be permitted to apply such amount of such
proceeds against such judgments, settlements and associated costs and all
security interests and other rights of the Collateral Agent in such amount of
such proceeds shall be automatically released and terminated upon such
application thereof and (ii) upon delivery of a certificate of a Financial
Officer to the Collateral Agent stating the claims of the Borrower or any
Subsidiary under the Specified Borrower Litigations that the Borrower or any
Subsidiary will assign in connection with the settlement of any Specified Third
Party Litigation, the Borrower shall be permitted to make such assignments and
all security interests and other rights of the Collateral Agent in such claims
shall be automatically released and terminated upon such assignments thereof.
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not do any act, or omit to do
any act, (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act) whereby any Patent that
is material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to xxxx any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
valid claim of abandonment or invalidity for non-use, (ii) maintain the quality
of products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a material Copyright, continue to
publish, reproduce, display, adopt and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
maximum rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any materially adverse determination or development (including
the institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office, United States Copyright
Office or any court or similar office of any country) regarding such Grantor's
ownership of any Patent, Trademark or Copyright, its right to register the
same, or its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark
or Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or
any office or agency in any political subdivision of the United States or in
any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest in such Patent, Trademark or Copyright, and each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.
(f) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct
of any Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly xxx for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Article 9 Collateral.
(h) Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License
or Trademark License to effect the assignment of all such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Limitations on Obligations Guaranteed and Secured
by Subsidiary Parties
SECTION 5.01. Obligations Guaranteed and Secured by Subsidiary
Parties. Notwithstanding any other provision of this Agreement, for so long as
the Senior Subordinated Credit Agreement or any Restrictive Indenture shall
remain in effect, (a) no Obligation shall be guaranteed or secured by any Lien
granted by a Subsidiary Party to the extent that the guaranteeing or securing
of such Obligation by such Subsidiary Party would be prohibited by the Senior
Subordinated Credit Agreement or such Restrictive Indenture and (b) the amount
of the Obligations guaranteed or secured by Liens granted by any Subsidiary
Party or by all the Subsidiary Parties shall not exceed the maximum amount of
the Obligations that can be so guaranteed or secured without violation of the
Senior Subordinated Credit Agreement or such Restrictive Indenture. If at any
time after the date hereof any Obligations that could not theretofore be
guaranteed or secured by any Lien granted by a Subsidiary Party may be so
guaranteed or secured without violation of the Senior Subordinated Credit
Agreement or any Restrictive Indenture, or the amount of the Obligations that
can be guaranteed or secured by Liens granted by any Subsidiary Party or by all
the Subsidiary Parties without violation of the Senior Subordinated Credit
Agreement or any Restrictive Indenture shall increase, in either case by reason
of (a) the termination of the Senior Subordinated Credit Agreement or any
Restrictive Indenture or any provisions therein, (b) any amendment of or waiver
under the Senior Subordinated Credit Agreement or any Restrictive Indenture,
(c) any increase in any basket or exception (including any basket or exception
for Restricted Payments, as defined in the Senior Subordinated Credit Agreement
or any Restrictive Indenture) as a result of the financial performance of the
Borrower and the Subsidiaries or otherwise, (d) any increase in the outstanding
amount of any Obligations or (e) any other event or condition, the amount of
the outstanding Obligations guaranteed or secured by Liens granted by the
Subsidiary Parties shall be simultaneously and automatically increased to the
maximum amount permitted to be so guaranteed or secured. No amount of
Obligations that shall be guaranteed or secured by Liens granted by any
Subsidiary Party in accordance with the foregoing provisions of this Article
shall at any time cease to be so guaranteed or secured as a result of (a) any
subsequent amendment of or waiver under the Senior Subordinated Credit
Agreement or any Restrictive Indenture, (b) any subsequent change in the amount
of any basket or exception under the Senior Subordinated Credit Agreement or
any Restrictive Indenture or (c) any other event or condition; provided, that
(i) if the outstanding amount of the Obligations shall be reduced below the
amount permitted to be guaranteed or secured by Liens granted by the Subsidiary
Parties and shall later be increased, the newly incurred Obligations will be
guaranteed and secured by Liens granted by the Subsidiary Parties only to the
extent permitted under the Senior Subordinated Credit Agreement and the
Restrictive Indentures at the time of such increase or thereafter (but without
giving effect to any amendment to the Senior Subordinated Credit Agreement or
any Restrictive Indenture after the date hereof that reduces the amount of the
Obligations that can be guaranteed or secured) and (ii) if the Borrower shall
make any Restricted Payment (as defined in the Senior Subordinated Credit
Agreement or any Restrictive Indenture) permitted under Section 6.02, 6.03(b),
6.09(a) or 6.09(b) of the Credit Agreement, the amount of the Obligations
guaranteed or secured by Liens granted by the Subsidiary Parties shall be
automatically reduced at the time such Restricted Payment is made to the
extent, and only to the extent, required to permit such Restricted Payment to
be made without violation of the Senior Subordinated Credit Agreement or any
Restrictive Indenture.
