GUARANTEE AND SECURITY AGREEMENT Dated as of February 9, 2011 Among NMH HOLDINGS, LLC, NATIONAL MENTOR HOLDINGS, INC., THE SUBSIDIARIES OF NATIONAL MENTOR HOLDINGS, INC. parties hereto from time to time and UBS AG, STAMFORD BRANCH, as Administrative Agent
Exhibit 10.2
EXECUTION VERSION
Dated as of
February 9, 0000
Xxxxx
XXX HOLDINGS, LLC,
and
UBS AG, STAMFORD BRANCH,
as Administrative Agent
as Administrative Agent
Table of Contents
| Page | ||||
SECTION 1. DEFINED TERMS |
1 | |||
1.1. Definitions |
1 | |||
1.2. Other Definitional Provisions |
6 | |||
SECTION 2. GUARANTEE |
6 | |||
2.1. Guarantee |
6 | |||
2.2. Guarantee of Payment |
7 | |||
2.3. No Limitations |
7 | |||
2.4. Reinstatement |
8 | |||
2.5. Agreement To Pay; Subrogation |
8 | |||
2.6. Information |
8 | |||
2.7. Savings |
8 | |||
SECTION 3. GRANT OF SECURITY INTEREST |
8 | |||
SECTION 4. REPRESENTATIONS AND WARRANTIES |
11 | |||
4.1. Title; No Other Liens |
11 | |||
4.2. Perfected First Priority Liens |
11 | |||
4.3. Organizational Information |
11 | |||
4.4. Inventory and Equipment |
11 | |||
4.5. Investment Property |
11 | |||
4.6. Receivables |
12 | |||
4.7. Intellectual Property |
12 | |||
SECTION 5. COVENANTS |
12 | |||
5.1. Delivery of Instruments, Certificated Securities and Chattel Paper |
13 | |||
5.2. Maintenance of Insurance |
13 | |||
5.3. Payment of Obligations |
13 | |||
5.4. Maintenance of Perfected Security Interest; Further Documentation |
13 | |||
5.5. Changes in Locations, Name, etc |
14 | |||
5.6. Investment Property |
14 | |||
5.7. Receivables |
15 | |||
5.8. Intellectual Property |
15 | |||
5.9. Commercial Tort Claims |
17 | |||
5.10. Post Default Actions |
17 | |||
SECTION 6. REMEDIAL PROVISIONS |
17 | |||
6.1. Certain Matters Relating to Receivables |
17 | |||
6.2. Communications with Obligors; Grantors Remain Liable |
18 | |||
6.3. Pledged Stock |
19 | |||
6.4. Proceeds to be Turned Over To Administrative Agent |
20 | |||
6.5. Application of Proceeds |
20 | |||
6.6. Code and Other Remedies |
21 | |||
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| Page | ||||
6.7. Deficiency |
22 | |||
SECTION 7. THE ADMINISTRATIVE AGENT |
22 | |||
7.1. Administrative Agent’s Appointment as Attorney-in-Fact, etc |
22 | |||
7.2. Duty of Administrative Agent |
24 | |||
7.3. Execution of Financing Statements |
24 | |||
7.4. Authority of Administrative Agent |
24 | |||
SECTION 8. INDEMNITY, SUBROGATION AND SUBORDINATION |
25 | |||
8.1. Indemnity and Subrogation |
25 | |||
8.2. Contribution and Subrogation |
25 | |||
8.3. Subordination |
25 | |||
SECTION 9. MISCELLANEOUS |
25 | |||
9.1. Amendments in Writing |
26 | |||
9.2. Notices |
26 | |||
9.3. No Waiver by Course of Conduct; Cumulative Remedies |
26 | |||
9.4. Enforcement Expenses; Indemnification |
26 | |||
9.5. Successors and Assigns |
27 | |||
9.6. Set-Off |
27 | |||
9.7. Counterparts |
27 | |||
9.8. Severability |
27 | |||
9.9. Section Headings |
27 | |||
9.10. Integration |
27 | |||
9.11. GOVERNING LAW |
28 | |||
9.12. Submission To Jurisdiction; Waivers |
28 | |||
9.13. Acknowledgments |
28 | |||
9.14. Additional Grantors |
29 | |||
9.15. Authorization to Release Guarantees and Liens |
29 | |||
9.16. Termination or Release |
29 | |||
9.17. WAIVER OF JURY TRIAL |
30 | |||
SCHEDULES
Schedule A
|
Investment Property | |
Schedule B
|
Perfection Information | |
Schedule C
|
Jurisdictions of Organization and Chief Executive Offices | |
Schedule D
|
Inventory and Equipment | |
Schedule E
|
Intellectual Property | |
Schedule F
|
Commercial Tort Claims |
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GUARANTEE AND SECURITY AGREEMENT, dated as of February 9, 2011, made by NMH HOLDINGS, LLC
(“Holdings”), NATIONAL MENTOR HOLDINGS, INC. (the “Borrower”) and certain
subsidiaries of NATIONAL MENTOR HOLDINGS, INC. who are or become signatories hereto, in favor of
UBS AG, STAMFORD BRANCH, as Administrative Agent (in such capacity, the “Administrative
Agent”) for the banks and other financial institutions (the “Lenders”) from time to
time parties to the Credit Agreement, dated as of February 9, 2011 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the Borrower,
Holdings, the Lenders and the Administrative Agent.
WITNESSETH
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make
extensions of credit upon the terms and subject to the conditions set forth therein;
WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in
part to make valuable transfers to one or more of the Grantors in connection with the operation of
their businesses;
WHEREAS, the Grantors have derived and will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement and the
obligation of the Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and
the Lenders to enter into the Credit Agreement and to make their respective extensions of credit to
the Borrower under the Credit Agreement, each Grantor hereby agrees with the Administrative Agent,
for the benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS.
1.1. Definitions.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement, and the following terms are used herein as
defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claim,
Documents, Equipment, Health-Care-Insurance Receivables, Instruments and Inventory.
The following terms shall have the following meanings:
“Agreement”: this Guarantee and Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
“Borrower”: as defined in the Recitals.
“Capital Stock”: any and all shares, interests, participation or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
“Collateral”: as defined in Section 3.
“Collateral Account”: any collateral account established by the Administrative Agent
as provided in Section 6.1 or 6.4.
“Contracts”: any contract or agreement between a Grantor and any Person, or an
invoice sent or to be sent by such Grantor, pursuant to or under which a Receivable shall arise or
be created, or which evidences a Receivable.
“Copyrights”: (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed in Schedule E), all
registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.
“Copyright Licenses”: any written agreement naming any Grantor as licensor or
licensee (including, without limitation, those listed in Schedule E), granting any right
under any Copyright, including, without limitation, the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
“Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook,
lockbox account or like account maintained with a depository institution.
“General Intangibles”: all “general intangibles” as such term is defined in Section
9-02(a)(42) of the New York UCC and, in any event, including, without limitation, with respect to
any Grantor, all contracts, agreements, provider numbers, certificates of need, determinations of
need, statutory entitlements, rights to participate in Third Party Payor Programs, instruments and
indentures in any form, and portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or any property of such Grantor
is subject, as the same may from time to time be amended, supplemented or otherwise modified,
including, without limitation, (i) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise all remedies thereunder,
in each case to the extent the grant by such Grantor of a Lien pursuant to this Agreement in its
right, title and interest in such contract, agreement, instrument or indenture is not prohibited by
applicable law or such contract, agreement, instrument or indenture without the consent of any
other party thereto, would not give any other party to such contract, agreement, instrument or
indenture the right to terminate its obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been obtained from the other
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parties thereto; provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a Lien pursuant to this Agreement in any Receivable
or any money or other amounts due or to become due under any such contract, agreement, instrument
or indenture.
