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EXHIBIT 10.5
[EXECUTION COPY]
AMENDED AND RESTATED COMPANY SECURITY AGREEMENT
This AMENDED AND RESTATED COMPANY SECURITY AGREEMENT dated as of
September 30, 1999, among NORTHSTAR HEALTH SERVICES, INC., a Delaware
corporation (the "Company"), CERBERUS CAPITAL MANAGEMENT, LLC (the "Agent") and
THE CHASE MANHATTAN BANK, as Collateral Agent as provided for in Section 8.1B of
the Credit Agreement referred to below (as successor collateral agent to IBJ
WHITEHALL BANK & TRUST COMPANY, formerly known as IBJ XXXXXXXX BANK & TRUST
COMPANY, the "Collateral Agent"), amends and restates in its entirety that
certain Security Agreement, dated as of October 20, 1995 (as amended, modified
or supplemented prior to the date hereof, the "Original Security Agreement"),
between the Company and IBJ Xxxxxxxx Bank & Trust Company (the "Original
Agent").
RECITALS
A. The Company, the Original Agent and the lenders set forth on the
signature pages thereto are parties to that certain Credit Agreement, dated as
of October 20, 1995 (as amended, modified or supplemented prior to the date
hereof, the "Original Credit Agreement"), pursuant to which the Lenders agreed
to extend certain credit facilities to the Company (the "Original Loans") which
were represented by certain promissory notes (the "Original Notes"), the
proceeds of which were used (i) to refinance substantially all indebtedness of
the Company and its Subsidiaries outstanding on the date thereof, (ii) to pay
certain fees and expenses, (iii) to provide financing for the working capital
needs of the Company and its Subsidiaries and (iv) to provide a portion of the
purchase price of certain acquisitions by the Company and its Subsidiaries.
B. The Company secured all of the Obligations under the Original Credit
Agreement and under the other Loan Documents by granting to the Original Agent,
on behalf of Lenders, a first priority security interest in all of its personal
property, including, without limitation, a pledge of all of the capital stock of
each of its Subsidiaries.
C. The Original Agent now wishes to resign as agent for the Lenders and
(i) the Agent wishes to replace the Original Agent as agent for the Lenders and
(ii) the Collateral Agent wishes to replace the Original Agent as collateral
agent for the Lenders under this Agreement.
D. The Company, the Lenders, the Agent and the Original Agent have
agreed to amend and restate the Original Credit Agreement as of the date hereof
(the Original Credit Agreement, as so amended and restated being referred to
herein as the "Credit Agreement") to (i) extend the maturity of the Original
Loans on the terms set forth therein, (ii) reflect the Original Agent's
resignation as agent for the Lenders thereunder and the appointment of the Agent
as successor agent for the Lenders and the appointment of the Collateral Agent
as its successor as collateral agent for the Lenders under this Agreement, and
(iii) make certain other changes as more fully set forth therein.
E. The Company, the Agent and the Collateral Agent now wish to amend
and restate the Original Security Agreement in its entirety to (i) secure the
Lenders' interest in the Obligations and (ii) reflect the Original Agent's
resignation as collateral agent for the Lenders and the appointment of the
Collateral Agent as its successor as collateral agent for the Lenders.
F. It is the intent of the Company, the Lenders, the Agent and the
Collateral
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Agent that the amendment and restatement of the Original Credit Agreement shall
not constitute a novation of the obligations and liabilities of the parties
under the Original Credit Agreement nor be deemed to evidence or constitute
repayment of all or any portion of such obligations and liabilities and that the
Credit Agreement shall amend and restate in its entirety the Obligations under
the Original Credit Agreement and re-evidence the Obligations of Company
outstanding thereunder.
G. The Company represents and confirms, and the Agent and the
Collateral Agent each acknowledge, that (i) the security interests granted
pursuant to the Original Security Agreement continue in full force and effect
and continue to secure the Obligations under the Credit Agreement, (ii) the
Loans represented by the Notes are the same Original Loans which were, prior to
the date hereof, represented by the Original Notes, and (iii) the transactions
contemplated by the Credit Agreement and this Agreement did not and do not
constitute a discharge or release of the security interests granted by the
Original Security Agreement and that the security interests and the Collateral
securing the Original Loans and Obligations continue to secure the Loans and the
Obligations.
AGREEMENT
In consideration of the premises and the mutual covenants and the
mutual agreements herein set forth, the parties agree as follows:
ARTICLE I
Defined Terms
Section 1.01. Certain Defined Terms. Unless otherwise defined herein,
capitalized terms used but not otherwise defined in this Agreement have the
meaning given to them in the Credit Agreement. In addition, the following terms
have the following meanings:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights and all other debts and obligations owing to
Company, including, but not limited to those arising out of the sale or
lease of goods or the rendition of services by Company, whether or not
earned by performance, including Health-care-insurance Receivables, all
credit insurance, guaranties and other security therefor and
enhancements thereof, as well as all goods returned to or reclaimed by
Company, and Company's books and records (both hard copy and
electronic) relating to any and all of the foregoing.
"Action" against a Person means an action, suit,
investigation, complaint, litigation, arbitration, contest, hearing,
inquiry, inquest, audit, examination or other proceeding threatened or
pending against or affecting the Person or its property, whether civil,
criminal, administrative, investigative or appellate, in law or equity
before any arbitrator or Governmental Body.
"Cash Management System" has the meaning stated in Section
3.05(e).
"Code" means the New York Uniform Commercial Code, as set
forth in N.Y. U.C.C. Law Sections 1-101, et seq. (XxXxxxxx 1990), as
amended from time to time.
"Collateral" means all of the following: Accounts; Equipment;
General Intangibles; Inventory; Investment Property; Negotiable
Collateral; Vehicles; Deposit Accounts; Fixtures; any money or other
assets of Company which hereafter come into the possession, custody or
control of Agent or Collateral
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Agent; and all proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any
or all of the Collateral, and any and all Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral,
money, Deposit Accounts or other tangible or intangible property
resulting from the sale or other disposition of the Collateral, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Agent's Office" means the office of the Collateral
Agent located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx.
"Concentration Account" means the deposit account established
in the name of the Collateral Agent with the Collateral Agent at the
Collateral Agent's Office, account number 507-890817.
"Copyright Licenses" means (a) any agreement, written or oral,
naming the Company as licensor or licensee, granting any right in or to
any Copyright or copyright registration in the United States or any
foreign country, including, without limitation, any thereof referred to
on Part I of Schedule 4.10 hereto, or (b) any and all present and
future agreements, including, without limitation, assignments and
consents, as any such agreements may from time to time be amended or
supplemented, pursuant to which the Company now has or hereafter
acquires any direct or indirect beneficial interest in any Copyright,
or is a grantor of rights to any third party with respect to any
Copyright, whether as a party to any such agreement or as an assignee
of any rights under any such agreement, including, without limitation,
any thereof referred to on Part I of Schedule 4.10 hereto, excluding,
however, non-exclusive computer software licenses.
"Copyrights" means (a) the copyrights in all original works of
authorship fixed in any tangible medium of expression, including,
without limitation, any thereof referred to on Part I of Schedule 4.10
hereto, including, without limitation, all databases, source codes,
object codes and manuals, whether published or unpublished, now or
hereafter existing, in the United States and all foreign countries, and
all applications, registrations, renewals, extensions and recordings
relating thereto filed in the United States Copyright Office or in any
other governmental office or agency in the United States or elsewhere,
in each case in which the Company has any right, title or interest, and
all other rights which the Company presently has or hereafter acquires
pursuant to any Copyright License, including, without limitation,
copyright assignments, exclusive and nonexclusive licenses, and (b) all
right, title and interest of the Company in all physical materials
embodying works with respect to which the Company owns or holds rights
in any Copyrights or Copyright Licenses.
"Deposit Account" means a demand, time, savings, passbook or
similar account maintained with a bank, other than Investment Property
or an account evidenced by an Instrument.
"Disbursement Account" means the deposit account, established
in the name of the Company with the Collateral Agent at the Collateral
Agent's Office, account number 507-890833.
"Equipment" means all of Company's present and hereafter
acquired equipment, machinery, machine tools, motors, furniture,
furnishings, fixtures, motor vehicles, rolling stock, processors,
tools, parts, dies, jigs, goods (other than consumer goods, farm
products or Inventory), wherever located, and any interest of Company
in any of the foregoing and all attachments, accessories, accessions,
replacements, substitutions, additions and improvements to any of
foregoing, wherever located.
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"Fixtures" means goods that have become so related to
particular real property that an interest in them arises under real
property law.
"General Intangibles" means all of Company's present and
future general intangibles and other personal property (including
contract rights, rights arising under common law, statutes or
regulations, licenses, franchises, Payment Intangibles, choses or
things in action, goodwill, Patents, Patent Licenses and Patent
applications, trade names, Trademarks, Trademark Licenses and trademark
applications, service marks, Copyrights, Copyright Licenses and
Copyright applications, trade secrets, blueprints, drawings,
intellectual property of any nature whatsoever, purchase orders,
customer lists, monies due or recoverable from pension funds, monies
due under any royalty or licensing agreements, route lists,
infringement claims, computer programs, computer discs, source codes,
computer tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds and tax refund claims) other
than goods and Accounts, and Company's books and records relating to
any of the foregoing.
"Governmental Body" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Health-care-insurance Receivable" means an interest in or
claim under a policy of insurance which is a right to payment of a
monetary obligation for health-care goods or services provided.
"Instrument" means a negotiable instrument or any other
writing that evidences a right to the payment of a monetary obligation,
is not itself a security agreement or lease, and is of a type that in
ordinary course of business is transferred by delivery with any
necessary endorsement or assignment.
"Inventory" means all present and future inventory in which
Company has any interest, including goods held for sale or lease or to
be furnished under a contract of service, Company's present and future
raw materials, work in process, finished goods and materials used in or
consumed in Company's business, goods which have been returned to,
repossessed by or stopped in transit by Company, packing and shipping
materials, wherever located, any documents of title representing any of
the above, and Company's books and records relating to any of the
foregoing.
"Investment Property" means all of Company's present and
future certificated and uncertificated securities, securities
entitlements, securities accounts, commodity accounts and commodity
contracts.
"Medicare" means the federal program authorized under 42
U.S.C. 301 et. seq.
"Medicare Collection Account" means the deposit account,
established in the name of the Company with the Collateral Agent at the
Collateral Agent's Office, account number 507-890809.
"Medicare Receivable" means any receivable of the Company or
one of its Subsidiaries created in connection with services provided
under Medicare.
"Negotiable Collateral" means all of Company's present and
future letters
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of credit, notes, drafts, Instruments, documents, leases and chattel
paper and Company's books and records relating to any of the foregoing.
"Non-Medicare Collection Account" means the deposit account
established in the name of the Company with S&T Bank at S&T Bank's
Office, account number 00- 32168.
"Patent Licenses" means any agreement, whether written or
oral, providing for the grant by the Company of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Part II Schedule 4.10
hereto.