SECTION 5.02. Maintenance of Records. The Borrower and the Subsidiary
Parties will at all times maintain records that will permit the Obligations
that are at any time guaranteed or secured by Liens granted by Subsidiary
Parties in accordance with Section 5.01 and the other provisions of this
Agreement to be identified and quantified, and will make such records available
to the Collateral Agent and each Lender upon request.
ARTICLE VI
Remedies
SECTION 6.01. Remedies Upon Default. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Article 9 Collateral by the applicable Grantors to the Collateral
Agent, or to license or sublicense, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any such Article 9 Collateral
throughout the world on such terms and conditions and in such manner as the
Collateral Agent shall determine (other than in violation of any applicable
laws or regulations or then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Article 9 Collateral and without liability for trespass to enter any premises
where the Article 9 Collateral may be located for the purpose of taking
possession of or removing the Article 9 Collateral and, generally, to exercise
any and all rights afforded to a secured party under the Uniform Commercial
Code or other applicable law. Without limiting the generality of the foregoing,
each Grantor agrees that the Collateral Agent shall have the right, subject to
the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral at a public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale of securities (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any sale of Collateral
shall hold the property sold absolutely, free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
law) all rights of redemption, stay and appraisal which such Grantor now has or
may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or
places as the Collateral Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral , or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine. The Collateral Agent shall
not be obligated to make any sale of any Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of such Collateral shall
have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which the same
was so adjourned. In case any sale of all or any part of the Collateral is made
on credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold again
upon like notice. At any public (or, to the extent permitted by law, private)
sale made pursuant to this Agreement, any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section 6.01 shall be deemed to conform
to the commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall
apply the proceeds of any collection or sale of Collateral, including any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement, any other Loan Document
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations secured by
such Collateral (the amounts so applied to be distributed among the
Secured Parties pro rata in accordance with the amounts of such
Obligations owed to them on the date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use of
such license by the Collateral Agent may be exercised, at the option of the
Collateral Agent, solely upon the occurrence and during the continuation of an
Event of Default; provided that any license, sublicense or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon the Grantors notwithstanding any subsequent cure of an Event of Default.
SECTION 6.04. Securities Act. In view of the position of the Grantors
in relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Collateral,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Grantor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Collateral, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Grantor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions.
In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Collateral at a price that the Collateral Agent, in its sole and absolute
discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached. The provisions of this
Section 6.04 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 6.05. Registration. Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Collateral at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its reasonable efforts to take or to cause the issuer
of such Pledged Collateral to take such action and prepare, distribute and/or
file such documents, as are required or advisable in the reasonable opinion of
counsel for the Collateral Agent to permit the public sale of such Pledged
Collateral. Each Grantor further agrees to indemnify, defend and hold harmless
the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including reasonable
fees and expenses to the Collateral Agent of legal counsel), and claims
(including the costs of investigation) that they may incur insofar as such
loss, liability, expense or claim arises out of or is based upon any alleged
untrue statement of a material fact contained in any prospectus (or any
amendment or supplement thereto) or in any notification or offering circular,
or arises out of or is based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements in any
thereof not misleading, except insofar as the same may have been caused by any
untrue statement or omission based upon information furnished in writing to
such Grantor or the issuer of such Pledged Collateral by the Collateral Agent
or any other Secured Party expressly for use therein. Each Grantor further
agrees, upon such written request referred to above, to use its reasonable
efforts to qualify, file or register, or cause the issuer of such Pledged
Collateral to qualify, file or register, any of the Pledged Collateral under
the Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Grantor will bear all costs and
expenses of carrying out its obligations under this Section 6.05. Each Grantor
acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 6.05 and that such failure would not
be adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 6.05 may be specifically enforced.
ARTICLE VII
Indemnity, Subrogation and Subordination
SECTION 7.01. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 7.03), the Borrower agrees that (a) in the event a
payment of an obligation shall be made by any Guarantor under this Agreement,
the Borrower shall indemnify such Guarantor for the full amount of such payment
and such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Grantor shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part an obligation owed to any
Secured Party, the Borrower shall indemnify such Grantor in an amount equal to
the greater of the book value or the fair market value of the assets so sold.