“Government Receivable”: any Receivable that, consistent with the Borrower’s past
accounting practice, is initially classified as a Medicare receivable, Medicaid receivable or
CHAMPUS receivable or other government receivable.
“Government Receivable Accounts”: as defined in Section 6.1(c).
“Grantors”: Holdings, the Borrower and the Subsidiary Guarantors.
“Guarantors”: Holdings and the Subsidiary Guarantors.
“Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this Agreement
(including, without limitation, Section 2) or any other Loan Document, any Specified Swap Agreement
or any Cash Management Obligations to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by such Guarantor pursuant to
the terms of this Agreement or any other Loan Document (including interest and fees accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower or any Guarantor, whether or not a claim for post-filing
or post-petition interest or fees is allowed in such proceeding)).
“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses,
the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to xxx
at law or in equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
“Intercompany Note”: any promissory note evidencing loans made by any Grantor to the
Borrower, Holdings or any of its Restricted Subsidiaries.
“Investment Property”: the collective reference to (i) all “investment property” as
such term is defined in Section 9-102(a)(49) of the New York UCC and (ii) whether or not
constituting “investment property” as so defined, all Pledged Notes, Pledged LLC Interests and all
Pledged Stock. Notwithstanding anything else herein to the contrary, the definition of “Investment
Property” shall (i) not include any Capital Stock in any Liquidating Subsidiary (until such time,
if at all, as such Liquidating Subsidiary ceases to be a Liquidating Subsidiary in accordance with
the Credit Agreement) or any Capital Stock in any Unrestricted Subsidiary and (ii), with respect to
any Non-Profit Entity, Foreign Subsidiary, Domestic Subsidiary substantially all of whose assets
consist of the stock of Foreign Subsidiaries or Insurance Subsidiary, only constitute that
percentage of the Capital Stock of any such Subsidiary required to be pledged to the Administrative
Agent pursuant to Section 6.9(c) of the Credit Agreement.
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“Issuers”: the collective reference to each issuer of any Investment Property.
“Loan Document Obligations”: the “Obligations” as defined in the Credit Agreement.
“New York UCC”: the Uniform Commercial Code as from time to time in effect in the
State of New York.
“Obligations”: (i) in the case of the Borrower, the Loan Document Obligations, and
(ii) in the case of each Guarantor, its Guarantor Obligations.
“Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof, including, without limitation,
any of the foregoing referred to in Schedule E, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred to in Schedule E, and
(iii) all rights to obtain any reissues or extensions of the foregoing.
“Patent License”: all agreements, whether written or oral, providing for the grant by
or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in
part by a Patent including, without limitation, any of the foregoing referred to in Schedule
E.
“Pledged LLC Interests”: in each case, whether now existing or hereafter acquired,
all of each Grantor’s right, title and interest in and to:
(a) any Issuer that is a limited liability company, but not any of such Grantor’s
obligations from time to time as a holder of interests in any such Issuer (unless the
Administrative Agent or its designee, on behalf of the Administrative Agent and the Lenders,
shall elect to become a holder of interests in any such Issuer in connection with its
exercise of remedies pursuant to the terms hereof);
(b) any and all moneys due and to become due such Grantor now or in the future by way
of a distribution made to such Grantor in its capacity as a holder of interests in any such
Issuer or otherwise in respect of each such Grantor’s interest as a holder of interests in
any such Issuer;
(c) any other property of any such Issuer to which such Grantor now or in the future
may be entitled in respect of its interests in any such Issuer by way of distribution,
return of capital or otherwise;
(d) any other claim or right which such Grantor now has or may in the future acquire in
respect of its interests in any such Issuer;
(e) the organizational documents of any such Issuer;
(f) all certificates, options or rights of any nature whatsoever that may be or granted
by any such Issuer to such Grantor while this Agreement is in effect; and
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(g) to the extent not otherwise included, all Proceeds of any or all of the foregoing.
Notwithstanding anything else herein to the contrary, the definition of “Pledged LLC
Interests” shall, (i) not include any Capital Stock in any Liquidating Subsidiary (until such time,
if at all, as such Liquidating Subsidiary ceases to be a Liquidating Subsidiary in accordance with
the Credit Agreement) or any Capital Stock in any Unrestricted Subsidiary and (ii) with respect to
any Non-Profit Entity, Foreign Subsidiary, Domestic Subsidiary substantially all of whose assets
consist of the stock of Foreign Subsidiaries or Insurance Subsidiary, only constitute that
percentage of the Capital Stock of any such Subsidiary required to be pledged to the Administrative
Agent pursuant to Section 6.9(c) of the Credit Agreement.
“Pledged Notes”: all promissory notes listed on Schedule A, all Intercompany
Notes at any time issued to any Grantor and all other promissory notes issued to or held by any
Grantor (other than promissory notes issued in connection with extensions of trade credit by any
Grantor in the ordinary course of business).
“Pledged Securities”: the collective reference to the Pledged LLC Interests, the
Pledged Stock and the Pledged Notes, together with any Proceeds thereof.
“Pledged Stock”: the shares of capital stock comprising Capital Stock listed on
Schedule A, together with any other shares, stock certificates, options, interests or
rights of any nature whatsoever in respect of the Capital Stock (other than Pledged LLC interests)
of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided, however, the definition of “Pledged Stock” shall (i) not include
any Capital Stock of any Liquidating Subsidiary (until such time, if at all, as such Liquidating
Subsidiary ceases to be a Liquidating Subsidiary in accordance with the Credit Agreement) or any
Capital Stock of any Unrestricted Subsidiary, (ii), with respect to any Non-Profit Entity, Foreign
Subsidiary, Domestic Subsidiary substantially all of whose assets consist of the stock of Foreign
Subsidiaries or Insurance Subsidiary, only constitute that percentage of the Capital Stock of any
such Subsidiary required to be pledged to the Administrative Agent pursuant to Section 6.9(c) of
the Credit Agreement and (iii) not include any Capital Stock that has been released pursuant to
Section 9.16.
“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New
York UCC and, in any event, shall include, without limitation, all dividends or other income from
the Investment Property, collections thereon or distributions or payments with respect thereto.
“Receivable”: any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account and any HealthCare-Insurance
Receivable).
“Retained Rights”: with respect to any Government Receivable of a Grantor (except to
the extent the obligor thereon may be required, pursuant to a court-ordered assignment which is
valid, binding and enforceable under applicable Medicare and Medicaid laws, rules and regulations
to make payments directly to a Person other than any applicable Grantor as the provider of
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the services giving rise thereto), the rights of such applicable Grantor to collect and
receive direct payment from the Governmental Authority obligated in respect of such Government
Receivable and, as applicable, to enforce the claim giving rise thereto against any federal
Government Authority to the extent the retention of such rights is required by Requirements of Law;
provided, however, that even in the absence of such a court-ordered assignment, the
“Retained Rights” shall not include the right of any applicable Grantor to retain the collections
or other Proceeds on any Government Receivable once payment thereon has been made to any applicable
Grantor as the provider of the services giving rise thereto.
“Secured Parties”: (a) the Lenders, (b) the Administrative Agent, (c) the Issuing
Lender, (d) each counterparty to any Specified Swap Agreement, (e) each Lender or its Affiliate or
any other Person to which any Cash Management Obligations are owed, (f) the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the
permitted successors and assigns of each of the foregoing.
“Securities Act”: the Securities Act of 1933, as amended.
“Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law lights related thereto, including, without limitation, any of the
foregoing referred to in Schedule E, and (ii) the right to obtain all renewals thereof.
“Trademark License”: any agreement, whether written or oral, providing for the grant
by or to any Grantor of any right to use any Trademark, including, without limitation, any of the
foregoing referred to in Schedule E.
1.2. Other Definitional Provisions. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section and Schedule references are to this Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms. Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof. In addition, Section 1.2 of the Credit Agreement shall
be applicable to this Agreement.