"Patents" means (a) all letters patent of the United States
and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Part II of Schedule 4.10 hereto, and (b) all
applications for letters patent of the United States and all divisions,
continuations and continuations-in-part thereof or any other country,
including, without limitation, any thereof referred to in Part II of
Schedule 4.10 hereto.
"Payment Intangible" means a general intangible under which
the account debtor's principal obligation is a monetary obligation.
"Payroll Account" means the deposit account, established in
the name of the Company with the Collateral Agent at the Collateral
Agent's Office, account number 507-890841.
"Pledged Accounts" has the meaning stated in Section 3.05(b).
"Regulation" means each applicable law, rule, regulation,
order or recommendation (or any change in its interpretation or
administration) by any Governmental Body, central bank or comparable
agency and any request or directive (whether or not having the force of
law) of any of those Persons and each writ, judgment, injunction,
order, decree or award of any arbitrator or Governmental Body.
"S&T Bank" means S&T Bank.
"S&T Bank's Office" means the office of S&T Bank located at
000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000.
"Trademark Licenses" means any agreement, written or oral,
providing for the grant by the Company of any right to use any
Trademark, including, without limitation, any thereof referred to in
Part III of Schedule 4.10 hereto.
"Trademarks" means (a) 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 the 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 or the
United States, any State thereof of any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Part III of Schedule 4.10 hereto, and (b) all
renewals thereof.
"Vehicles" means vehicles operated or driven upon a public
highway and propelled by any power other than muscular power as set
forth in N.Y. Veh. & Traf. Law Section 125 (XxXxxxxx 1996), as amended.
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ARTICLE II
Grant of Security
Section 2.01. Grant of Security. Company hereby grants to Agent and
Collateral Agent, for their benefit and for the ratable benefit of the Lenders,
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Company of each and all
of its covenants and duties under the Loan Documents. Agent's and Collateral
Agent's security interest in the Collateral shall attach to all Collateral
without further act on the part of Agent, Collateral Agent or Company. Other
than sales of Inventory to buyers in the ordinary course of business, Company
has no authority, express or implied, to dispose of any item or portion of the
Collateral, except as set forth in the Credit Agreement.
Section 2.02. Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Company shall, upon the request of Agent, immediately endorse and assign such
Negotiable Collateral to Agent or the Collateral Agent and deliver physical
possession of such Negotiable Collateral to Collateral Agent.
ARTICLE III
Company Remains Liable; Delivery of Collateral; Deposit Accounts
Section 3.01. Company Remains Liable. Anything in this Agreement to the
contrary notwithstanding:
(a) Company Remains Liable. The Company shall remain liable to
perform all its obligations (whether under the Contract, Negotiable
Collateral or otherwise) under or in respect of the Collateral to the
same extent as if this Agreement had not been executed.
(b) Company Not Released. The exercise by the Collateral
Agent, the Agent or any Lender of any of their rights under any Loan
Document shall not release the Company from any of those obligations,
(c) Collateral Agent, Agent and Lenders Not Liable. Neither
the Collateral Agent, the Agent nor any Lender shall have, by reason of
any Loan Document, any obligation or liability under or in respect of
any Collateral or any contract or agreement included in the Collateral.
(d) Collateral Agent, Agent and Lenders Not Obligated to
Perform. Neither the Collateral Agent, the Agent nor any Lender shall
be obligated to perform any of the obligations of the Company under or
in respect of any Collateral or any other contract or agreement
included in the Collateral or to take any action to collect or enforce
any claim for payment assigned by this Agreement.
Section 3.02. Delivery of Collateral.
(a) Delivery of Collateral. All certificates and instruments, whether
negotiable or otherwise, representing or evidencing the Investment Property
shall be delivered to the Collateral Agent duly endorsed in blank or accompanied
by undated stock powers, instruments of transfer or undated assignments duly
executed in blank, in each case with signatures guaranteed and otherwise in form
and substance satisfactory to the
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Collateral Agent (the "Stock Powers"), or in the case of non-negotiable
Investment Property such Investment Property has been re-registered in the
Collateral Agent's name.
(b) Re-Registration of Collateral. Upon the occurrence and during the
continuation of an Event of Default under the Credit Agreement, at the request
of the Agent, the Company shall promptly cause the Investment Property,
Negotiable Collateral or Instruments specified by the Agent to be registered in
the name of the Collateral Agent or in the name of the nominee or nominees
specified by the Agent.
(c) Exchange of Certificates. The Collateral Agent may from time to
time exchange certificates or instruments representing or evidencing the
Investment Property, Negotiable Collateral or Instruments for replacement
certificates or instruments.
Section 3.03 Notices and Analysis.
(a) Notice to Account Debtors and Contracting Parties. The Company
shall promptly notify account debtors on the Accounts, parties to the Contracts
and all other obligors in respect of any Collateral that the Accounts, Contracts
and all other Collateral have been assigned to the Collateral Agent for the
ratable benefit of the Lenders and that payments in respect thereof shall be
made directly to S&T Bank by delivering a written notice, substantially in the
form of Exhibit 3.03(a) hereto to each such account debtor, Contract party and
obligor. The Collateral Agent and the Agent may in their own names or in the
name of others communicate with account debtors on the Accounts, parties to the
Contracts and the other obligors to verify with them to its satisfaction the
existence, amount and terms of any Accounts, Contracts or other Collateral.
(b) Analysis of Accounts. The Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonable considers advisable, and the Company shall furnish all such
assistance and information as the Agent may require in connection therewith. At
any time and from time to time, upon the Agent's request and at the expense of
the Company, the Company shall cause independent public accountants or others
satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts; provided, that unless an Event of Default shall have occurred and be
continuing (in which case this right shall not be so limited) such activities
shall not take place more often than two times during any calendar year.
Section 3.04. Voting of Investment Property. Unless an Event of Default
shall have occurred and is continuing, the Company shall be entitled to exercise
any and all voting and other consensual rights pertaining to all or any part of
the Investment Property for any purpose not inconsistent with the terms of this
Agreement or any other Loan Document; provided, however, that the Company shall
not exercise or refrain from exercising any right if, in the judgment of the
Agent, the action would have a material adverse effect on the value of all or
any part of any Collateral or on the interest of the Company, the Collateral
Agent, the Agent or the Lenders in any Collateral. The Company shall give the
Collateral Agent and the Agent at least five Business Days prior written notice
of the manner in which it intends to exercise, or the reasons for refraining
from exercising, any such right.
Section 3.05. Deposit Accounts.
(a) No Other Accounts. The Company shall not, and shall not permit any
of its Subsidiaries to, own, open, establish, have or maintain any Deposit
Account other than the Pledged Accounts (as defined below).
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(b) Establishment of Pledged Accounts. There have been established by
the Company and its Subsidiaries on or prior to the date hereof the Medicare
Collection Account, the Non- Medicare Collection Account, the Concentration
Account, the Payroll Account and the Disbursement Account (collectively, the
"Pledged Accounts").
The terms and conditions of each of the Pledged Accounts shall at all
times be in all respects satisfactory to the Collateral Agent and the Agent.
(c) Blocked Accounts. On or prior to the date hereof (i) the Company,
the Agent and S&T Bank will enter into a Blocked Account Agreement,
substantially in the form of Exhibit 3.05(c) hereto, with respect to the
Non-Medicare Collection Account and (ii) the Company, the Agent and the
Collateral Agent will enter into Blocked Account Agreements, substantially in
the form of Exhibit 3.05(c) hereto, with respect to each of the Pledged
Accounts, other than the Non-Medicare Collection Account.
(d) Control of the Pledged Accounts. The parties hereto agree that the
Pledged Accounts (other than the Medicare Collection Account) shall be under the
exclusive dominion and control of the Collateral Agent. The Collateral Agent
hereby authorizes the Company to collect amounts due under the Collateral,
subject to the Agent's direction and control, and the Agent may curtail or
terminate said authority at any time.
(e) Cash Management System. The Company agrees to, and shall cause the
Subsidiaries to, operate their respective businesses, manage their cash flows,
and maintain the Pledged Accounts strictly in accordance with the terms and
provisions of the cash management system set forth on Annex A to this Agreement
(the "Cash Management System"). In addition, the Company shall not, and shall
cause the Subsidiaries not to, take any action or omit to take any action that
would violate, breach, conflict with, or otherwise frustrate the purposes of the
Cash Management System. The Company agrees that any such violation or breach of
the Cash Management System shall be treated as a breach or violation of any
provision of this Agreement.
(f) Reports and Documents. Promptly (but in no event later than 10
days) after the end of each calendar month, the Company shall deliver to the
Collateral Agent a certification from the Chief Financial Officer of the Company
that all deposits into the Pledged Accounts consist solely of Collateral or
Proceeds of Collateral. At the Collateral Agent's request, the Company shall
deliver to the Collateral Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to such deposits,
including, without limitation, all original orders and invoices.
(g) Turn-Over of Proceeds. All Proceeds of Collateral which are not
sent or delivered directly to a Pledged Account by an obligor, when collected by
the Company, whether consisting of checks, notes, drafts, bills of exchange,
money orders, commercial paper of any kind whatsoever, or other documents or
otherwise, received in payment of any Collateral or on account of any Collateral
shall be promptly deposited by the Company in the exact form received, except
for any endorsement by the Company to the Collateral Agent, if required, in the
Medicare Collection Account, or the Non-Medicare Collection Account, as
applicable, or shall be turned over to the Collateral Agent, and until so
deposited or turned over, shall be deemed to be held in trust by the Company for
and as the Collateral Agent's property and shall not be commingled with the
Company's other funds.
(h) Proceeds Remain Collateral. All Proceeds constituting collections
of Collateral while held by the Collateral Agent (or by the Company in trust for
the Collateral Agent) shall continue to be collateral security for all of the
Obligations and
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shall not constitute payment thereof until applied as hereinafter provided.
(i) KRS Partnerships. The Company agrees to use its best efforts to
cause each of the partners of the KRS Partnerships to execute and deliver the
Addendum to Management Agreement, in the form of Exhibit 3.05(i) (1), (2), (3)
and (4) attached hereto within 60 days after the date of this Agreement. In the
event that all such agreements are not executed and delivered within such 60 day
period the Company agrees to modify the Cash Management System to the
satisfaction of the Agent.
ARTICLE IV
Representations and Warranties of the Company
The Company hereby represents and warrants to the Collateral Agent, the
Agent and the Lenders as follows:
Section 4.01. Power. The Company has good right and all necessary power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, including, without limitation, the granting of
the security interests, Liens and pledges in the Collateral to the Collateral
Agent.
Section 4.02. Authorization; Binding Effect. The execution and delivery
by the Company of this Agreement, the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby has been duly authorized by all necessary corporate action.