SECTION 7.02. Contribution and Subrogation. Each Subsidiary Party (a
"Contributing Party") agrees (subject to Section 7.03) that, in the event a
payment shall be made by any other Subsidiary Party hereunder in respect of any
Obligation or assets of any other Subsidiary Party shall be sold pursuant to
any Security Document to satisfy any Obligation owed to any Secured Party and
such other Subsidiary Party (the "Claiming Party") shall not have been fully
indemnified by the Borrower as provided in Section 7.01, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Party on the date hereof
and the denominator shall be the aggregate net worth of all the Subsidiary
Party on the date hereof (or, in the case of any Subsidiary Party becoming a
party hereto pursuant to Section 8.14, the date of the supplement hereto
executed and delivered by such Subsidiary Party). Any Contributing Party making
any payment to a Claiming Party pursuant to this Section 7.02 shall be
subrogated to the rights of such Claiming Party under Section 7.01 to the
extent of such payment.
SECTION 7.03. Subordination. (a) Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 7.01 and 7.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Obligations. No failure on the
part of the Borrower or any Guarantor or Grantor to make the payments required
by Sections 7.01 and 7.02 (or any other payments required under applicable law
or otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor or Grantor with respect to its obligations hereunder, and each
Guarantor and Grantor shall remain liable for the full amount of the
obligations of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all Indebtedness and
other monetary obligations owed by it to any other Guarantor, Grantor or any
other Subsidiary shall be fully subordinated to the indefeasible payment in
full in cash of the Obligations.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Party shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 8.02. Waivers; Amendment. (a) No failure or delay by the
Collateral Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent, each Issuing
Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section 8.02, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed
as a waiver of any Default, regardless of whether the Collateral Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time. No notice or demand on any Loan Party in any case shall entitle any
Loan Party to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 8.03. Collateral Agent's Fees and Expenses; Indemnification.
(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.03 of
the Credit Agreement.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
to any of the foregoing agreement or instrument contemplated hereby, or to the
Collateral, (including any such claim, litigation, investigation or proceeding
brought by or on behalf of any Grantor, Guarantor or any Related Party of a
Grantor or Guarantor) whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8.03 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party. All amounts due
under this Section 8.03 shall be payable on written demand therefor.
SECTION 8.04. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Guarantor, Grantor or the Collateral
Agent that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
SECTION 8.05. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any fee or any other
amount payable under any Loan Document is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or
terminated.
SECTION 8.06. Counterparts; Effectiveness; Several Agreement. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute single contract.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement. This Agreement shall become effective as to any Loan Party
when a counterpart hereof executed on behalf of such Loan Party shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding
upon such Loan Party and the Collateral Agent and their respective permitted
successors and assigns, and shall inure to the benefit of such Loan Party, the
Collateral Agent and the other Secured Parties and their respective successors
and assigns, except that no Loan Party shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This
Agreement shall be construed as a separate agreement with respect to each Loan
Party and may be amended, modified, supplemented, waived or released with
respect to any Loan Party without the approval of any other Loan Party and
without affecting the obligations of any other Loan Party hereunder.
SECTION 8.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8.08. Right of Set-Off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of
any Subsidiary Party against any of and all the obligations of such Subsidiary
Party now or hereafter existing under this agreement owed to such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section 8.08 are in addition to other rights and
remedies (including other rights of set-off) which such Lender may have.
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Loan Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Collateral Agent, any Issuing Bank or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or Guarantor, or its
properties in the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section
8.09. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.10.
SECTION 8.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest, the grant of a security interest in the
Pledged Collateral and all obligations of each Grantor and Guarantor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place
of payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument, (c)
any exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor or Guarantor in respect of the Obligations or this
Agreement.
SECTION 8.13. Termination or Release. (a) This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate automatically hereunder and all rights to the
Collateral shall automatically revert to the Grantors with no further action on
the part of any Person when all the Obligations have been indefeasibly paid in
full and the Lenders have no further commitment to lend under the Credit
Agreement, the LC Exposure has been reduced to zero and each Issuing Bank has
no further obligations to issue Letters of Credit under the Credit Agreement
and, as of such date, the Collateral Agent shall be deemed to have authorized
each Grantor to file financing statements, including amendments and
terminations, to evidence such termination.
(b) Any Subsidiary Party shall be released from its obligations
hereunder, and the Liens created hereunder in any Collateral shall be released,
as provided in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Grantor, at such Grantor's expense, all documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 8.13 shall be without recourse
to or warranty by the Collateral Agent.