SECTION 2. GUARANTEE.
2.1. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally,
as a primary obligor and not merely as a surety, the due and punctual payment and performance of
the Loan Document Obligations. Each of the Guarantors further agrees that the Loan Document
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 Loan Document Obligation. Each of the Guarantors
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waives presentment to, demand of payment from and protest to the Borrower or any other
Loan Party of any of the Loan Document Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment.
2.2. 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 Administrative Agent or any other Secured Party to any security held for the payment of the
Loan Document Obligations or to any balance of any deposit account or credit on the books of the
Administrative Agent or any other Secured Party in favor of the Borrower or any other Person.
2.3. No Limitations.
(a) Except for termination of a Guarantor’s obligations hereunder as expressly provided in
Section 9.16, 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 Loan Document 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 Administrative Agent or any other Secured Party to
assert any claim or demand or to enforce any right or remedy under the provisions of any Loan
Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release
from any of the terms or provisions of, any Loan Document or any other agreement, including with
respect to any other Guarantor under this Agreement; (iii) the release of any security held by the
Administrative Agent or any other Secured Party for the Loan Document Obligations or any of them;
(iv) any default, failure or delay, willful or otherwise, in the performance of the Loan Document
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 payment in full of all the Loan Document Obligations). Each Guarantor
expressly authorizes the Secured Parties to take and hold security for the payment and performance
of the Obligations, to exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and manner of any sale
thereof in 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 payment in full of all the Loan
Document Obligations. The Administrative Agent and the other Secured Parties may, at their
election, foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or
adjust any part of the Obligations, make any other accommodation with the Borrower or any other
Loan Party or exercise any other right or remedy available to them against the Borrower or any
other Loan Party, without affecting or impairing in any way the liability of any
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Guarantor hereunder except to the extent the Loan Document Obligations have been fully and
paid in full. 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.
2.4. 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 Administrative Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other Loan Party or
otherwise.
2.5. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the
Administrative 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 Loan Document
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 Administrative Agent for distribution to the applicable Secured Parties in
cash the amount of such unpaid Loan Document Obligation. Upon payment by any Guarantor of any sums
to the Administrative 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 Section 8.
2.6. 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 Loan Document Obligations and the nature,
scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Administrative 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.
2.7. Savings. In any action or proceeding involving any state corporate limited partnership or limited
liability company law, or any applicable state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the obligations of any
Guarantor under Section 2.1 would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 2.1, then, notwithstanding any other provision to the contrary, the
amount of such liability shall, without any further action by such Guarantor, any Loan Party or any
other person, be automatically limited and reduced to the highest amount (after giving effect to
the right of contribution established in Section 8.2) that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or proceeding.
SECTION 3. GRANT OF SECURITY INTEREST. Each Grantor hereby collaterally assigns, pledges and grants to the Administrative Agent,
for the benefit of the Secured Parties, a
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security interest in, all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire
any right, title or interest (collectively, the “Collateral”), as collateral security for
the prompt and complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor’s Obligations:
(a) all Accounts;
(b) Letter of Credit rights;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all General Intangibles;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) all Receivables (including without limitation Government Receivables);
(n) commercial tort claims as listed on Schedule F;
(o) all books and records pertaining to the Collateral; and
(p) 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;
provided, that in no event will “Collateral” be deemed to include any Retained Rights.
Notwithstanding the foregoing provisions of this Section 3, such grant of security interest
shall not extend to, and the term “Collateral” shall exclude (i) Contracts, lease, licenses,
Chattel Paper, Intellectual Property and other General Intangibles, or assets subject thereto, if
any, (but shall not include the Receivables, collections and Proceeds thereof) which are now or
hereafter held by Grantor as licensee, lessee or otherwise, to the extent that (and only for so
long as) (A) such Contracts, Chattel Paper and other General Intangibles, or assets subject
thereto, if any, are not assignable or capable of being encumbered as a matter of law or under the
terms of the
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license, lease or other agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law, including Sections 9-406, 9-407, 9-408 or
9-409 of the New York UCC, in respect of the grant of a security interest hereunder), without the
consent of the licensor or lessor thereof, or other applicable party thereto and (B) such consent
has not been obtained, (ii) assets owned by any Grantor on the date hereof or hereafter acquired
and any proceeds thereof that are subject to a Lien securing a Capital Lease Obligation or a
purchase money obligation permitted to be incurred pursuant to the Credit Agreement or any other
Lien permitted by Section 7.3(g) of the Credit Agreement to the extent and for so long as the
contract or other agreement in which such Lien is granted (or the documentation providing for such
Capital Lease Obligation or purchase money obligation) validly prohibits the creation of any other
Lien on such assets and proceeds, (iii) any property and any person existing at the time such
property or person is acquired or merged with or into or consolidated with any Grantor that is
subject to a Lien permitted by Section 7.3(m) of the Credit Agreement to the extent and for so long
as the contract or other agreement in which such Lien is granted validly prohibits the creation of
any other Lien on such property, (iv) any intent-to-use trademark application for which a statement
of use has not been filed and accepted with the U.S. Patent and Trademark Office or any other
Intellectual Property to the extent and for so long as creation by a Grantor of a security interest
therein would result in the loss by such Grantor of any material rights therein, (v) the
Institutional L/C Collateral Account Agreement and the Institutional L/C Collateral Account and all
funds and proceeds therein, and any proceeds thereof prior to their receipt by any Grantor, (vi)
(A) any Capital Stock in any Liquidating Subsidiary (until such time, if at all, as such
Liquidating Subsidiary ceases to be a Liquidating Subsidiary in accordance with the Credit
Agreement) or any Capital Stock in any Unrestricted Subsidiary and proceeds of the Capital Stock of
any Unrestricted Subsidiary and (B) with respect to any Non-Profit Entity, Foreign Subsidiary,
Domestic Subsidiary substantially all of whose assets consist of the stock of Foreign Subsidiaries
or Insurance Subsidiary, such percentage of the Capital Stock of any such Subsidiary that is not
required to be pledged to the Administrative Agent pursuant to Section 6.9(c) of the Credit
Agreement, (vii) any interest in a joint venture or a Subsidiary that is not a Wholly-Owned
Subsidiary to the extent the granting of a security interest therein is prohibited by the terms of
the organizational documents or any shareholder or similar agreement of such joint venture or
Subsidiary, (viii) any motor vehicle or other assets subject to certificates of title, the
perfection of a security interest in which cannot be perfected through the filing of UCC-1
financing statements under the UCC in the relevant jurisdiction, (ix) leasehold interests in real
property, (x) any assets if, as determined by the Borrower in writing and reasonably agreed to by
the Administrative Agent, granting a security interest therein to the Administrative Agent for the
benefit of the Secured Parties would result in adverse tax consequences to Holdings or any of its
Restricted Subsidiaries, and (xii) any asset if, in the reasonable judgment of the Administrative
Agent evidenced in writing, the burden, cost or consequences to Holdings or its Restricted
Subsidiaries of creating or perfecting such security interests in favor of the Administrative Agent
for the benefit of the Secured Parties is excessive in relation to the benefits to be obtained
therefrom by the Secured Parties.
The Administrative Agent may grant extensions of time for the perfection of security interests
in particular assets (including extensions beyond the Closing Date for the perfection of security
interests in the assets of any Loan Party on such date) where it reasonably determines, in
consultation with the Borrower, that perfection cannot be accomplished without undue efforts or
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expense by the time or times at which it would otherwise be required by this Agreement or the
other Loan Documents.