No other proceedings on the part of the Company are necessary to approve and
adopt this Agreement or to approve the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and is a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
Section 4.03. Contravention. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (with or without notice or lapse of time
or both) (a) conflict with, violate or breach any provision of the Company's
organizational documents or bylaws, (b) violate, conflict with or result in a
breach of any Regulation, writ, judgment, injunction, order, decree or award of
any Governmental Body or any other Person by which the Company, any of the
Collateral or any of its other properties may be bound or affected, (c) conflict
with, result in a default under, or give rise to a right of termination,
cancellation, or acceleration or to a loss of a benefit under any Contract or
other material agreement to which the Company is a party or by which the
Company, the Collateral or any of its other properties may be bound or affected
or (d) result in or require the creation or imposition of any Lien on any
Collateral or any of the other properties now owned or hereafter acquired by the
Company, except for the Liens in favor of the Collateral Agent created by this
Agreement.
Section 4.04. Approvals. No authorization, consent, order or approval
of, notice to or registration or filing with, or any other action by any
Governmental Body or other Person, including any other party to a Contract, is
required or advisable in connection with (a) the due execution and delivery by
the Company of this Agreement, (b) the consummation of the transactions
contemplated by this Agreement, including the granting of the security
interests, Liens and pledges of the Collateral to the Collateral Agent, (c) the
perfection of the security interests, Liens and pledges granted by this
Agreement, (d) the performance by the Company of its obligations under this
Agreement, or (e) the exercise by the Collateral Agent of its rights and
remedies under this Agreement.
Section 4.05. Title. The Company is and, with respect to Collateral to
be
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acquired, will be, the sole legal and beneficial owner of the Collateral, free
and clear of any Lien or option in favor of any other Person, except for the
Liens created by this Agreement and the Company has good and marketable title to
the Collateral. No security agreement, financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Collateral
Agent relating to this Agreement.
Section 4.06. Perfected First Priority Liens. The Liens originally
granted pursuant to this Security Agreement constitute first priority perfected
Liens in favor of the Original Agent for the ratable benefit of the Lenders, and
upon filing of appropriate amendments to the UCC financing statements filed in
connection with such Liens, will constitute first priority perfected Liens in
favor of the Collateral Agent, for the ratable benefit of the Lenders, which
Liens are prior to all other Liens on the Collateral and which are enforceable
as such against (a) all creditors of, and purchasers from, the Company, (b) upon
receipt of landlord waivers in the form of Exhibit 5.02, any owner or purchaser
of the real property where any of the Equipment is located, (c) any present or
future creditor obtaining a Lien on such real property or any of the Collateral,
and (d) any other third party, and all filings and other actions necessary or
desirable to perfect and protect such Liens and security interests have been
duly made or taken.
Section 4.07. Chief Place of Business. The chief place of business and
chief executive office of the Company are located at The Atrium, 000
Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000. The Company keeps all of its
records concerning the Collateral and the original copies of the Contracts only
at that address.
Section 4.08. Accounts, Negotiable Collateral, Instruments and General
Intangibles.
(a) Bona Fide Accounts; Amounts. Except as set forth on Schedule
4.08(a) hereto, each of the Accounts, Negotiable Collateral, Instruments and
General Intangibles arose from bona fide transactions in the ordinary course of
the Company's business and are current and collectible net of any reserves shown
on the Company's financial statements (which reserves are adequate and were
calculated consistent with past practice). The amount represented by the Company
to the Collateral Agent from time to time as owing by each account debtor or by
all account debtors in respect of the Accounts, Negotiable Collateral,
Instruments and General Intangibles will at such time be the correct amount
actually owing by such account debtor or debtors thereunder. There exists no
default under the Accounts, Negotiable Collateral, Instruments or General
Intangibles by any party. The Company has given notice to the issuer of each
Instrument, Investment Property and Negotiable Collateral existing on the date
of this Agreement of the Collateral Agent's security interest in such
Collateral.
(b) Delivery to Agent. All of the certificates and instruments
representing or evidencing Negotiable Collateral and Instruments have been
endorsed, and/or issued and delivered to the Agent in accordance with Section
3.02. No amount payable to the Company under or in connection with any Account
is evidenced by any Instrument or Negotiable Collateral which has not been
delivered to the Agent.
(c) Schedule. Schedule 4.08(c) sets forth a true, correct and complete
list and description of all (i) Accounts in excess of $5,000, (ii) Negotiable
Collateral, (iii) Instruments and (iv) General Intangibles, in each case, in
which the Company has an interest as of the date of the Agreement.
Section 4.09. Contracts.
(a) Legal, Valid and Binding. Each of the Contracts (i) has been duly
authorized, executed and delivered by the Company and, to the best of the
Company's knowledge, by the other parties thereto, and is in full force and
effect and (ii) constitutes
11
the legal, valid and binding obligation of each of the parties thereto.
(b) Full Force and Effect. Except as set forth on Schedule 4.09(b)
hereto, each Contract will continue in full force and effect following the
transactions contemplated by this Agreement, including, without limitation, the
collateral assignment of the Contracts hereunder, in each case without the
breach of any terms or conditions of thereof, without the forfeiture or
impairment of any rights thereunder and without material penalty or other
material adverse consequence.
(c) No Defaults; No Defenses. There exists no breach or default (or
event which with or without the lapse of time or the giving of notice, or both,
would constitute a breach or default) under the Contracts by the Company, or to
the Company's knowledge, any other party thereto. The Company has fully
performed all its obligations under each Contract. The right, title and interest
of the Company in, to and under each Contract are not subject to any defense,
offset, counterclaim or claim which would materially adversely affect the value
of such Contract as Collateral, nor have any of the foregoing been asserted or
alleged against the Company as to any Contract.
(d) Copies of Contracts; No Instruments. At the request of the Agent,
the Company will deliver to the Agent a complete and correct copy of each
Contract, including all amendments, supplements and other modifications thereto.
No amount payable to the Company under or in connection with any Contract is
evidenced by any Instrument or Negotiable Collateral which has not been
delivered to the Collateral Agent. Schedule 4.09(d) sets forth a true, correct
and complete list and description of all of the Contracts.
Section 4.10. Copyrights, Patents and Trademarks.
(a) Schedules. Part I of Schedule 4.10 sets forth a true, correct and
complete list and description of all Copyrights and Copyright Licenses in which
the Company has an interest as of the date hereof. Part II of Schedule 4.10 sets
forth a true, correct and complete list and description of all Patents and
Patent Licenses in which the Company has an interest as of the date hereof. Part
III of Schedule 4.10 sets forth a true, correct and complete list and
description of all Trademarks and Trademark Licenses in which the Company has an
interest as of the date hereof, in each case, including a list of all
jurisdictions in which such Proprietary Rights are registered or applied for and
all registration and application numbers, where applicable.
(b) General. The Company has good and marketable title to each of the
interests created by the Proprietary Rights. All Proprietary Rights of the
Company are valid and in good standing and are in full force and effect. The
Company has not granted any options, licenses or agreements of any kind relating
to Proprietary Rights, including the marketing or distribution thereof. Except
as set forth on Schedule 4.10, the Company is not bound by or a party to any
options, licenses or agreements of any kind relating to the Proprietary Rights
of any other Person. There is no obligation or liability of the Company with
respect to any of the Proprietary Rights which is required to have been paid or
otherwise performed which has not been paid or otherwise performed in full.
(c) No Actions. Except as disclosed on Schedule 4.10, no Action is
pending (i) questioning or challenging the Company's title to, or right to use
such Proprietary Rights, (ii) seeking to limit, cancel or question the validity
of any Proprietary Right, or (iii) which, if adversely determined, would have a
material adverse effect on the value of any Proprietary Rights.
12
Section 4.11. Investment Property.
(a) Schedules. Part I of Schedule 4.11 sets forth a true, correct and
complete list and description of all of the Investment Property constituting
capital stock or other equity interests (the "Equity Interests") and the issuers
thereof (the "Equity Issuers"). Part II of Schedule 4.11 sets forth a true,
correct and complete list and description of all of the Investment Property
constituting indebtedness (the "Debt Interests") and the issuers thereof (the
"Debt Issuers", and together with the Equity Issuers, the "Issuers").
(b) Equity Interests. Each of the Equity Interests is duly authorized,
validly issued, fully paid and non-assessable.
(c) Debt Interests. Each of the Debt Interests is duly authorized,
validly issued and constitutes the legal, valid and binding obligation of the
Issuers thereof enforceable against each such Issuer in accordance with their
respective terms.
(d) No Other Securities or Interests. There are no (i) outstanding
capital stock or securities convertible into or exchangeable or exercisable for
any shares of capital stock or securities of any Equity Issuer, (ii) outstanding
rights to subscribe for or to purchase, or any options for the purchase of, or
any calls, commitments or claims of any character relating to, any shares of
capital stock or securities of any Equity Issuer, (iii) outstanding securities
convertible into or exchangeable or exercisable for any shares of capital stock
or securities of any Equity Issuer and (iv) agreements or arrangements providing
for the issuance of any shares of capital stock or securities of any Equity
Issuer.
(e) No Voting or Transfer Restrictions. There is no agreement or
arrangement restricting the voting or transfer of the Equity Interests or the
Debt Interests or any other Investment Property, except as provided in this
Agreement.
(f) No Payment Restrictions. There are no legal, contractual or other
restrictions on the payment of (i) dividends or other distributions on any
shares of the capital stock or securities of any Equity Issuer, including,
without limitation, the Equity Interests, or (ii) principal or interest on any
indebtedness of any Debt Issuer, including, without limitation, the Debt
Interests, in each case, except for restrictions imposed by this Agreement and
the Credit Agreement.
(g) No Repurchase Obligations. No Person is subject to any obligation,
contingent or otherwise, to repurchase or otherwise acquire or retire any of the
Equity Interests or the Debt Interests.
(h) Delivery to Collateral Agent. All of the certificates and
instruments representing or evidencing the Investment Property and the Stock
Powers have been delivered to the Collateral Agent in accordance with Section
3.02.
Section 4.12. Inventory, Equipment and Fixtures.
(a) Possession. The Company has exclusive possession and control of the
Inventory, Equipment and Fixtures.
(b) Condition. All of the Inventory, Equipment and Fixtures are in good
working order, condition and repair, except for ordinary, wear and tear which is
not material, and are suitable and adequate for the uses for which they are used
and intended.
(c) Schedule. Schedule 4.12 sets forth a true, correct and complete
list, description and location of all (i) Inventory, (ii) Equipment and (iii)
Fixtures, in each case, in which the Company has an interest as of the date of
this Agreement.
Section 4.13. Vehicles. Schedule 4.13 sets forth a true, correct and
complete
13
list and description of all Vehicles in which the Company has an interest as of
the date of this Agreement. All such Vehicles are in good working order,
condition and repair (except for ordinary wear and tear) and are suitable and
adequate for the uses for which they are used and intended.
Section 4.14. Governmental Obligors. Schedule 4.14 sets forth a true,
correct and complete list and description, including the name and address and
outstanding amount owed (as of the date hereof), by each of the account debtors
on the Accounts, parties to the Contracts and the obligors under any other
Collateral which is a Governmental Body as of the date of this Agreement whose
payments must be segregated from other receivables of the Company under
Medicare. The Company has notified any obligor which is a Governmental Body of
the security interest granted hereby and has instructed such Governmental Bodies
making Medicare payments to the Company to make such payments only to the
Medicare Collection Account.