(d) Upon any disposition of property permitted by the Credit Agreement
and subject to all applicable requirements of the Credit Agreement (including
the requirements set forth in the proviso in the definition of "Credit Support
Subsidiaries" in the Credit Agreement), (i) the Security Interest granted
herein on such property shall be automatically released in accordance with
Section 9.14 of the Credit Agreement and (ii) the Collateral Agent shall as of
such date be deemed to have authorized the filing of financing statement
amendments to evidence the foregoing release. The Collateral Agent shall
further execute and deliver to any Grantor, at such Grantor's expense, all
documents that such Grantor shall reasonably request to evidence such release.
SECTION 8.14. Additional Subsidiaries. Subsidiaries of the Company may
from time to time be required to enter into this Agreement as a Subsidiary
Parties under Section 5.14 or 5.15 of the Credit Agreement. Upon the execution
and delivery by the Collateral Agent and a Subsidiary of an instrument in the
form of Exhibit I hereto, such Subsidiary shall become a Subsidiary Party
hereunder with the same force and effect as if originally named as a Subsidiary
Party herein. The execution and delivery of any such instrument shall not
require the consent of any other Loan Party. The rights and obligations of each
Loan Party hereunder shall remain in full force and effect notwithstanding the
addition of any Subsidiary as a party to this Agreement.
SECTION 8.15. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby. The Collateral Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor 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 wilful
misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HEALTHSOUTH CORPORATION,
By /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
JPMORGAN CHASE BANK, N.A.
AS COLLATERAL AGENT,
By /s/ Xxxx Xxx Xxx
------------------------------------
Name: Xxxx Xxx Xxx
Title: Vice President
Exhibit I to the
Guarantee and
Collateral Agreement
SUPPLEMENT NO. __ dated as of, to the Guarantee
and Collateral Agreement dated as of March 21 2005, between
HEALTHSOUTH CORPORATION, a Delaware corporation (the
"Borrower"), and JPMORGAN CHASE BANK, N.A. ("JPMCB"), as
Collateral Agent (in such capacity, the "Collateral Agent").
A. Reference is made to the Amended and Restated Credit Agreement
dated as of March 21, 2005 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the Borrower, JPMorgan Chase Bank,
N.A., as the administrative agent and the collateral agent, Wachovia Bank,
National Association, as syndication agent, and Deutsche Bank Trust Company
Americas, as documentation agent.
B. Capitalized terms used herein (including in this preamble) and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement and the Collateral Agreement referred to therein.
C. The Grantors have entered into the Collateral Agreement in order to
induce the Lenders to make Loans and each Issuing Bank to issue Letters of
Credit. Section 8.14 of Collateral Agreement provides that additional
Subsidiaries of the Borrower may become Subsidiary Parties under the Collateral
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Subsidiary") is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Party under the Collateral Agreement in order to induce the
Lenders to make additional Loans and each Issuing Bank to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary agree as
follows:
SECTION 1. In accordance with Section 8.14 of the Collateral
Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party
(and accordingly, becomes a Guarantor and a Grantor), Grantor and Guarantor
under the Collateral Agreement with the same force and effect as if originally
named therein as a Subsidiary Party and the New Subsidiary hereby (a) agrees to
all the terms and provisions of the Collateral Agreement applicable to it as a
Subsidiary Party, Grantor and Guarantor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Grantor and
Guarantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Subsidiary, as security for the payment
and performance in full of the Obligations (as defined in the Collateral
Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Subsidiary's right, title and interest in and to the Collateral (as defined in
the Collateral Agreement) of the New Subsidiary and subject to the provisions
of the Collateral Agreement. Each reference to a "Guarantor" or "Grantor" in
the Collateral Agreement shall be deemed to include the New Subsidiary. The
Collateral Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received a counterpart of this Supplement that bears the
signature of the New Subsidiary and the Collateral Agent has executed a
counterpart hereof. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Supplement.
SECTION 4. The New Subsidiary hereby represents and warrants that (a)
set forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Subsidiary and (b) set forth
under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of formation and the location of its chief
executive office.
SECTION 5. Except as expressly supplemented hereby, the Collateral
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Collateral Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 8.01 of the Collateral Agreement.
SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have
duly executed this Supplement to the Collateral Agreement as of the day and
year first above written.
[NAME OF NEW SUBSIDIARY],
by
___________________________________
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive office:
JPMORGAN CHASE BANK, N.A.
AS COLLATERAL AGENT
By
___________________________________
Name:
Title:
Schedule I
to the Supplement No __ to the
Guarantee and
Collateral Agreement
LOCATION OF COLLATERAL
Description Location
----------- --------
EQUITY INTERESTS
Number and Percentage
Number of Registered Class of of
Issuer Certificate Owner Equity Interests Equity Interests
------ ----------- ----- ---------------- ----------------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
------ ------ ------------ -------------
INTELLECTUAL PROPERTY