SECTION 4. REPRESENTATIONS AND WARRANTIES. To induce the Administrative Agent and the Secured Parties to make their respective
extensions of credit to the Borrower under the Credit Agreement, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1. Title; No Other Liens. Except for the security interest granted to the Administrative Agent for the ratable
benefit of the Secured Parties pursuant to this Agreement and Permitted Liens, such Grantor owns or
has a license or the right to use each item of the Collateral free and clear of any and all Liens
of others. No financing statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have been filed in favor of
the Administrative Agent, for the benefit of the Secured Parties, pursuant to this Agreement, or as
to which a duly authorized termination statement relating to such UCC financing statement or other
instrument has been delivered to the Administrative Agent on the Closing Date, Permitted Liens or
as are otherwise permitted by the Credit Agreement.
4.2. Perfected First Priority Liens. The security interests granted pursuant to this Agreement (a) upon completion of the
filings and other actions specified on Schedule B (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered to the Administrative Agent in
completed and, if applicable, duly executed form) and payment of all filing fees will constitute
valid perfected security interests in all of the Collateral in which a security interest can be
perfected by the filing of a financing statement and/or the other filings and actions specified on
Schedule B in favor of the Administrative Agent, for the benefit of the Secured Parties, as
collateral security for such Grantor’s Obligations, enforceable (subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting
creditors’ rights and general equitable principles (whether considered in a proceeding in equity or
at law) in accordance with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens. Notwithstanding the
foregoing, nothing in this Agreement shall require any Grantor to make any filings or take any
other actions to record or perfect the Administrative Agent’s Lien on and security interest in any
Intellectual Property outside the United States.
4.3. Organizational Information. On the date hereof, such Grantor’s (i) chief executive office or sole place of business,
(ii) exact legal name, (iii) state of formation, organization or incorporation (as applicable) and
(iv) organizational identification number (if any) is as specified on Schedule C.
4.4. Inventory and Equipment. On the date hereof, the Inventory and the material Equipment (other than mobile goods or
Equipment out for repair or refurbishment or on loan to employees) are kept at, or are in transit
to, the locations listed on Schedule D.
4.5. Investment Property. The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and
outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor (other
than Capital Stock in Insurance Subsidiaries, Non-Profit
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Entities, Liquidating Subsidiaries, Foreign Subsidiaries, Domestic Subsidiaries substantially
all of whose assets consist of the stock of Foreign Subsidiaries and Unrestricted Subsidiaries not
required to be pledged pursuant to the Loan Documents). The Pledged LLC Interests pledged by the
Grantors constitute all the issued and outstanding Capital Stock of each Issuer that is a limited
liability company in which any Grantor has any right, title or interest (other than Capital Stock
in Insurance Subsidiaries, Non-Profit Entities, Liquidating Subsidiaries, Foreign Subsidiaries,
Domestic Subsidiaries substantially all of whose assets consist of the stock of Foreign
Subsidiaries and Unrestricted Subsidiaries not required to be pledged pursuant to the Loan
Documents). All the shares of the Pledged Stock and the Pledged LLC Interests have been duly and
validly issued and in the case of the Pledged Stock are fully paid and nonassessable. Each of the
Pledged Notes constitutes the legally valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally and general equitable principles (whether considered in a
proceeding in equity or at law). Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens
of, any other Person, except the Lien created by this Agreement and Permitted Liens.
4.6. Receivables. To each Grantor’s knowledge, no material amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Administrative Agent.
4.7. Intellectual Property. Schedule E lists all material Intellectual Property owned by such Grantor in its
own name on the date hereof that is registered, patented or subject to a pending application for
registration or patent (other than Internet domain names). On the date hereof, all material
Intellectual Property owned by such Grantor is valid, subsisting, unexpired and enforceable and has
not been abandoned, except, in each case, as would not reasonably be expected to have a Material
Adverse Effect, and, to such Grantor’s knowledge, does not infringe the intellectual property
rights of any other Person. Except as set forth in Schedule E, on the date hereof, none of
the material Intellectual Property owned by such Grantor is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or franchiser. No holding,
decision or judgment has been rendered by any Governmental Authority which would limit, cancel or
question the validity of, or such Grantor’s rights in, any Intellectual Property owned by such
Grantor in any respect that could reasonably be expected to have a Material Adverse Effect. No
action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on the date
hereof (i) seeking to limit, cancel or question the validity of any material Intellectual Property
owned by such Grantor or such Grantor’s ownership interest therein, or (ii) which, if adversely
determined, would have a Material Adverse Effect on the value of any Intellectual Property owned by
such Grantor.
SECTION 5. COVENANTS. Each Grantor covenants and agrees with the Administrative Agent and the Secured Parties
that, from and after the date of this Agreement until the Obligations (other than obligations under
or in respect of Swap Agreements) (excluding contingent indemnity obligations) shall have been paid
in full, no Letter of Credit shall be outstanding (or shall have been cash collateralized or
replaced in a manner reasonably satisfactory to the Administrative Agent) and the Commitments shall
have terminated:
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5.1. Delivery of Instruments, Certificated Securities and Chattel Paper. If any material amount payable under or in connection with any of the Collateral shall be
or become evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be promptly delivered to the Administrative Agent,
duly endorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement.
5.2. Maintenance of Insurance. Each Grantor or an Affiliate on behalf of such Grantor will at all times maintain
insurance, at such Grantor’s own expense to the extent and in the manner provided in the Credit
Agreement.
5.3. Payment of Obligations. Such Grantor will pay and discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all material taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well
as all material claims of any kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such charge need be paid if the
amount or validity thereof is currently being contested in good faith by appropriate proceedings,
reserves in conformity with GAAP with respect thereto have been provided on the books of such
Grantor and such proceedings would not reasonably be expected to result in a Material Adverse
Effect.
5.4. Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section 4.2, and subject to
the qualifications set forth in Section 4.2, and shall take all reasonable actions necessary to
defend such security interest against the claims and demands of all Persons at any time claiming
the same or any interest therein (other than Permitted Liens or to the extent otherwise not
required herein) adverse to the Administrative Agent.
(b) Such Grantor will furnish to the Administrative Agent from time to time statements and
schedules further identifying and describing the assets and property which constitute Collateral
of such Grantor and such other reports in connection therewith as the Administrative Agent may
reasonably request, all in reasonable detail to the extent available.
(c) At any time and from time to time, upon the written request of the Administrative Agent,
and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver,
and, if applicable, have recorded, such further instruments and documents and take such further
actions as the Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction in the United States
with respect to the security interests created hereby, (ii) in the case of Investment Property and
any other relevant Collateral (excluding in any case (x) security entitlements, securities
accounts, commodity contracts, commodity accounts and (y) Deposit Accounts), taking any actions
reasonably necessary to enable the Administrative Agent to obtain “control” (within the meaning of
the applicable Uniform Commercial Code) with respect thereto; and (iii) obtaining
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an acknowledgement, in form and substance satisfactory to the Administrative Agent, of any
bailee having possession of any of the Collateral that the bailee holds such Collateral for the
Administrative Agent.
5.5. Changes in Locations, Name, etc. Such Grantor will not, except upon 10 days’ prior written notice to the Administrative
Agent and delivery to the Administrative Agent of all additional financing statements and other
documents reasonably requested by the Administrative Agent to maintain the validity, perfection and
priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location of its chief executive
office or sole place of business from that referred to in Section 4.3;
(ii) change its name, identity or corporate structure to such an extent that any
financing statement filed by the Administrative Agent in connection with this Agreement
would become misleading; or
(iii) change its Federal Taxpayer Identification Number or organizational
identification number.