ARTICLE V
Covenants of the Company
Section 5.01. No Liens on Collateral. The Company will not create,
incur, assume or permit to exist, will defend the Collateral against, and will
take such other actions as is necessary to remove, any Lien or claim on or to
the Collateral, other than the Liens created hereby, and will defend the right,
title and interest of the Collateral Agent and the Lenders in and to any of the
Collateral against the claims and demands of any and all Persons.
Section 5.02. Perfection. The Company will take any and all actions, at
the Company's expense, which are necessary or advisable to ensure that (a) the
Liens granted pursuant to this Security Agreement at all times constitute
perfected Liens in favor of the Collateral Agent, for the ratable benefit of the
Lenders, and (b) such Liens are at all times prior to all other Liens on the
Collateral and will be enforceable as such against all creditors of, and
purchasers from, the Company and against any owner or purchaser of the real
property where any of the Equipment is located and any present or future
creditor obtaining a Lien on such real property, and will use its best efforts
to obtain landlord waivers in the form of Exhibit 5.02 hereto, from all of the
landlords owning property at which the Company conducts business or has
Equipment.
Section 5.03. Limitations on Dispositions of Collateral. The Company
will not sell, transfer, lease, convey or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so, except for, so long as no
Default or Event of Default has occurred and is continuing, the disposition in
the ordinary course of the Company's business consistent with past practice of
property not material to the conduct of the Company's or the Subsidiaries'
respective businesses.
Section 5.04. Payment of Obligations. The Company will promptly pay and
discharge when due all taxes, assessments and governmental charges or levies
assessed, levied or imposed upon or relating to, and all claims against, the
Collateral or the Company or in respect of the Company's income or profits
therefrom, as well as all claims of any kind, including, without limitation,
claims for labor, materials and supplies, against or with respect to the
Collateral.
Section 5.05. Compliance with Laws, etc. The Company will comply in all
material respects with all Regulations applicable to the Collateral or any part
thereof or to the operation of the Company's business.
Section 5.06. Maintenance of Records. The Company will keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, including,
14
without limitation, a record of all payments received and all credits granted
with respect to the Accounts. The Company will xxxx its books and records
pertaining to the Collateral to evidence this Security Agreement and the Liens,
security interests and pledges granted hereby. For the Collateral Agent's and
Lenders' further security, the Collateral Agent, for the ratable benefit of the
Lenders, shall have a security interest in all of the Company's books and
records pertaining to the Collateral and, upon the occurrence of an Event of
Default which is continuing, the Company shall, upon request, turn over any such
books and records to the Collateral Agent or to its representatives.
Section 5.07. Right of Inspection. The Collateral Agent, the Agent and
the Lenders shall at all times have full and free access during normal business
hours and, upon the occurrence and continuation of an Event of Default, at any
time, to all the books, correspondence and records of the Company, and the
Collateral Agent, the Agent and the Lenders or their respective representatives
may examine the same, take extracts therefrom and make photocopies thereof, and
the Company agrees to render to the Collateral Agent, the Agent and the Lenders,
at the Company's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Collateral Agent, the Agent and
the Lenders and their respective representatives shall at all times also have
the right to enter into and upon any premises where any of the Inventory,
Equipment or other Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting their interests therein.
Section 5.08. Impairment of Collateral.
(a) General. The Company shall not take, or fail to take, any action in
connection with any Collateral that would impair the value of the Collateral or
the interest or rights of the Company, the Collateral Agent, the Agent or any
Lender in, to or under that Collateral.
(b) Certain Actions Prohibited. The Company will not (i) amend, modify,
terminate, cancel or waive any provision of any Account, Negotiable Collateral,
Instrument, General Intangible, Contract or Investment Property in any manner
which could reasonably be expected to materially adversely affect the value of
the Collateral or the interest of the Company, the Collateral Agent, the Agent
or the Lenders in such Collateral, (ii) fail to exercise promptly and diligently
each and every material right which it may have under each Contract, each
agreement giving rise to an Account (other than any right of termination) or any
other right with respect to Collateral or (iii) fail to deliver to the
Collateral Agent a copy of each material demand, notice or document received by
it relating in any way to any Contract, any agreement giving rise to an Account
or any other Collateral.
(c) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of the Company's business consistent with past
practice, the Company will not grant any extension of the time of payment of any
of the Accounts, Negotiable Collateral, Instruments, General Intangibles,
Contracts or Investment Property, or compromise, compound or settle the same for
less than the full amount thereof, release, wholly or partially, any Person
liable for the payment thereof, or allow any credit or discount whatsoever
thereon.
Section 5.09. Notices; Reports.
(a) Liens. The Company will advise the Collateral Agent and the Agent
promptly, in reasonable detail, of (i) any Lien (other than Liens created hereby
or permitted under the Credit Agreement) on, or claim asserted against, any of
the Collateral and (ii) the occurrence of any other event which could reasonably
be
15
expected to have a material adverse effect on (x) the aggregate value of the
Collateral or (y) the Liens created hereunder.
(b) Reports, Notices, Etc. The Company shall furnish to the Collateral
Agent and the Agent (i) promptly upon receipt, copies of all notices, requests
and other documents received by the Company under or in respect of the
Collateral, (ii) promptly upon the request of the Agent, information and reports
regarding that Collateral and (iii) promptly upon the request of the Agent, make
the demands and requests for information or action that the Company is en titled
to make under that Collateral. The Company will also promptly furnish to the
Collateral Agent copies of any monthly management reports prepared by the
Company.
(c) Further Identification of Collateral. The Company will furnish to
the Collateral Agent and the Agent from time to time statements and schedules
further listing, identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request,
all in reasonable detail.
Section 5.10. Changes in Locations, Name, etc. The Company will not (i)
change the location of its chief executive office or its chief place of business
from that specified in Section 4.07 or remove its books and records from the
location specified in Section 4.07, (ii) permit any of the Collateral to be
kept, stored or used at a location other than those listed on the Schedules to
this Agreement or (iii) change its name, identity or corporate structure or
merge or take or suffer any other action that might result in any financing
statement filed by the Agent in connection with this Security Agreement becoming
misleading, unless, in each case, it shall have given the Collateral Agent and
the Agent at least 30 days prior written notice thereof.
Section 5.11. Accounts, Negotiable Collateral, Instruments, General
Intangibles, Contracts and Investment Property.
(a) Collections. Subject to the provisions of Article VI hereof and the
Cash Management System, the Company shall timely collect all amounts due or to
become due to the Company under the Accounts, Negotiable Collateral,
Instruments, General Intangibles, Contracts and Investment Property and
otherwise enforce its rights under and in respect of such Collateral.
(b) Deliver Collateral to Agent. In the event that any Account,
Negotiable Collateral, Instrument or General Intangible is evidenced by a
promissory note, certificate or instrument, the Company shall deliver and pledge
to the Agent the note or instrument. In the event any Investment Property is
evidenced by a promissory note, certificate or instrument, the Company shall
deliver and pledge to be Collateral Agent the note or instrument, accompanied by
Stock Powers. The Company will also deliver to the Agent or the Collateral
Agent, with respect to Investment Property, all Instruments, Negotiable
Collateral and Investment Property existing on and after the date of this
Agreement endorsed and issued as provided in Section 3.02.
(c) Pledge of Additional Collateral. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
Negotiable Collateral, Instrument or Investment Property, such Negotiable
Collateral, Instrument or Investment Property shall be immediately delivered to
the Agent, or the Collateral Agent (with respect to Investment Property)
accompanied by Stock Powers, to be held as Collateral pursuant to this
Agreement.
Section 5.12. Contracts. The Company will fully and timely perform and
comply in all material respects with all its obligations under the Contracts and
all its other contractual obligations relating to the Collateral and maintain
such Collateral in full force and effect.
16
Section 5.13. Copyrights.
(a) No Bad Acts. The Company (either itself or through licensees) will,
except with respect to any Copyright that the Company shall reasonably determine
is of negligible value (i) employ the Copyright for each published work with an
appropriate notice of Copyright and (ii) not (and will not knowingly permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright may become invalidated. The Company will not (either
itself or knowingly permit any licensee or sublicensee to) do any act, or
knowingly omit to do any act, whereby any Copyright may become injected into the
public domain.
(b) Notice of Events. (i) The Company shall notify the Collateral Agent
immediately if it knows, or has reason to know, that any Copyright may become
injected into the public domain or of any adverse determination or development,
including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country,
regarding the Company's ownership of any such Copyright or its validity.
(ii) The Company will promptly notify the Collateral Agent of any
infringement of any Copyright of which it becomes aware and will take such
actions as it shall reasonably deem appropriate under the circumstances to
protect such Copyright, including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover any and all
damages for such infringement.
(c) Regulatory Filings. The Company will file in the United States
Copyright Office an application for copyright registration for each material
Copyright and Copyright License and will take all necessary steps as it shall
reasonably deem appropriate under the circumstances, to maintain and pursue each
United States application (and to obtain the relevant registration) and to
maintain each United States registration of each material Copyright owned by the
Company including, without limitation, filing of applications for renewal, where
necessary and shall report all such filings and registrations to the Collateral
Agent within five Business Days after the same are made and execute and deliver
all documents and instruments necessary to perfect the Collateral Agent's
security interest, for the ratable benefit of the Lenders, in any Copyright or
Copyright License.
Section 5.14. Patents and Trademarks.
(a) No Bad Acts. The Company (either itself or through licensees) will,
except with respect to any Trademark that the Company shall reasonably determine
is of negligible economic value to it, (i) continue to use each Trademark 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
maintain such Trademark in full force free from any claim of abandonment for
non- use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) employ such Trademark with the appropriate
notice of registration, (iv) not adopt or use any xxxx which is confusingly
similar or a colorable imitation of such Trademark unless the Collateral Agent,
for the ratable benefit of the Lenders, shall obtain a perfected security
interest in such xxxx pursuant to this Security Agreement, and (v) not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark may become invalidated. The Company will not,
except with respect to any Patent that the Company shall reasonably determine is
of negligible economic value to it, do any act or omit to do any act, whereby
any Patent may become abandoned or dedicated.
(b) Notice of Events. (i) The Company will notify the Collateral Agent
17
immediately if it knows, or has reason to know, that any application or
registration relating to any Patent or Trademark may become abandoned or
dedicated, or of any adverse determination or development, including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any court or
tribunal in any country, regarding the Company's ownership of any Patent or
Trademark or its right to register the same or to keep and maintain the same.
(ii) In the event that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party, the
Company shall promptly notify the Collateral Agent after it learns thereof and,
at the Company's sole expense, shall, unless the Company shall reasonably
determine that such Patent or Trademark is of negligible economic value to the
Company, promptly xxx for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other actions as the
Company shall reasonably deem appropriate under the circumstances to protect
such Patent or Trademark.
(c) Regulatory Filings. Whenever the Company, either by itself or
through any agent, employee, licensee or designee, shall file an application for
the registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, the Company shall report such filing to the
Collateral Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. The Company will take all reasonable and
necessary steps, including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
(d) Further Filings. The Company shall execute and deliver any and all
agreements, instruments, documents, and papers as the Agent may reasonably
request, including, without limitation, the Notice of Security Interest in
Patents attached hereto as Exhibit 5.14(d)(i) and the Memorandum of Security
Agreement - Trademarks attached hereto as Exhibit 5.14(d)(ii), to evidence the
Collateral Agent's security interest for the ratable benefit of the Lenders in
any Patent or Trademark and the goodwill and general intangibles of the Company
relating thereto or represented thereby, and the Company hereby constitutes the
Collateral Agent its attorney-in-fact to execute and file all such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Obligations are paid in full and the Commitment is terminated.
Section 5.15. Inventory, Equipment and Fixtures.
(a) Maintenance of Collateral. The Company shall maintain, keep and
preserve the Inventory, Equipment and Fixtures in good working order and
condition, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual and any Regulations. The Company shall promptly after the
occurrence of any loss or damage to any Inventory, Equipment or Fixtures (i)
make or cause to be made all repairs, replacements and other improvements that
are necessary or desirable to maintain the value of such Collateral and (ii)
furnish to the Collateral Agent a statement in respect of any loss or damage to
any Inventory, Equipment or Fixtures.
(b) Reports. The Company shall, at the request of the Agent, furnish to
the Collateral Agent and the Agent, with sufficient copies for each Lender, a
report detailing changes in the amount and condition of the Inventory, Equipment
and Fixtures, including purchases, depreciation, sales and losses.
18
Section 5.16. Vehicles. The Company will maintain each Vehicle in good
operating condition, ordinary wear and tear and immaterial impairments of value
and damage by the elements excepted, and will provide all maintenance, service
and repairs necessary for such purpose. The Company will notify the Agent of
each acquisition or sale of a vehicle, promptly following the acquisition or
sale thereof. If an Event of Default shall occur and be continuing, at the
request of the Agent the Company shall, within five Business Days after such
request, file applications for certificates of title indicating the Collateral
Agent's first priority Lien for the ratable benefit of the Lenders on the
Vehicles covered by such certificates, together with any other necessary
documentation, in each office in each jurisdiction which the Agent shall deem
advisable to perfect its Liens on the Vehicles.
Section 5.17. Maintenance of Insurance.
(a) Adequate Insurance. The Company will maintain at its own expense,
with financially sound and reputable companies, insurance policies covering the
Collateral (i) insuring the Collateral against loss by fire, explosion, theft
and such other casualties in amounts comparable to amounts of insurance coverage
obtained by similar businesses of similar size acting prudently and (ii)
insuring the Company, the Collateral Agent, the Agent and the Lenders against
liability for personal injury and property damage relating to such Collateral,
such policies to be in such form and amounts and having such coverage as shall
be comparable to forms, amounts and coverage, respectively, obtained by similar
businesses of similar size acting prudently, with losses payable to the Company,
the Collateral Agent, the Agent and the Lenders as their respective interests
may appear.
(b) Terms of Policies. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Collateral Agent of written notice thereof, (ii) name the Collateral Agent, the
Agent and the Lenders as insured and loss payee, (iii) contain the agreement by
the insurer that any loss under the policy shall be payable to the Collateral
Agent notwithstanding any action, inaction or breach of representation or
warranty by the Company, (iv) provide that there shall be no recourse against
the Collateral Agent, the Agent or any Lender for payment of premiums or other
amounts with respect to the policy and (v) be reasonably satisfactory in all
other respects to the Collateral Agent.
(c) Broker's Report. The Company shall deliver to the Collateral Agent
a report of a reputable insurance broker with respect to such insurance during
the month of January in each calendar year and such supplemental reports with
respect thereto as the Collateral Agent may from time to time reasonably
request.
(d) Payment of Proceeds. Reimbursement under any liability insurance
may be paid directly to the Person who shall have incurred liability covered by
the insurance. In case of any loss involving damage to any Collateral, the
Company shall cause the proceeds to be paid directly to the Collateral Agent
and, if an Event of Default shall not have occurred and is not then continuing,
the Agent shall reimburse the Company for the costs of any repairs or
replacements from such proceeds.
(e) Assignment of Policies. At the request of the Agent, the Company
shall duly execute and deliver instruments of assignment of the insurance
policies and all notices of that assignment, in each case in form and substance
satisfactory to the Collateral Agent, and cause the respective insurers to
acknowledge notice of the assignment.
(f) Copies of Policies. Upon the request of the Agent, the Company
shall deliver to the Collateral Agent original or duplicate copies of all
policies of insurance evidencing compliance with this Section.
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Section 5.18. Indemnification. The Company will indemnify the
Collateral Agent, the Agent, the Lenders and their respective Affiliates and
each of their respective shareholders, partners, members, directors, officers,
employees, agents and Affiliates (collectively, the "Indemnified Persons")
against and hold each Indemnified Person harmless from any and all liabilities,
obligations, losses, damages, penalties, Actions, judgments, costs, expenses,
claims, diminution in value, or disbursements of any kind or nature whatsoever
(including interest, penalties, fines, judgments, settlements, costs of
preparation and investigation, costs incurred in enforcing this indemnity and
reasonable attorneys' fees and expenses) that the Indemnified Persons may
suffer, sustain, incur or become subject to arising out of, relating to, or due
to:
(a) any inaccuracy or breach of any of the representations and
warranties of the Company contained in this Agreement or in any
certificate delivered hereunder;
(b) the nonfulfillment of any covenant, undertaking, agreement
or other obligation of the Company contained in this Agreement or in
any certificate delivered hereunder;
(c) the failure or delay by the Company in paying, any and all
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral; or
(d) any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the account debtor or obligor under any of
the Collateral, arising out of a breach by the Company of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from the Company.
Section 5.19. Medicare Matters.
(a) Directions to Obligors. The Company agrees to notify and instruct
all obligors from time to time with respect to any Medicare Receivables to make
any and all payments in respect of such Medicare Receivable only to the Medicare
Collection Account.
(b) No Commingling. The Company agrees that only the Proceeds of
Medicare Receivables will be deposited into the Medicare Collection Account and
that no other funds or payments will be commingled with such Medicare
Receivables or the Proceeds thereof. The Company agrees that all Medicare
Receivables and the Proceeds thereof will at all times be segregated from all
other funds, be identifiable as Proceeds of Medicare Receivables and will not be
commingled with any other funds. The Company agrees that all other funds of the
Company will be deposited or paid, in accordance with the Cash Management
System, into Pledged Accounts other than the Medicare Collection Account.
(c) Certification. Within 10 days after the end of each calendar month,
the Company will provide to the Agent (i) a written certification of the Chief
Financial Officer of the Company stating that all deposits made into the
Medicare Collection Account consist only of Proceeds of Medicare Receivables and
(ii) a true, correct and complete copy of a bank statement showing such
deposits.
Section 5.20. Further Assurances. At any time and from time to time,
upon the written request of the Agent, and at the sole expense of the Company,
the Company will promptly and duly execute and deliver such further instruments
and documents and
20
take such further action as the Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby and all
actions and filings necessary to maintain the Collateral Agent's first priority
perfected Lien on, security interest in and pledge of all of the Collateral. The
Company also hereby authorizes the Collateral Agent to file any such financing
or continuation statement without the signature of the Company to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement for filing
in any jurisdiction.
ARTICLE VI
Remedies
Section 6.01. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent and the Agent shall have each and every right
and remedy available to it whether at law, in equity or otherwise, including,
without limitation, each of the following:
(a) UCC Remedies. The Collateral Agent or the Agent may
exercise all rights and remedies in respect of the Collateral available
to a secured party under the Uniform Commercial Code in effect in the
relevant jurisdiction (whether or not the Uniform Commercial Code
applies to the affected Collateral), by law or otherwise.
(b) Exercise Rights of Company. The Collateral Agent or the
Agent may exercise any and all rights and remedies of the Company under
or in respect of the Collateral, including, without limitation, any and
all rights of the Company to demand or otherwise require payment of any
amount under, or performance of any provision of, the Collateral, or
the right of the Company to vote or consent with respect to any
Collateral.
(c) Take Possession of Collateral. The Collateral Agent or the
Agent may take possession of the Collateral and, without liability for
trespass, enter on any premises for the purpose of taking possession of
or removing any Collateral.
(d) Right to Sell Collateral.
(i) The Collateral Agent or the Agent may, without demand of
performance or other demand, presentment, protest, advertisement or
notice of any kind, and without notice to the Company except as
specified in this Section 6.01, sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver all or any
part of the Collateral in one or more parcels at public or private
sale, at any of the Collateral Agent's offices, on any securities
exchange, or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Agent may deem commercially reasonable.
(ii) The Company agrees that, to the extent notice of sale
shall be required by law, at least ten days notice to the Company of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to consummate any sale of
Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public sale from time to time by any
notice or announcement and may make any sale without further notice of
the time and
21
place to which the sale was so adjourned.
(iii) For purposes of this Agreement, a written agreement to
purchase all or any of the Collateral shall be deemed to be a sale of
that property and the Collateral Agent shall be free to carry out the
agreement notwithstanding that the Event of Default shall have been
cured and the Obligations paid in full.
(iv) If all or any part of the Collateral is sold on credit or
for future delivery, the property may be retained by the Collateral
Agent until the sale price is paid by the purchaser or purchasers, but
the Collateral Agent shall not be liable if the purchaser or purchasers
fail to take up and pay for the property and, in that event, the
Collateral Agent may again sell the property pursuant to this Section.
(v) The Collateral Agent may restrict the bidders or
purchasers to persons (A) representing that they are purchasing the
Collateral for their own account for investment and not with a view to
further distribution or sale and (B) satisfying the offeree and
purchaser requirements for a valid private placement or limited
offering under the Securities Act of 1933, as amended. The Company
understands and agrees that the sale may be made at prices and on terms
less favorable than a public sale and agrees that any such sale shall
be deemed to have been made in a commercially reasonable manner even if
the Collateral Agent accepts the first offer received.
(vi) To the extent permitted by law, the Collateral Agent, the
Agent or any Lender may purchase all or any part of the Collateral at
any public or private sale or sales free of any equity or right of
redemption, stay, valuation or appraisal on the part of the Company
(all said rights being hereby waived and released to the extent
permitted by law) and may make payment for the purchase by using any
claim then due and payable to the Collateral Agent, the Agent or any
Lender, as applicable, from the Company as a credit against the
purchase price, and the Collateral Agent may, upon compliance with the
terms of sale, hold, retain and transfer the property without further
accountability to the Company.