5.6. Investment Property.
(a) If such Grantor shall receive any stock certificate or a certificate evidencing
membership interests or partnership interests (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any reclassification, increase
or reduction of capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any shares of the Pledged Stock or the Pledged LLC
Interests, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the
Administrative Agent and the other Secured Parties, hold the same in trust for the Administrative
Agent and the other Secured Parties and deliver the same forthwith to the Administrative Agent in
the exact form received, duly endorsed by such Grantor to the Administrative Agent if required,
together with an undated stock power covering such certificate duly executed in blank by such
Grantor to be held by the Administrative Agent, subject to the terms hereof, as additional
collateral security for the obligations of such Grantor hereunder. Except as a result of a
transaction permitted under the Credit Agreement, (i) any sums paid upon or in respect of such
Investment Property upon the liquidation or dissolution of any Issuer shall be paid over to the
Administrative Agent to be held by it hereunder as additional collateral security for the
obligations of such Grantor hereunder, and (ii) in case any distribution of capital shall be made
on or in respect of the Investment Property or any property shall be distributed upon or with
respect to the Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the Administrative
Agent, be delivered to the Administrative Agent to be held by it hereunder as additional
collateral security for the obligations of such Grantor hereunder. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such
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money or property in trust for the Lenders, segregated from other funds of such Grantor, as
additional collateral security for the obligations of such Grantor hereunder.
(b) Without the prior written consent of the Administrative Agent, such Grantor will not (i)
sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to,
the Investment Property or Proceeds thereof (except pursuant to a transaction permitted by the
Credit Agreement) or (ii) create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any
interest therein, except for the Liens created by this Agreement or Permitted Liens.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Investment Property issued by it and will
comply with such terms insofar as such terms are applicable to it and (ii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Investment
Property issued by it.
5.7. Receivables.
(a) Except as otherwise permitted in the Credit Agreement or other than in the ordinary course
of business consistent with its past practice or as such Grantor finds appropriate in accordance
with its reasonable business judgment, such Grantor will not (i) grant any extension of the time of
payment of any material Receivable, (ii) compromise or settle any Receivable for materially lesser
amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any
material Receivable, (iv) allow any credit or discount whatsoever on any material Receivable or (v)
amend, supplement or modify any material Receivable in any manner that could materially adversely
affect the value thereof.
5.8. Intellectual Property.
(a) Such Grantor will (i) continue to use each material Trademark owned by such Grantor on
each and every trademark class of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to, to the extent required by applicable law, maintain
such Trademark in full force free from any claim of abandonment for non-use for so long as such
Trademark is material to the business of such Grantor, (ii) maintain as in the past, substantially
the same or higher, quality of products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and legends required by
applicable Legal Requirement, (iv) not adopt or use any xxxx which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of
the Secured Parties, shall obtain a perfected security interest (subject to the qualifications set
forth in Section 4.2) in such xxxx pursuant to this Agreement, and (v) not knowingly do any act or
knowingly omit to do any act whereby such Trademark may become invalidated or materially impaired.
(b) Such Grantor will not knowingly do any act, or knowingly omit to do any act, whereby any
material Patent owned by such Grantor may become forfeited, abandoned or dedicated to the public
for so long as such Patent is material to the business of such Grantor.
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(c) Such Grantor (i) will employ each material Copyright owned by such Grantor and (ii) will
not knowingly do any act or knowingly omit to do any act whereby any material Copyright owned by
Grantor may become invalidated or otherwise impaired for so long as such Copyright is material to
the business of the Grantor. Such Grantor will not knowingly do any act whereby any material
Copyright owned by such Grantor may fall into the public domain for so long as such Copyright is
material to the business of the Grantor.
(d) Such Grantor will not knowingly do any act that knowingly uses any material Intellectual
Property owned by such Grantor to infringe the intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the other Secured Parties promptly,
but in any event within thirty (30) days of such Grantor having knowledge thereof, if it knows that
any application or registration for any material Intellectual Property owned by such Grantor may
become forfeited, abandoned or dedicated to the public (other than the expiration of patents at the
end of their statutory term), or of any adverse determination or development regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property owned by such
Grantor or such Grantor’s right to register the same or to own and maintain the same (other than
office actions issued in the ordinary course of prosecution of any pending applications for patents
or applications for registration of other Intellectual Property).
(f) Whenever such Grantor, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political subdivision thereof, such
Grantor shall report such filing to the Administrative Agent within thirty Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative
Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Administrative Agent may reasonably request to evidence
the Administrative Agent’s and the Lenders’ security interest in any Copyright, Patent or Trademark
and the goodwill and general intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take reasonable steps to maintain each registration of the material
Intellectual Property owned by such Grantor for so long as such Intellectual Property is material
to the business of such Grantor, except as would not reasonably be expected to have a Material
Adverse Effect, including, without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(h) In the event that, to the knowledge of the Grantor, any material Intellectual Property
owned by such Grantor is infringed, misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to
protect such Intellectual Property and (ii) if such Intellectual Property is of material economic
value to such Grantor, promptly notify the Administrative Agent after it learns thereof and, if
appropriate, xxx for infringement, misappropriation or dilution, seek injunctive relief where
appropriate and seek to recover any and all damages for such infringement, misappropriation or
dilution.
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5.9. Commercial Tort Claims. If the Grantors or any of them shall at any time acquire a Commercial Tort Claim such
Grantor(s) shall, within a reasonable period of time, notify the Administrative Agent in writing
signed of the brief details thereof and shall grant to the Administrative Agent for the benefit of
the Secured Parties a security interest therein and in the proceeds thereof, all on the terms of
this Agreement, and in writing in form and substance reasonably satisfactory to the Administrative
Agent. This Section 5.09 shall apply only to Commercial Tort Claims (i) that are not claims
against the Administrative Agent or any of the other Secured Parties in their capacities as such or
as Administrative Agent or Secured Parties under the Loan Documents, and (ii) as to which the
Grantor(s) holding any such claim has been advised by counsel engaged for the purpose of
prosecuting such claim that such claim is reasonably likely to result in a judgment or negotiated
settlement in excess of $300,000. The Grantor(s) shall have sole control of all aspects of
commercial tort claims that are subject to this Section 5.09 unless and until an Event of Default
has occurred and is continuing, the Loan Document Obligations have been accelerated and the
Administrative Agent has begun exercising rights with respect to other Collateral under this
Agreement.
5.10. Post Default Actions. If an Event of Default shall occur and be continuing, no Grantor shall take any action
which would have a Material Adverse Effect or take any action prohibited or fail to perform any
action required of the Grantor hereunder, under the Credit Agreement or under any other Loan
Document to which such Grantor is a party.
SECTION 6. REMEDIAL PROVISIONS.
6.1. Certain Matters Relating to Receivables.
(a) Subject to applicable law and contractual rights, if any, in each case relating to
confidentiality, at any time after the occurrence and during the continuance of an Event of
Default after giving prior notice to the Grantor, the Administrative Agent shall have the right to
make test verifications of the Receivables in any manner and through any medium that it reasonably
considers advisable, and each Grantor in the name of such Grantor shall furnish all such
assistance and information as the Administrative Agent may require in connection with such test
verifications.
(b) The Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
Receivables (except in respect of any Receivable subject to Retained Rights to the extent not
permitted by applicable law), and the Administrative Agent may curtail or terminate said authority
at any time after the occurrence and during the continuance of an Event of Default under Sections
8(a) or (f) of the Credit Agreement. Except as set forth in subsection 6.1(c), if required by the
Administrative Agent at any time after the occurrence and during the continuance of an Event of
Default under Sections 8(a) or (f) of the Credit Agreement, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days)
deposited by such Grantor in the exact form received, duly endorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the sole dominion and
control of the Administrative Agent as collateral security for such Grantor’s Obligations, subject
to withdrawal by the Administrative Agent for the account of the Secured Parties in payment of
such Grantor’s Obligations only as provided in Section 6.5, and (ii) until so turned over, shall
be held by such Grantor in trust for the Administrative Agent and
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the other Secured Parties, segregated from other funds of such Grantor. Notwithstanding anything
to the contrary herein, the Administrative Agent shall not assign or otherwise dispose of any
Trademark owned by any Grantor without assigning the assets and goodwill of the business
associated therewith and any such assignment shall be null and void. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit.
(c) If required by the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default under Sections 8(a) or (f) of the Credit Agreement, (1) any
payments of Receivables (other than Receivables subject to Retained Rights) shall be directed by
the applicable Grantor or the Administrative Agent to be sent directly to a lockbox address
designated by the Administrative Agent and daily deposited into a lockbox account at the
Administrative Agent under the sole dominion and control of the Administrative Agent, and (2) the
applicable Grantor shall cause any payments of Government Receivables subject to Retained Rights,
when collected by any Grantor, to be forthwith (and, in any event, within two Business Days)
deposited by such Grantor into a separate deposit account (the “Government Receivables
Account”) under the dominion and control of the Grantor, for which such Grantor shall have
delivered a standing direction to the depository holding such applicable Government Receivables
Account, directing it to sweep cash proceeds of such Receivables daily and to wire and deposit the
same into the Collateral Account specified in Section 6.1(b) above, all to the extent not
prohibited by applicable law. It shall be an Event of Default under the Credit Agreement if any
Grantor changes such standing direction. Each such deposit of Proceeds of Receivables subject to
Retained Rights deposited in the Government Receivables Account shall be accompanied by a report
delivered to the Administrative Agent within two Business Days after the deposit thereof into the
Government Receivables Account, identifying in reasonable detail the nature and source of the
payments included in such deposit.
(d) Upon the occurrence and during the continuance of an Event of Default, at the
Administrative Agent’s reasonable request, each Grantor shall deliver to the Administrative Agent
all original and other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including, without limitation, all original orders, invoices
and shipping receipts.
6.2. Communications with Obligors; Grantors Remain Liable.
(a) Subject to applicable law and contractual rights, if any, in each case relating to
confidentiality, at any time after the occurrence and during the continuance of an Event of
Default, the Administrative Agent in its own name may at any time communicate with obligors under
the Receivables and parties to the Contracts to verify with them to the Administrative Agent’s
satisfaction the existence, amount and terms of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time after the occurrence and during
the continuance of an Event of Default under Section 8(a) or (f) of the Credit Agreement, each
Grantor shall notify obligors on the Receivables (except where such Receivables are subject to
Retained Rights) and parties to the Contracts that the Receivables and the Contracts have been
assigned to the Administrative Agent for the ratable benefit of the Secured Parties and that
payments in respect thereof shall be made directly to the Administrative Agent.
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(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables and Contracts to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by the Administrative Agent or any Lender of any
payment relating thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency of any performance
by any party thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.
6.3. Pledged Stock.
(a) Unless an Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to
exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to
receive all cash dividends and other distributions paid in respect of the Pledged Stock, all
payments made in respect of the Pledged Notes and all distributions made in respect of the Pledged
LLC Interests, to the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Investment Property.
(b) If an Event of Default shall occur and be continuing and the Administrative Agent shall
give three days prior written notice of its intent to exercise such rights to the relevant Grantor
or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash
dividends, payments, or other Proceeds paid in respect of the Investment Property, to hold the same
as additional collateral security for and make application thereof to such Grantor’s Obligations in
accordance with Section 6.5, and (ii) the Administrative Agent shall have the right to register any
or all of the Investment Property in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other
rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Investment Property as if it were the
absolute owner thereof (including, without limitation, the right to exchange at its discretion any
and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment
Property, and in connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it, but the Administrative Agent
shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing. Upon the cure or waiver of any Event of
Default in accordance with the Credit Agreement, (a)(i) each Grantor shall have the right to
receive the payments, proceeds, dividends, distributions, monies, compensation, property, assets,
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instruments or rights that it would be authorized to receive and retain pursuant to this
Agreement absent an Event of Default (ii) the Administrative shall deliver to the respective
Grantor all cash and monies that such Grantor is entitled to retain pursuant to this Agreement
which have not been applied to the repayment of the Obligations pursuant to this Agreement or the
Credit Agreement and (b) each Grantor shall have the right to exercise the voting, managerial and
other consensual rights and powers that it would otherwise be entitled to pursuant to this
Agreement absent an Event of Default and the Administrative Agent shall (at the expense of the
Borrower) cause any Investment Property registered pursuant to clause (ii) of this Section 6.3(b)
to be registered in the name of the original Grantor in which such Investment Property was
registered prior to the Event of Default which has been cured or waived.
(c) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property
pledged by such Grantor hereunder to (i) comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends
or other payments with respect to the Investment Property directly to the Administrative Agent.
6.4. Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Administrative Agent and the Secured Parties specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by any Grantor consisting of cash, checks and other near-cash
items shall be held by such Grantor in trust for the Administrative Agent and the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Administrative Agent in the exact form (except as any Receivable subject to
Retained Rights not in exact form to the extent prohibited by applicable law, but only Proceeds in
form to the extent not so prohibited) received by such Grantor (duly endorsed by such Grantor to
the Administrative Agent, if required). All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent and the Secured Parties) shall
continue to be held as collateral security for all of such Grantor’s Obligations and shall not
constitute payment thereof until applied as provided in Section 6.5.
6.5. Application of Proceeds. The proceeds received by the Administrative Agent in respect of any sale of, collection
from or other realization upon all or any part of the Collateral pursuant to the exercise by the
Administrative Agent of its remedies shall be applied, in full or in part, together with any other
sums then held by the Administrative Agent pursuant to the Loan Documents, promptly by the
Administrative Agent as follows: first, to all fees and reasonable costs and expenses incurred by
Administrative Agent or any other Secured Party with respect to the Credit Agreement, the other
Loan Documents or the Collateral; second, to all fees due and owing to Administrative Agent or any
other Secured Party; third, to accrued and unpaid interest on the Loan Document Obligations;
fourth, to the principal amounts of the Loan Document Obligations outstanding; and fifth, to any
other Loan Document Obligations owing to the Administrative Agent or any other Secured Party. Any
balance of such Proceeds remaining after such
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Grantor’s Obligations (other than contingent indemnification obligations for which no pending
claim is outstanding) shall have been paid in full, no Letters of Credit shall be outstanding (or
shall have been cash collateralized or replaced in a manner reasonably satisfactory to the
Administrative Agent) and the Commitments shall have terminated shall be turned over to whomsoever
may be lawfully entitled to receive the same.
6.6. Code and Other Remedies.
(a) If any Event of Default has occurred and is continuing, the Administrative Agent, on
behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted
to them in this Agreement and in any other instrument or agreement securing, evidencing or relating
to the Obligations, all rights and remedies of a secured party under the New York UCC or any other
applicable law (except in respect of any Receivable subject to Retained Rights to the extent not
permitted by applicable law). Without limiting the generality of the foregoing, the Administrative
Agent, without further demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred to below), to or upon any Grantor
or any other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived to the extent permitted by law), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any
other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Administrative Agent or any other Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent’s request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere. The Administrative Agent shall apply the
net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Secured Parties hereunder, including, without limitation, reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such
order as set forth in Section 6.5, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law, including, without
limitation, Section 9-615 of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives
all claims, damages and demands it may acquire against the Administrative Agent or any other
Secured Party arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least ten days before such sale or other disposition.
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(b) If at any time when the Administrative Agent shall determine to exercise its right to sell
all or any part of the Pledged Stock pursuant to this Section, and if such Pledged Stock or the
part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the
Securities Act or the securities laws of any state, the Administrative Agent is hereby expressly
authorized to sell such Pledged Stock or such part thereof by private sale in such manner and under
such circumstances as the Administrative Agent may deem commercially reasonable in order that such
sale may legally be effected without such registration. The Administrative Agent shall sell all or
any part of the Pledged Stock at a price which the Administrative Agent deems commercially
reasonable under the circumstances.
6.7. Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay such Grantor’s Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or any other Secured Party to
collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT.
7.1. Administrative Agent’s Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable (except where such Receivables are subject to
Retained Rights) or Contract or with respect to, any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any and all such
moneys due under any Receivable (except where such Receivables are subject to Retained
Rights) or Contract or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property owned by or licensed to the Grantor,
execute and deliver, and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the Administrative
Agent’s and the Secured Parties’ security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented thereby;
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(iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement
and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Sections 6.6 or 6.7, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral (except in
respect of any Receivable subject to Retained Rights) to make payment of any and all moneys
due or to become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral (except in respect of any Receivable
subject to Retained Rights); (3) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against Grantors, assignments,
verifications, notices and other documents in connection with any of the Collateral (except
in respect of any Receivable subject to Retained Rights); (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral (except in respect of any Receivable subject to Retained Rights) or
any portion thereof and to enforce any other right in respect of any Collateral (except in
respect of any Receivable subject to Retained Rights); (5) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the business to which any such
Trademark pertains), throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its reasonable discretion determine; and
(8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral (except in respect of any Receivable subject to Retained
Rights) as fully and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s
expense, at any time, or from time to time, all acts and things which the Administrative
Agent deems necessary to protect, preserve or realize upon the Collateral (except in respect
of any Receivable subject to Retained Rights) and the Administrative Agent’s and the Secured
Parties’ security interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent
agrees that it will not exercise any rights under the power of attorney provided for in this
Section 7.1(a) unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein, the
Administrative Agent, at its option during the existence of an Event of Default, but without any
obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such
agreement.
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(c) The reasonable, out-of-pocket expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1 shall be payable by such Grantor to the
Administrative Agent in accordance with Section 10.5 of the Credit Agreement.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2. Duty of Administrative Agent. The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any Secured Party nor any
of their respective officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Administrative Agent and the other Secured Parties hereunder
are solely to protect the Administrative Agent’s and the Secured Parties’ interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any other Secured Party
to exercise any such powers. The Administrative Agent and the other Secured Parties shall be
accountable only for amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad
faith or willful misconduct or material breach of this Agreement or any other Loan Document.
7.3. Execution of Financing Statements. Pursuant to the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or recording documents
or instruments with respect to the Collateral without the signature of such Grantor in such form
and in such offices as the Administrative Agent determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement; provided, that Administrative Agent
shall provide the applicable Grantor (or the Borrower) with a photocopy of any such filings. Each
Grantor authorizes the Administrative Agent to use the collateral description “all assets of the
Debtor” (as the term Debtor is defined in such financing statement or words of similar effect). A
photographic or other reproduction of this Agreement shall be sufficient as a financing statement
or other filing or recording document or instrument for filing or recording in any jurisdiction.
7.4. Authority of Administrative Agent. Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative Agent or the exercise
or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this Agreement shall, as between
the Administrative Agent and the other Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among them, but, as
between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively
presumed to be acting as
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agent for the Secured Parties with full and valid authority so to act or refrain from acting,
and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. INDEMNITY, SUBROGATION AND SUBORDINATION.
8.1. 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 8.3), 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.
8.2. Contribution and Subrogation. Each Guarantor and Grantor (a “Contributing Party”) agrees (subject to Section 8.3)
that, in the event a payment shall be made by any other Guarantor hereunder in respect of any
Obligation or assets of any other Grantor shall be sold pursuant to any Security Document to
satisfy any Obligation owed to any Secured Party and such other Guarantor (the “Claiming
Party”) shall not have been fully indemnified by the Borrower as provided in Section 8.1, 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 Guarantors and Grantors on the date hereof (or, in the case of any Guarantor or Grantor
becoming a party hereto pursuant to Section 9.14, the date of the supplement hereto executed and
delivered by such Guarantor or Grantor). Any Contributing Party making any payment to a Claiming
Party pursuant to this Section 8.2 shall be subrogated to the rights of such Claiming Party under
Section 8.1 to the extent of such payment.
8.3. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the
Guarantors and Grantors under Sections 8.1 and 8.2 and all other rights of indemnity, contribution
or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full of the Obligations. No failure on the part of the Borrower or any Guarantor or
Grantor to make the payments required by Sections 8.1 and 8.2 (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.
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 payment in full of the Obligations.
SECTION 9. MISCELLANEOUS.
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9.1. Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 10.1 of the Credit Agreement.
9.2. Notices. All notices, requests and demands to or upon the Administrative Agent or any Grantor
hereunder shall be effected in the manner provided for in Section 10.2 of the Credit Agreement and
shall be addressed to such Grantor, c/o the Borrower’s address set forth in the Credit Agreement.
9.3. No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 9.1), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default.
No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or
any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.
No single or partial exercise of any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right, power or privilege. A waiver by
the Administrative Agent or any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Administrative Agent or such
Secured Party would otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
9.4. Enforcement Expenses; Indemnification.
(a) Each Guarantor and Grantor agrees to pay or reimburse each Lender and the Administrative
Agent for all its reasonable, out-of-pocket costs and expenses incurred in collecting against such
Guarantor and Grantor under the guarantee contained in Section 2 or otherwise enforcing or
preserving any rights under this Agreement and the other Loan Documents to which such Guarantor and
Grantor is a party, including, without limitation, the reasonable fees and disbursements of one
counsel to all Lenders and of one counsel to the Agents and of counsel to the Administrative Agent.
(b) Each Guarantor and Grantor agrees to pay, and to save the Administrative Agent and the
Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) Each Guarantor and Grantor agrees to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees, affiliates, agents and
controlling persons (each, an “Indemnitee”) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to such Guarantor’s and Grantor’s
Obligations under this Agreement and the other Loan Documents to which such Guarantor or Grantor is
a party to the extent the Borrower would be required to do so under Section 10.5 of the Credit
Agreement.
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(d) The agreements in this Section 9.4 shall survive repayment of each of the Borrower’s and
the Guarantor’s Obligations and all other amounts payable under the Loan Documents.
9.5. Successors and Assigns. This Agreement shall be binding upon the permitted successors and assigns of each Grantor
and shall inure to the benefit of the Administrative Agent and the Lenders and their permitted
successors and assigns; provided that no Grantor may assign, transfer or delegate any of
its rights or obligations under this Agreement without the prior written consent of the
Administrative Agent.
9.6. Set-Off. Each Grantor hereby irrevocably authorizes the Administrative Agent and each Lender at any
time and from time to time after the occurrence and during the continuance of an Event of Default,
without prior notice to such Grantor, any such notice being expressly waived by such Grantor to the
extent permitted by applicable law, upon any amount becoming due and payable by such Grantor
hereunder (whether at the stated maturity of the Loan Document Obligations, by acceleration thereof
or otherwise), to set off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final other than payroll or trust accounts), in
any currency, and any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, and whether or not fully secured,
at any time held or owing by such Lender or any branch or agency thereof to or for the credit or
the account of such Grantor, as the case may be. Each Lender agrees promptly to notify the
applicable Grantor and the Administrative Agent after any such setoff and application made by such
Lender, provided that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Administrative Agent and each Lender under this Section
9.6 are in addition to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such Lender may have.
9.7. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
9.8. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.9. Section Headings. The Section headings used in this Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the interpretation hereof.
9.10. Integration. This Agreement and the other Loan Documents represent the agreement of the Grantors, the
Administrative Agent and the other Secured Parties with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any other Secured Parties relative to subject matter hereof and thereof not
expressly set forth or referred to herein or in the other Loan Documents.
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9.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
9.12. Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the court of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such Grantor at its address referred to in Section 9.2 or at such
other address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to xxx in any other jurisdiction;
and
(e) waives, to the maximum extent, not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.
9.13. Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any other Secured Party has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Grantors, on the one
hand, and the Administrative Agent and other Secured Parties, on the other hand, in
connection herewith or therewith is solely that of guarantor and lender;
(c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Secured Parties or among
the Grantors and the Secured Parties; and
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(d) as between any Grantor on the one hand and the Administrative Agent or any other
Secured Party on the other band, (x) the maturity of the Loan Document Obligations may be
accelerated as provided in the Credit Agreement for the purposes of this Agreement and the
other Security Documents to which Grantor is a party, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations guaranteed
hereby, and (y) in the event of any declaration of acceleration of such Loan Document
Obligations as provided in the Credit Agreement, such Grantor’s Obligations (whether or not
due and payable) shall forthwith become due and payable by such Grantor for the purpose of
this Agreement and the other Security Documents to which it is a party.
9.14. Additional Grantors. Each Subsidiary of the Borrower that is required to become a party to this Agreement
pursuant to Section 6.9(c) of the Credit Agreement shall become a Guarantor and Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.
9.15. Authorization to Release Guarantees and Liens. Notwithstanding anything to the contrary contained herein, the Administrative Agent is
hereby irrevocably authorized (without requirement of notice to or consent of any other Secured
Party except as expressly required by Section 10.1 of the Credit Agreement) to take any action
requested by the Grantors having the effect of releasing any Guarantor, Collateral or Obligations
to the extent necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with Section 10.1 of the Credit Agreement.
9.16. Termination or Release.
(a) This Agreement, the Guarantees made herein, the security interest granted hereby shall
terminate when all the Loan Document Obligations (other than Loan Document Obligations in respect
of Specified Swap Agreements, Cash Management Obligations and contingent indemnity obligations for
which no claim is pending) have been paid in full and the Lenders have no further commitment to
lend under the Credit Agreement, the exposure under the Letters of Credit has been reduced to zero
and the Issuing Lender has no further obligations to issue Letters of Credit under the Credit
Agreement.
(b) A Subsidiary Guarantor shall automatically be released from its obligations hereunder and
the security interest in the Collateral of such Subsidiary Guarantor shall be automatically
released upon the consummation of any transaction permitted by the Credit Agreement as a result of
which such Subsidiary Guarantor ceases to be a Subsidiary of the Borrower or is designated as an
Unrestricted Subsidiary in accordance with the Credit Agreement; provided that the Required
Lenders shall have consented to such transaction (to the extent required by the Credit Agreement)
and the terms of such consent did not provide otherwise. The security interest in the Pledged
Stock of any Subsidiary Guarantor shall be automatically released if such Subsidiary Guarantor is
designated an Unrestricted Subsidiary in accordance with the Credit Agreement.
(c) Holdings shall automatically be released from its obligations hereunder subject to and
pursuant to the terms of Section 10.18 of the Credit Agreement.
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(d) Upon any sale or other transfer or disposal by any Grantor of any Collateral that is
permitted under the Credit Agreement (other than any such transfer, sale or disposal to another
Grantor), or upon the effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 10.1 of the Credit Agreement, the security
interest in such Collateral shall be automatically released.
(e) In connection with any termination or release pursuant to paragraph (a), (b) or (c), the
Administrative 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 and
assign, transfer and deliver to such Grantor such of the Collateral as is then being (or has been)
so sold or otherwise disposed of, or released, and as may be in the possession of the
Administrative Agent and has not theretofore been released pursuant to this Agreement. Any
execution and delivery of documents pursuant to this Section 9.16 shall be without recourse to or
warranty by the Administrative Agent.
9.17. WAIVER OF JURY TRIAL. EACH GUARANTOR AND GRANTOR AND, BY THEIR ACCEPTANCE HEREOF, THE ADMINISTRATIVE AGENT AND
THE OTHER SECURED PARTIES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Security Agreement
to be duly executed and delivered under seal as of the date first above written.
| NMH HOLDINGS, LLC | ||||||
| By: | /s/ Xxxxx X. Xxxxxx
|
|||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Title: | Executive Vice President, Chief | |||||
| Financial Officer and Treasurer | ||||||
| NATIONAL MENTOR HOLDINGS, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxxxx
|
|||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Title: | Executive Vice President, Chief | |||||
| Financial Officer and Treasurer | ||||||
| CORNERSTONE LIVING SKILLS, INC. FAMILY ADVOCACY SERVICES, LLC FIRST STEP INDEPENDENT LIVING PROGRAM, INC. XXXXXXXX XXXX ENTERPRISES, INC. ILLINOIS MENTOR, INC. INSTITUTE FOR FAMILY CENTERED SERVICES, INC. XXXX’X LIBERTY HOMES, INC. MASSACHUSETTS MENTOR, INC. MENTOR MANAGEMENT, INC. MENTOR MARYLAND, INC. NATIONAL MENTOR HEALTHCARE, LLC NATIONAL MENTOR HOLDINGS, LLC NATIONAL MENTOR SERVICES HOLDINGS, LLC NATIONAL MENTOR SERVICES, LLC NATIONAL MENTOR, LLC NEW PROVIDER, LLC OHIO MENTOR, INC. REM ARIZONA REHABILITATION, INC. REM ARROWHEAD, INC. REM CENTRAL LAKES, INC. REM COLORADO, INC. REM COMMUNITY OPTIONS, LLC REM COMMUNITY PAYROLL SERVICES, LLC REM CONNECTICUT COMMUNITY SERVICES, INC. REM CONSULTING OF OHIO, INC. |
||||||
| REM DEVELOPMENTAL SERVICES, INC. REM HEARTLAND, INC. REM HENNEPIN, INC. REM HOME HEALTH, INC. REM INDIANA COMMUNITY SERVICES, INC. REM INDIANA COMMUNITY SERVICES II, INC. REM INDIANA, INC. REM IOWA COMMUNITY SERVICES, INC. REM IOWA, INC. REM MANAGEMENT, INC. REM MARYLAND, INC. REM MINNESOTA COMMUNITY SERVICES, INC. REM MINNESOTA, INC. REM NEVADA, INC. REM NEW JERSEY, INC. REM NORTH DAKOTA, INC. REM NORTH STAR, INC. REM OHIO WAIVERED SERVICES, INC. REM OHIO, INC. XXX XXXXXX, INC. REM RIVER BLUFFS, INC. REM SOUTH CENTRAL SERVICES, INC. REM SOUTHWEST SERVICES, INC. REM UTAH, INC. REM WEST VIRGINIA, LLC REM WISCONSIN, INC. REM WISCONSIN II, INC. REM WISCONSIN III, INC. REM WOODVALE, INC. REM, INC. ROCKLAND CHILD DEVELOPMENT SERVICES, INC. SOUTH CAROLINA MENTOR, INC. TRANSITIONAL SERVICES, LLC UNLIMITED QUEST, INC. |
||||||
| By: | /s/ Xxxxx X. Xxxxxx
|
|||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Title: | Executive Vice President, Chief Financial | |||||
| Officer and Treasurer | ||||||
| CAREMERIDIAN, LLC, CENTER FOR COMPREHENSIVE SERVICES, INC. LAKEVIEW BLUE RIDGE, INC. LAKEVIEW HEALTHCARE SYSTEMS, INC. LAKEVIEW OCEAN STATE, INC. |
||||||
| LAKEVIEW WATERFORD, INC. MENTOR ABI, LLC, NEURORESTORATIVE ASSOCIATES, INC. PROGRESSIVE LIVING UNITS SYSTEMS-NEW JERSEY, INC. TIMBER RIDGE GROUP, INC. |
||||||
| By: | /s/ Xxxxx X. Xxxxxx
|
|||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Title: | Executive Vice President and Treasurer | |||||
| UBS AG, STAMFORD BRANCH, as Administrative Agent |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Associate Director, Banking Products Services, US | |||
| By: | /s/ Xxxx X. Xxxx | |||
| Name: | Xxxx X. Xxxx | |||
| Title: | Associate Director, Banking Products Services, US | |||