(vii) Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of the
Company, and the Company hereby waives (to the extent permitted by law)
all rights of redemption, stay, valuation and appraisal which the
Company now has or may at any time in the future have under rule of law
or statute now existing or hereafter enacted.
(e) Store Collateral. The Collateral Agent or the Agent may
cause any Collateral to be held, stored, processed or completed prior
to sale, and expenses incurred for this purpose shall constitute
Obligations hereunder. The Company agrees to assemble the Collateral
and make it available to the Collateral Agent and the Agent at places
where the Collateral Agent or the Agent may reasonably select, whether
at the Company's premises or elsewhere.
(f) Notices to Account Debtors, Obligors, Etc. The Collateral
Agent or the Agent may, without notice to the Company, (i) notify the
account debtors, obligors or bailees under or of any of the Collateral
of the assignment and pledge to the Agent of the Collateral, (ii)
direct the account debtors or obligors to make payment and direct the
bailees to make delivery directly to the Collateral Agent, or as the
Agent shall otherwise direct, of all amounts due or to become due to
the Company under the Collateral and (iii) collect, adjust, settle or
compromise those obligations. While the Collateral Agent is exercising
any authority under this Section the Company shall not adjust, settle
or compromise any obligation under the Collateral, release wholly or
partly any account debtor or obligor in respect of those obligations,
or allow any credit or discount on those obligations.
22
(g) All Other Remedies. The Collateral Agent and the Agent may
exercise all other rights and/or remedies available, whether at law, in
equity or otherwise.
Section 6.02. Waiver. To the extent permitted by applicable law, the
Company waives all claims, damages and demands it may acquire against the
Collateral Agent, the Agent or any of the Lenders arising out of the exercise by
the Collateral Agent, the Agent or any Lender of any of their rights under this
Agreement.
Section 6.03. Remedies Cumulative. All rights and remedies of the
Collateral Agent, the Agent and the Lenders existing under this Agreement and
any other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 6.04. Payments Held in Trust. All payments, funds, instruments
and other items received by the Company under or in respect of any Collateral
shall be received in trust for the Collateral Agent, segregated from other funds
of the Company and promptly delivered to the Collateral Agent in the same form
received, together with all necessary endorsements or Stock Powers.
Section 6.05. Application of Funds.
(a) Funds Applied in Accordance with Credit Agreement. The Agent shall
apply all Account Collateral and all payments received under or in respect of
all other Collateral and all cash proceeds received by the Collateral Agent and
the Agent in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral in accordance with the Credit Agreement.
(b) Company Remains Liable. The Company shall remain fully liable for
any deficiency if the proceeds or other realization of the Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Collateral Agent, the Agent or the Lenders to collect
such deficiency.
(c) Collateral In Excess of Obligations. Any amount held by the
Collateral Agent under this Agreement after all the Obligations have been
indefeasibly and finally paid in full in cash shall be paid over to the Company
or to any other Person lawfully entitled to receive payment.
ARTICLE VII
Appointment, Rights and Duties of Collateral Agent
Section 7.01. Appointment of Collateral Agent. In accordance with the
provisions of Section 8.1B of the Credit Agreement, The Chase Manhattan Bank is
hereby appointed Collateral Agent hereunder and under the other Loan Documents
as successor to the Original Agent and the Agent and each Lender hereby
authorizes the Collateral Agent to act as its collateral agent in accordance
with the terms of this Agreement and the other Loan Documents.
Section 7.02. Collateral Agent Appointed Attorney-in-Fact. The Company
hereby irrevocably appoints the Collateral Agent (with full power of
substitution) the Company's attorney-in-fact, with full authority in the place
and stead of the Company and in the name of the Company or otherwise, from time
to time in the Agent's discretion, to execute any instrument and to take any
other action that the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
23
(a) Further Documents. To execute, deliver and file on behalf
of and in the name of the Company one or more financing statements,
notices, copies of this Agreement or such other documents, and
amendments and continuations to those statements or documents, relating
to all or any part of the Collateral without the signature of the
Company where permitted by law. The Company agrees that a carbon,
photographic or other reproduction of this Agreement, any financing
statement, notice or other document covering the Collateral shall be
sufficient as a financing statement where permitted by law.
(b) Continue Perfection. To take any and all actions on behalf
of and in the name of the Company, at the Company's expense, which are
necessary or advisable to ensure that (i) the Liens granted pursuant to
this Security Agreement at all times constitute perfected Liens in
favor of the Collateral Agent, for the ratable benefit of the Lenders,
and (ii) such Liens are at all times prior to all other Liens on the
Collateral and will be enforceable as such against all creditors of,
and purchasers from, the Company and against any owner or purchaser of
the real property where any of the Equipment is located and any present
or future creditor obtaining a Lien on such real property.
(c) Insurance Matters. To obtain and adjust insurance required
to be paid to the Collateral Agent pursuant to Section 5.17 and cancel,
assign, and surrender any policies of insurance.
(d) Pay Taxes. To pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any repairs
called for by the terms of this Security Agreement and to pay all or
any part of the costs thereof.
(e) Collect Collateral. Upon the occurrence and during the
continuation of an Event of Default, to ask, demand, collect, xxx for,
recover, compromise, receive, indorse and give acquittance, discharge
and receipts for moneys or other instruments, documents and chattel
paper due and to become due under or in respect of all or any part of
the Collateral (whether as interest, dividend, other distribution or
otherwise) and to direct any party liable for any payment under any of
the Collateral to make such payment directly to the Collateral Agent or
as the Agent shall direct.
(f) Institute Proceedings. Upon the occurrence and during the
continuation of an Event of Default, to file any claims, proofs of
claim, subrogation receipts or take any action or commence or institute
any proceedings which the Agent may deem necessary or desirable for the
collection of all or any part of the Collateral or otherwise to enforce
the rights of the Collateral Agent with respect to all or any part of
the Collateral.
(g) Transfer Collateral Into Collateral Agent's Name. Upon the
occurrence and during the continuation of an Event of Default, to
transfer any Collateral into the Collateral Agent's or its nominee's
name.
(h) Vote Collateral. Upon the occurrence and during the
continuation of an Event of Default, to exercise all or any of the
voting rights and other consensual rights pertaining to the Collateral.
(i) Other Actions. (x) Upon the occurrence and during the
continuation of an Event of Default, to take any other action it deems
advisable with respect to the Collateral or to accomplish the purposes
of this Agreement, including, but not limited to, (i) sell or assign
any Account upon such terms, for such amount and at such time or times
as Agent deems advisable, (ii) notify the post office authorities to
change the address for delivery of Company's mail to an address
designated by Agent, and open all mail addressed to Company and (iii)
do all other acts and
24
things necessary, in Agent's determination, to fulfill Company's
obligations under this Agreement or any of the other Loan Documents;
and (y) at any time that Agent determines that it is necessary or
appropriate to preserve, protect, insure or maintain its rights
hereunder (i) take control, in any manner, of any item of payment or
proceeds of any Collateral, (ii) sign Company's name on any of the
documents described in Section 5.20 and 7.02(a) or on any other similar
documents to be executed, recorded or filled in order to perfect or
continue perfected Agent's and Collateral Agent's security interest in
the Collateral and file or record any of the foregoing documents, (iii)
endorse Company's name on any items of payment or proceeds thereof and
deposit the same to the account of Agent or the Collateral Agent for
application to the Obligations, (iv) sign Company's name on any
invoices, bills of lading, freight bills, chattel paper, documents,
instruments or similar documents or agreement relating to any Accounts
or any goods pertaining thereto or any other Collateral, (v) sign
Company's name on any verification of Accounts and notices thereof to
Account debtors.
The Company hereby ratifies all that said attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
Section 7.03. Collateral Agent May Perform. If the Company fails to
perform any obligation under this Agreement or under or in respect of any
Collateral or any representation of the Company contained in this Agreement or
in any document included in the Collateral shall be untrue or incorrect in any
material respect, the Collateral Agent or the Agent may, but shall be under no
obligation to, perform the obligation or remedy that breach, or cause it to be
performed or remedied, and the expenses incurred by or on behalf of the
Collateral Agent and the Agent in connection with the performance of the
obligation or the remedy of the breach shall constitute Obligations.
Section 7.04. Duties of Collateral Agent.
(a) Duties. The powers conferred on the Agent and the Collateral Agent
by this Agreement are solely to protect the Collateral Agent's, the Agent's and
the Lenders' interest in the Collateral and shall not impose on the Collateral
Agent, the Agent or any Lender any duty to exercise any powers. Except for the
safe custody of any Collateral in its possession and the accounting for moneys
actually received by it under this Agreement, the Collateral Agent, the Agent
nor any Lender shall have any duty or liability as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or as
to any other rights or matters pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral Agent treats
the Collateral substantially the same as it treats similar property of its own.
(b) Not Responsible. The Collateral Agent, the Agent and the Lenders
shall not have any responsibility or liability for (i) ascertaining or taking
action with respect to calls, con versions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Collateral Agent,
the Agent or any Lender has or is deemed to have knowledge of such matters, (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral, (iii) collecting any proceeds of any Collateral or by reason
of any invalidity, lack of value or uncollectability of any of the payments
received by it from obligors or otherwise or (iv) any other matter in connection
with any Loan Document except in respect of duties specifically undertaken by it
in this Agreement and in that case none of the Collateral Agent, the Agent or
any of the Lenders shall be liable to any party in the absence of gross
negligence or willful misconduct.
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ARTICLE VIII
Termination and Waiver
Section 8.01. Continuing Security Interest. This Agreement shall create
a continuing security interest in, Lien on, and pledge of, the Collateral,
without respect to the amount of the Obligations outstanding from time to time,
and shall remain in full force and effect until the Obligations have been
indefeasibly paid and otherwise performed in full in cash. Thereafter, this
Agreement shall be reinstated if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned upon the insolvency,
bankruptcy or reorganization of the Company or any other Person or otherwise,
all as though the payment had not been made.
Section 8.02. Termination. Upon the indefeasible payment and
performance of the Obligations in full in cash, the security interests granted
by this Agreement shall terminate and all rights to the Collateral shall revert
to the Company. At the Company's expense, the Collateral Agent shall then
execute and deliver to the Company the documents reasonably requested and
prepared by the Company to evidence the termination.
Section 8.03. Waiver. The Company unconditionally waives, to the full
extent permitted by law:
(a) Set-Off. Any defense, set-off or counterclaim which the
Company may otherwise assert against the Collateral Agent, the Agent or
the Lenders.
(b) Notice, etc. Presentment, protest, demand for payment,
promptness, diligence, notice of protest, notice of any other action at
any time taken or omitted by the Collateral Agent, the Agent or any
Lender and, generally, all demands and notices of every kind in
connection with any Loan Document or the Obligations, including,
without limitation:
(i) notice of any of the matters referred to in
Section 8.04; and
(ii) all notices which may be required by statute,
rule of law or otherwise, now or hereafter in effect, to
preserve intact any rights against the Company under any Loan
Document or as a requirement to the enforcement, assertion or
exercise against the Company of any right, power, privilege or
remedy conferred under any Loan Document.
(c) Exhaust Other Remedies. Any requirement to exhaust any
rights or remedies or to mitigate the damages resulting from any
default under any Loan Document or any other document or any
requirement to protect, secure, perfect or insure any Lien or any
property subject to the Lien or take any other action against any
person or any collateral or other property.
(d) Claims. All claims that the sale price of any Collateral
was inadequate or unreasonable for any reason and all other claims to
damages and demands of any nature against the Collateral Agent, the
Agent and the Lenders.
(e) Equitable Rights. All equities and rights of appraisal,
stay and redemption (whether now or hereafter existing), in each case
arising out of the Collateral Agent, the Agent or the Lenders enforcing
any of their rights and remedies under any Loan Document.
(f) Subrogation and/or Contribution. Any exoneration or
release from the Obligations resulting from any loss by the Company of
its rights, if any, of subrogation or contribution.
26
(g) Other Circumstances. Any other circumstance whatsoever,
including, without limitation, those stated in Section 8.04, which
might otherwise constitute a defense to or a legal or equitable
discharge or release of a guarantor or surety or a party granting
security or which might otherwise limit recourse against the Company.
Section 8.04. Obligations Not Affected. The rights of the Collateral
Agent, the Agent and the Lenders and the obligations of the Company under this
Agreement shall be absolute and unconditional, present and continuing and shall
remain in full force and effect and shall not be released, discharged or in any
way affected by any circumstance or condition of any nature (whether or not the
Company, the Collateral Agent, the Agent or any Lender shall have any notice or
knowledge of the circumstance or condition), including, without limitation:
(a) Failure of Documents. The invalidity, illegality,
unenforceability, discharge, termination, cancellation or frustration,
in whole or in part, of any Obligation, Loan Document or other
document.
(b) Failure to Exercise Rights and/or Remedies. The exercise
or failure to exercise by any person any right, remedy, privilege or
power under any Loan Document or other document.
(c) Collection Attempts. Any demand or attempt to collect
from, or failure to demand or attempt to collect from, the Company or
any other Person under any Loan Document or other document.
(d) Security and Guarantees. The giving, acceptance,
existence, non-existence, validity, invalidity or value of any security
or collateral securing the Obligations or any guarantee of the
Obligations, including, without limitation, the Collateral and the
guarantees by the Subsidiary Guarantors, any attempt or failure to
attempt to realize upon that security, collateral or guarantee or the
exchange, substitution, renewal, extension, modification, compromise,
release, discharge or failure to perfect for any reason that security,
collateral or guarantee.
(e) Actions. Any change in the time, place or manner of
payment or the waiver, consent, extension, renewal, indulgence,
compromise, release, settlement, refunding, funding, or any other
forbearance or other action taken, delayed or omitted by the Collateral
Agent, the Agent, any Lender, the Company, or any other Person under or
in respect of any term or provision of any Obligation, Loan Document or
other document.
(f) Modifications. The termination, modification, alteration,
amendment, waiver, addition, deletion or other change to any
Obligation, Loan Document or other document or any provision of any of
those documents.
(g) Reorganizations. The liquidation, dissolution, merger or
consolidation of the Company or any other Person, or the transfer by
the Company or any other Person of all or any part of its property or
assets, or the change in the ownership of any shares of capital stock
of the Company or any other Person.
(h) Bankruptcy. The voluntary or involuntary bankruptcy,
receivership, liquidation, insolvency, reorganization, arrangement,
assignment for the benefit of creditors or similar proceedings
involving or affecting the Company any other Person or any of their
property.
27
(i) Release. The release or discharge, by operation of law or
otherwise, of the Company or any other Person from any Obligation or
any provision of any Loan Document or other document.
(j) Other Circumstances. Any other circumstance whatsoever,
foreseen or unforseen, which may or might in any manner or to any
extent vary the risks of the Company or otherwise constitute a defense
available to or a legal or equitable discharge of or limit recourse
against a surety, a guarantor or a party granting security, the Company
or otherwise.
ARTICLE IX
Miscellaneous
Section 9.01. Notices. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, telexed or sent by telefacsimile (so
long as such notice sent by telefacsimile is followed within two Business Days
by a notice sent by another method specified hereunder) or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or three Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided that notices to Agent shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or (i) as to
Company, the Collateral Agent and Agent, such other address as shall be
designated by such Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
Section 9.02. Expenses. The Company agrees to pay to the Collateral
Agent, the Agent and the Lenders on demand the amount of any and all expenses,
including, without limitation, the fees and expenses of the Collateral Agent's,
the Agent's or the Lenders' counsel, which the Collateral Agent, the Agent or
any Lender may pay or incur in exercising or enforcing their rights under this
Agreement.
Section 9.03. Transfer of Notes. If any Lender shall transfer any Note
held by it or grant participations in all or any of its Obligations, the
transferees of the Note or the grantees of the participations, as the case may
be, shall have the rights of the Lender under this Agreement in respect of the
Note or Obligations.
Section 9.04. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, and by different parties hereto in
separate counterparts, each of which when executed will be deemed an original,
but all of which taken together will constitute one and the same instrument.
Section 9.05. Interpretation. As used in this Agreement, references to
the singular will include the plural and vice versa and references to the
masculine gender will include the feminine and neuter genders and vice versa, as
appropriate. Unless otherwise expressly provided in this Agreement (a) the words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement and (b) article, section, subsection, schedule and
exhibit references are references with respect to this Agreement unless
otherwise specified. References in this Agreement to any law or regulation will
refer to such laws and regulations as from time to time amended and to any laws
or regulations successor thereto. Unless the context otherwise requires, the
term "including" will mean "including, without limitation".
28
Section 9.06. Descriptive Headings. The headings in this Agreement and
in the Schedules, Exhibits and Annexes are included for convenience of reference
only and will not affect in any way the meaning or interpretation of this
Agreement.
Section 9.07. Incorporation of Schedules, Exhibits and Annexes. The
Schedules, Exhibits and Annexes hereto are incorporated into this Agreement and
will be deemed a part hereof as if set forth herein in full. In the event of any
conflict between the provisions of this Agreement and any Schedule, Exhibit or
Annex, the provisions of this Agreement will control.
Section 9.08. Amendment of Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.09. Successors and Assigns. This Agreement will be binding
upon and inures to the benefit of and is enforceable by the respective
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by any party hereto without the prior written consent of all other
parties hereto except for the assignment of all or any part of the rights and
obligations of the Collateral Agent under this Agreement, which may be assigned
by the Collateral Agent as provided in Section 8.1B and 9.1 of the Credit
Agreement. Any assignment or attempted assignment in contravention of this
Section will be void ab initio and will not relieve the assigning party of any
obligation under this Agreement
Section 9.10. No Waiver; Remedies. No failure or delay by any party in
exercising any right, power or privilege under this Agreement will operate as a
waiver of the right, power or privilege. A single or partial exercise of any
right, power or privilege will not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement and the other Loan
Documents will be cumulative and not exclusive of any rights or remedies
provided by law.
Section 9.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section 9.12. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the state of New York applicable to
contracts executed in and to be performed entirely within that state.
Section 9.13. No Third-Party Rights. This Agreement is not intended,
and will not be construed, to create any rights in any parties other than the
Company, the Collateral Agent, the Agent and the Lenders, and no Person may
assert any rights as third-party beneficiary hereunder, except as provided in
Section 5.18.
Section 9.14. Submission to Jurisdiction. Any Action with respect to
this Agreement may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and each of the
Company, the Collateral Agent, the Agent and the Lenders hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of these courts. Each of the Company, the Collateral Agent, the
Agent and the Lenders hereby irrevocably waives
29
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any Action in those jurisdictions.
Section 9.15. Waiver of Jury Trial. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered or to be delivered
in connection with this Agreement and agrees that any Action will be tried
before a court and not before a jury.
30
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above in New York, New York.
NORTHSTAR HEALTH SERVICES, INC.
By:_____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent for the Lenders
By:_____________________________________
Name:
Title:
CERBERUS CAPITAL MANAGEMENT, L.L.C,
as Agent for the Lenders
By:_____________________________________
Name:
Title:
31
List of Annexes, Schedules and Exhibits
---------------------------------------
Annex A Cash Management System
Schedule 4.08(a) Certain Accounts
Schedule 4.08(c) List of Accounts, Negotiable Collateral, Instruments
and General Intangibles
Schedule 4.09(b) Certain Contracts
Schedule 4.09(d) List of Contracts
Schedule 4.10 Proprietary Rights
Schedule 4.11 Investment Property
Schedule 4.12 Inventory, Equipment and Fixtures
Schedule 4.13 Vehicles
Schedule 4.14 Governmental Obligors
Exhibit 3.03(a) Form of Account Notice
Exhibit 3.05(c) Form of Blocked Account Agreement
Exhibit 3.05(i) (1),
(2), (3) and (4) Form of Addendum to Management Agreement
Exhibit 5.02 Form of Landlord Waiver
Exhibit 5.14(d)(i) Form of Notice of Security Interest--Patents
Exhibit 5.14(d)(ii) Form of Memorandum of Security Interest--Trademarks
32
ANNEX A
to
AMENDED AND RESTATED COMPANY SECURITY AGREEMENT
Cash Management System
Subject in all cases to the rights of the Agent, the Collateral Agent
and the Lenders in the event that an Event of Default shall have occurred and be
continuing as set forth in Section F below, the Company and the Subsidiaries
shall maintain and manage the Pledged Accounts strictly in accordance with the
following:
A. NO COMMINGLING OF NON-COLLATERAL WITH COLLATERAL
1. The Company will not, and will cause each of its Subsidiaries not to,
make, or permit to be made, any deposit consisting of funds or other
amounts that are not Collateral or Proceeds of Collateral into any
Pledged Account. The Company shall, and shall cause each of its
Subsidiaries to, make, or permit to be made, deposits consisting only
of Collateral or Proceeds of Collateral into any Pledged Account.
B. TRANSFERS INTO COMPANY NON-MEDICARE COLLECTION ACCOUNT
2. The Company and each of its Subsidiaries shall instruct each obligor or
account debtor to deliver or pay all non-Medicare Proceeds of
Collateral, payments, collections, funds, cash and other monies
(collectively, the "Non-Medicare Funds") owed or payable to the Company
or such Subsidiary directly to the Non-Medicare Collection Account. All
Non-Medicare Funds collected or received by the Company or any
Subsidiary of the Company, shall immediately, but no later than the
close of business on the day on which such Non-Medicare Funds are
received, be deposited in the Non-Medicare Collection Account.
C. TRANSFERS INTO COMPANY MEDICARE COLLECTION ACCOUNT
3. The Company and each of its Subsidiaries shall instruct each obligor or
account debtor to deliver or pay all Medicare Proceeds of Collateral,
payments, collections, funds, cash and other monies (collectively, the
"Medicare Funds") owed or payable to the Company or such Subsidiary
directly to the Medicare Collection Account by wire transfer of
immediately available funds. All Medicare Funds collected or received
by the Company or any of its Subsidiaries shall immediately, but no
later than the close of business on the day on which such Funds are
received, be deposited in the Medicare Collection Account.
33
D. TRANSFERS INTO CONCENTRATION ACCOUNT
4. The Company, the Agent and S&T Bank shall enter into Blocked Account
Agreements pursuant to which S&T Bank shall be instructed to transfer
all available funds in the Non-Medicare Collection Account to the
Concentration Account once (or more frequently as directed by the
Agent) daily prior to the close of business on each Business Day (the
"Non-Medicare Sweep").
5. The Company, Agent and Collateral Agent shall enter into Blocked
Account Agreements pursuant to which the Collateral Agent shall be
instructed to transfer all available funds in the Medicare Collection
Account to the Concentration Account once daily (or more frequently as
directed by the Agent) prior to the close of business on each Business
Day (the"Medicare Sweep").
E. TRANSFERS FROM THE CONCENTRATION ACCOUNT
6. On any Business Day, the Collateral Agent is authorized upon receipt of
written instructions from the Agent, to make a transfer from the
Concentration Account to an account maintained by the Agent, the
Lenders, the Collateral Agent or any third party, of any amounts which
the Collateral Agent or the Agent is instructed by the Lenders to
disburse under or pursuant to the Loan Documents, to the Agent, the
Collateral Agent, the Lenders or any other party.
7. No earlier than one Business Day prior to the day on which the Company
is required to make a payroll payment to its officers and employees,
the Company shall be entitled to transfer an amount equal to (but not
greater than) the amount required to make the next aggregate payroll
payment that the Company is required to make (the "Payroll Amount")
from the Concentration Account to the Payroll Account.
8. On each Business Day, the Company shall be entitled to transfer an
amount equal to the funds required to cover the checks presented for
payment out of the Disbursement Account for such Business Day (such
amount being the "Disbursement Amount") from the Concentration Account
to the Disbursement Account; provided, however, that any funds
remaining in the Disbursement Account at the close of business on any
day shall automatically be transferred back to the Concentration
Account.
F. EVENTS OF DEFAULT
If an Event of Default shall have occurred and be continuing,
notwithstanding any other provision of this Cash Management System to the
contrary:
9. With respect to each and all of the Pledged Accounts, the Agent, the
Collateral Agent and/or the Lenders shall have the right to immediately
take control of any or all such Pledged Accounts and exercise their
rights under the Blocked Account Agreements.
10. Except for the Medicare Sweep and the Non-Medicare Sweep, no funds may
be withdrawn, transferred, paid or disbursed out of the Medicare
Collection Account, the Non-Medicare Collection Account, the
Concentration Account, the Disbursement Account or the Payroll Account
without the prior written consent of the Agent, which
may be withheld in its sole and absolute discretion.
11. At the discretion of the Agent, and without the consent of, or notice
to, the Company, (i) the Collateral Agent shall withdraw any and all
funds held in the Medicare Collection Account, the Concentration
Account, the Disbursement Account and/or the Payroll Account and (ii)
S&T Bank shall withdraw any and all
34
funds held in the Non- Medicare Collection Account.
12. The Collateral Agent, the Agent or the Lenders shall have the right to
instruct any obligor, payor or account debtor to make any payments
otherwise payable to the Company or any of its Subsidiaries, directly
to the Agent or as the Agent may direct.
13. If the Agent or the Lenders shall so elect funds held in the Payroll
Account or the Disbursement Account shall immediately be transferred to
the Concentration Account.
14. The Collateral Agent, the Agent and the Lenders shall be entitled to
exercise any and all other rights they may have under the Loan
Documents, the UCC or applicable law.
35
EXHIBIT 3.03(a)
to
COMPANY SECURITY AGREEMENT
Form of Account Notice
[TO BE PROVIDED BY XXXXXX XXXXXXXXX]
36
EXHIBIT 3.05(c)
to
COMPANY SECURITY AGREEMENT
Form of Blocked Account Agreement
See attached sheets.
37
EXHIBIT 3.05(i)
to
COMPANY SECURITY AGREEMENT
Form of Addenda to Management Agreements
(1) See attached sheets.
(2) See attached sheets.
(3) See attached sheets.
(4) See attached sheets.
38
EXHIBIT 5.02
to
COMPANY SECURITY AGREEMENT
Form of Landlord Waiver
______________ __, 1999
Cerberus Capital Management, LLC, as Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Waiver, License and Agreement by Landlord
Gentlemen:
We are the owners of record of real property at ________________________ (the
"Premises"). The Premises are occupied by ________________________ ("Tenant"),
under a lease dated _________________ (the "Lease").
You have previously entered into or are about to enter into certain financing
agreements (the "Agreements") with Tenant and you have requested that we grant
this Waiver. We understand that the payment and performance of all of Tenant's
obligations to you, including without limitation indebtedness arising under the
Agreements, is and shall be secured by a security interest in, among other
things, all of the present and future inventory and equipment owned by Tenant,
and the proceeds and products thereof (as defined in the Uniform Commercial
Code), now or hereafter located at the Premises (the "Collateral").
In consideration of financial accommodations extended by you to Tenant, and in
recognition of the benefits afforded to Tenant therefrom, we hereby waive any
present or future interest which we may have in the Collateral, regardless of
how such interest arises or has arisen, including, but not limited to, any lien
for unpaid rent, whether arising under statute, common law or any agreement
between us and Tenant (including the Lease).
Furthermore, we grant you the right to enter the Premises for the purpose of
repossessing, removing, selling or otherwise handling the Collateral in
accordance with the provisions of the Agreements (said right hereinafter
referred to as the "License"). The License shall continue, at your option, for a
minimum of ninety (90) days from the date you enter into possession of the
Premises. As a condition of your exercise of the License, you agree to pay to
the undersigned a per diem license fee based upon the average monthly rental
provided for in the Lease. In no event shall the License continue beyond the
time that the Collateral remains on the Premises.
We understand that you will rely upon this instrument in connection with your
financial accommodations to Tenant, and that any additional financial
accommodations you may hereafter extend will also be in reliance on this
instrument.
This Waiver, License and Agreement may not be changed or terminated orally, and
it shall be binding upon the successors, transferees, and assigns of the
undersigned.
Very truly yours,
39
State of _______________
.ss:
County of ______________
On the ___ day of ___________, 1999 before me personally came
_______________ to me known, who, being by me duly sworn, did depose and say
that (s)he resides at ________; that (s)he is the _______________ of
____________, the corporation described in an which executed the foregoing
instrument; that (s)he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was affixed by order of the
board of directors of said corporation, and that (s)he signed her/his name
thereto by like order.
_______________________________
Notary Public
40
EXHIBIT 5.14(d)(i)
to
AMENDED AND RESTATED COMPANY SECURITY AGREEMENT
Form of Notice of Security Interest in Patents
September 30, 0000
Xxxxxx Xxxxxx Department of Commerce
Commissioner of Patents and Trademarks
Box Assignments
Washington, D.C. 20231
Northstar Health Services, Inc.
Ladies and Gentlemen:
Pursuant to an Amended and Restated Security Agreement, dated
as of September 30, 1999 (the "Security Agreement"), NORTHSTAR HEALTH SERVICES,
INC., a Delaware corporation, (the "Assignor"), has granted THE CHASE MANHATTAN
BANK, as Collateral Agent, (the "Assignee") a continuing security interest in,
and a continuing lien upon, the Patents (as such term is defined in the Security
Agreement) including the patents and patent applications listed on the annexed
Annex A, and all applications, registrations, renewals and proceeds (including
accounts receivable and royalties) thereof (the "Patents"). The Assignee's
security interest in the Patents can only be terminated in accordance with the
terms of the Security Agreement.
Very truly yours,
NORTHSTAR HEALTH SERVICES,
INC.
By_________________________________
Name:
Title:
ACKNOWLEDGED BY:
THE CHASE MANHATTAN BANK,
as Collateral Agent
By_________________________________
Name:
Title:
41
ANNEX A
to
NOTICE OF SECURITY INTEREST IN PATENTS
Patents
United States Patent Numbers and
Design Patent Numbers Issue Date
--------------------- ----------
None
----
Patent Licenses
---------------
United States
Patent Number Owner Issue Date
------------- ----- ----------
None
----
Patent Applications
-------------------
Nature of
Serial No. Owner Interest Filing Date
---------- ----- -------- -----------
None
----
42
EXHIBIT 5.14(d)(ii)
to
AMENDED AND RESTATED COMPANY SECURITY AGREEMENT
Form of Memorandum of Security Interest in Trademarks
September 30, 0000
Xxxxxx Xxxxxx Department of Commerce
Commissioner of Patents and Trademarks
Box Assignments
Washington, D.C. 20231
Northstar Health Services, Inc.
Ladies and Gentlemen:
Pursuant to an Amended and Restated Security Agreement, dated as of
September 30, 1999 (the "Security Agreement"), NORTHSTAR HEALTH SERVICES, INC.,
a Delaware corporation, (the "Assignor"), has granted THE CHASE MANHATTAN BANK,
as Collateral Agent, (the "Assignee") a continuing security interest in, and a
continuing lien upon, the Trademarks (as such term is defined in the Security
Agreement) including the trademarks listed on the annexed Annex A, and all
applications, registrations, renewals and proceeds (including accounts
receivable and royalties) thereof (the "Trademarks"), together with the goodwill
of the business connected with the use of and symbolized by the Trademarks. The
Assignee's security interest in the Trademarks can only be terminated in
accordance with the terms of the Security Agreement.
Very truly yours,
NORTHSTAR HEALTH SERVICES, INC.
By________________________
Name:
Title:
ACKNOWLEDGED BY:
THE CHASE MANHATTAN BANK,
as Collateral Agent
By_________________________
Name:
Title:
43
ANNEX A
to
MEMORANDUM OF SECURITY INTEREST IN TRADEMARKS
Trademarks
Xxxx: Keystone Rehabilitation Systems + design
Reg. No.: 1,490,615
Reg. Date: May 31, 1988
Class: Int. Class 42; U.S. Class 100
Trademark Applications
Xxxx: K Keystone Rehabilitation Enterprises
Serial Number: 75/521065
Filing Date: July 17, 1998
44
[EXECUTION COPY]
NON-BANK CERTIFICATE
Reference is made to the Credit Agreement, dated as of September 30,
1999 (as supplemented, amended or restated from time to time, the "Credit
Agreement"), among Northstar Health Services, Inc., and its subsidiaries,
Cerberus Capital Management, LLC, as Agent, The Chase Manhattan Bank, as
Collateral Agent and certain other financial institutions. Pursuant to the
provisions of Section 2.6B(iii) of the Credit Agreement, the undersigned hereby
certifies that it is not a "bank" as such term is used in Section 881(c)(3)(A)
of the United States Internal Revenue Code of 1986, as amended.
Dated as of September 30, 1999
BEAR XXXXXXX & CO.
By_________________________
Name:
Title: