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EXHIBIT 10.9
[EXECUTION COPY]
AMENDED AND RESTATED SUBSIDIARIES SECURITY AGREEMENT
This AMENDED AND RESTATED SUBSIDIARIES SECURITY AGREEMENT dated as of
September 30, 1999, among the subsidiaries of Northstar Health Services, Inc.
(the "Company") set forth on Schedule I hereto (as the successors to the
Grantors (as such term is defined in the Original Subsidiaries Security
Agreement (as defined below), each, a "Grantor", and collectively, the
"Grantors"), 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 Subsidiaries Security Agreement, dated as of October 20, 1995 (as
amended, modified or supplemented prior to the date hereof, the "Original
Subsidiaries Security Agreement"), among the Grantors 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 Grantors and the Original Agent are parties to that certain
Subsidiaries Guarantee, dated as of October 20, 1995 (as amended, modified or
supplemented prior to the date hereof, the "Original Subsidiaries Guarantee"),
among the Grantors and the Agent, pursuant to which the Grantors guaranteed the
Company's Obligations under the Original Credit Agreement and under the other
Loan Documents.
C. In order to secure the Obligations under the Original Subsidiaries
Guarantee, the Grantors and the Agent entered into the Original Subsidiaries
Security Agreement, pursuant to which the Grantors granted to the Original
Agent, on behalf of Lenders, a first priority security interest in all of their
personal property.
D. 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.
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E. The Company, the Grantors, 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.
F. The Grantors, the Agent and the Collateral Agent have agreed to
amend and restate the Original Subsidiaries Guarantee in its entirety to (i)
provide for the continuation of the guarantee of the Obligations by the Grantors
and (ii) to reflect the Original Agent's resignation as collateral agent for the
Lenders and the appointment of the Agent and the Collateral Agent as successor
agents for the Lenders.
G. The Grantors, the Agent and the Collateral Agent now wish to amend
and restate the Original Subsidiaries 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.
H. The Company owns, directly or indirectly, all of the issued and
outstanding capital stock of the Grantors.
I. The Company and the Grantors engaged in related businesses, and each
of the Grantors will derive substantial direct and indirect benefit from the
continuance of the Loans pursuant to the Credit Agreement.
J. It is the intent of the Company, the Grantors, the Lenders, the
Agent and the Collateral 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.
K. Each of the Grantors represents and confirms, and the Agent and the
Collateral Agent each acknowledge, that (i) the security interests granted
pursuant to the Original Subsidiaries Security Agreement continue in full force
and effect and continue to secure the Obligations under the Subsidiaries
Guarantee, (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 Subsidiaries Security
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Agreement and that the security interests and the Collateral securing the
Original Loans and Obligations continue to secure the Loans and the Obligations.
L. It is a condition precedent to the obligation of the Lenders to
amend and restate the Original Credit Agreement and to extend the maturity of
the Original Loans that the Grantors execute this Agreement and continue to
grant the security interests hereunder.
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
the Grantors, including, but not limited to those arising out of the
sale or lease of goods or the rendition of services by the Grantors,
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 the Grantors, and the Grantor'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 the Credit
Agreement.
"Code" means the New York Uniform Commercial Code, as set
forth in N.Y.U.C.C. Law Section 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; Pledged Partnership
Interests: any money or other assets of the
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Grantors which hereafter come into the possession, custody or control
of Agent or Collateral 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.
"Company Security Agreement" has the meaning stated in the
Credit Agreement.
"Concentration Account" has the meaning stated in the Company
Security Agreement.
"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.
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"Deposit Accounts" 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" has the meaning stated in the Company
Security Agreement.
"Equipment" means all of the Grantors' 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 the
Grantors in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions and improvements to
any of the foregoing, wherever located.
"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 the Grantors' 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 and patent applications, trade
names, trademarks and trademark applications, service marks, copyrights
and copyright applications, trade secrets, blueprints, drawings,
intellectual property or 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 the Grantors' books and records relating
to any of the foregoing.
"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 delivered with any
necessary endorsement or assignment.
"Inventory" means all present and future inventory in which
the Grantors have any interest, including goods held for sale or lease
or to be furnished under a contract of service, the Grantors' present
and future raw materials, work in process, finished goods and materials
used in or consumed in the Grantors's business, goods, which have been
returned to, repossessed by or stopped in transit by the Grantors,
packing and shipping
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materials, wherever located, any documents of title representing any of
the above, and the Grantors' books and records relating to any of the
foregoing.
"Investment Property" means all of the Grantors' present and
future certificated and uncertificated securities, securities
entitlements, securities accounts, commodity accounts and commodity
contracts.
"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.
"Medicare" the federal program authorized under 42 U.S.C. 301
et seq.
"Medicare Collection Account" has the meaning stated in the
Company Security Agreement.
"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 the Grantors' present and
future letters 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" has the meaning stated in
the Company Security Agreement.
"Partnership" means each of the partnerships set forth in Part
III of Schedule 4.11.
"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.
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"Payroll Account" has the meaning stated in the Company
Security Agreement.
"Pledged Accounts" has the meaning stated in the Company
Security Agreement.
"Pledged Partnership Interests" means the partnership
interests (general or limited) and other equity interests, together
with all certificates and instruments, if any, representing such
interests, each as set forth in Part III of Schedule 4.11 hereto.
"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.
"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.
ARTICLE II
Grant of Security
Section 2.01. Grant of Security. The Grantors hereby grants to Agent
and the Collateral Agent, for their benefit and 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 the Grantors
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of each and all of their 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 the
Grantors. Other than sales of Inventory to buyers in the ordinary course of
business, the Grantors have no authority, express or implied, to dispose of any
item or portion of the Collateral, except as provided for 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, the
Grantors 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
Grantors Remains Liable; Delivery of Collateral; Deposit Accounts
Section 3.01. Grantors Remains Liable. Anything in this Agreement to
the contrary notwithstanding:
(a) Grantors Remains Liable. The Grantors shall remain liable
to perform all its obligations (whether under the Contracts, Negotiable
Collateral or otherwise) under or in respect of the Guarantee
Collateral to the same extent as if this Agreement had not been
executed.
(b) Grantors 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 Grantors 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 Guarantee Collateral or any contract or agreement included in the
Guarantee 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 Grantors under or
in respect of any Guarantee Collateral or any other contract or
agreement included in the Guarantee Collateral or to take any action to
collect or enforce any claim for payment assigned by this Agreement.
Section 3.02. Delivery of Guarantee Collateral.
(a) Delivery of Guarantee 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,
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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 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 Guarantee Collateral. Upon the occurrence and
during the continuation of an Event of Default under the Credit Agreement, at
the request of the Agent, each Grantor 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.
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Section 3.03 Notices and Analysis.
(a) Notice to Account Debtors and Contracting Parties. Each Grantor
shall promptly notify account debtors on the Accounts, parties to the Contracts
and all other obligors in respect of any Guarantee Collateral that the Accounts,
Contracts and all other Guarantee 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) to the Company Security
Agreement 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 Guarantee 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 Grantors 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 Grantors, the Grantors 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 Grantors 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
Grantors 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 Guarantee Collateral or on the interest of the
Grantors, the Collateral Agent, the Agent or the Lenders in any Guarantee
Collateral. The Grantors 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 Grantors shall not own, open, establish,
have or maintain any Deposit Account other than the Pledged Accounts.
(b) Establishment of Pledged Accounts. There have been established by
the Company and the Grantors on or prior to the date hereof, the Pledged
Accounts.
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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, the Company, the
Agent, S&T Bank and the Collateral Agent shall have entered into the Blocked
Account Agreements, substantially in the form of Exhibit 3.05(c) to the Company
Security Agreement as provided in Section 3.05 (c) of the Company Security
Agreement.
(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 Grantors to collect amounts due under the Guarantee
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. Each of the Grantors agrees 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 in the Cash Management System. In addition, the
Grantors shall not 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. Each Grantor agrees that any such violation or breach of the
Cash Management System shall be treated as a violation or breach of this
Agreement.
(f) Reports and Documents. Promptly (but in no event later than 10
days) after the end of each calendar month, the Grantors shall deliver to the
Collateral Agent a certification from the Chief Financial Officer of such
Grantor that all deposits into the Pledged Accounts consist solely of Guarantee
Collateral or Proceeds of Guarantee Collateral. At the Collateral Agent's
request, the Grantors 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 Guarantee Collateral which
are not sent or delivered directly to a Pledged Account by an obligor, when
collected by a Grantor, 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 Guarantee Collateral or on
account of any Guarantee Collateral shall be promptly deposited by such Grantor
in the exact form received, except for any endorsement by such Grantor 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 such Grantor for and as the Collateral Agent's property and
shall not be commingled with such Grantor's other funds.
(h) Proceeds Remain Guarantee Collateral. All Proceeds constituting
collections of Guarantee Collateral while held by the Collateral Agent (or by a
Grantor in trust for the
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Collateral Agent) shall continue to be collateral security for all of the
Obligations and shall not constitute payment thereof until applied as
hereinafter provided.
(i) KRS Partnerships. Each Grantor agrees to use its respective 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 to the Company Security Agreement 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 each Grantor agrees to modify
the Cash Management System to the satisfaction of the Agent.
ARTICLE IV
Representations and Warranties of the Grantors
Each of the Grantors hereby represents and warrants to the Collateral
Agent, the Agent and the Lenders as follows:
Section 4.01. Power. Such Grantor 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 Guarantee Collateral to the
Collateral Agent.
Section 4.02. Authorization; Binding Effect. The execution and delivery
by such Grantor of this Agreement, the performance by such Grantor 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 such Grantor 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 such
Grantor and is a legal, valid and binding obligation of such Grantor enforceable
against such Grantor in accordance with its terms.
Section 4.03. Contravention. Neither the execution, delivery and
performance of this Agreement by such Grantor 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 such Grantor'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 such Grantor, any of the
Guarantee 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 such Grantor is a party or by
which such Grantor, the Guarantee 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 Guarantee Collateral or any of the other
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properties now owned or hereafter acquired by such Grantor, 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
such Grantor 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 Guarantee Collateral to the Collateral
Agent, (c) the perfection of the security interests, Liens and pledges granted
by this Agreement, (d) the performance by such Grantor 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. Such Grantor is and, with respect to Guarantee
Collateral to be acquired, will be, the sole legal and beneficial owner of the
Guarantee Collateral, free and clear of any Lien or option in favor of any other
Person, except for the Liens created by this Agreement and such Grantor has good
and marketable title to the Guarantee Collateral. No security agreement,
financing statement or other instrument similar in effect covering all or any
part of the Guarantee 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 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 Guarantee Collateral and which are
enforceable as such against (a) all creditors of, and purchasers from, such
Grantor, (b) upon receipt of the landlord waivers referred to in Section 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 Guarantee 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 such Grantor are located at The Atrium, 000
Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000. Such Grantor keeps all of its
records concerning the Guarantee 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
such Grantor's business and are current and collectible net
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of any reserves shown on such Grantor's financial statements (which reserves are
adequate and were calculated consistent with past practice). The amount
represented by such Grantor 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. Such Grantor 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 such Grantor 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 such Grantor 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 such Grantor and, to the best of such
Grantor's knowledge, by the other parties thereto, and is in full force and
effect and (ii) constitutes 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 such Grantor, or to
such Grantor's knowledge, any other party thereto. Such Grantor has fully
performed all its obligations under each Contract. The right, title and interest
of such Grantor 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 Guarantee Collateral, nor have any of the foregoing been
asserted or alleged against such Grantor as to any Contract.
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(d) Copies of Contracts; No Instruments. At the request of the Agent,
the Grantors 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 such Grantor 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
any Grantor have 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 any Grantor 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 any Grantor 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. One of the Grantors has good and marketable title to each
of the interests created by the Proprietary Rights. All Proprietary Rights of
the Grantors are valid and in good standing and are in full force and effect.
None of the Grantors has 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, none of the Grantors is 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
any Grantor 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 any Grantor'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.
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"). Part III
of Schedule 4.11 sets forth a true, correct and complete list and description of
all of the Pledged Partnership Interests and the Partnerships.
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(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.
(i) Capital Account Balances, etc. The capital account balance with
respect to each of the Pledged Partnership Interests as of December 31, 1998 is
as set forth in Part III of Schedule 4.11 under the heading "Capital Account
Balance". The Grantors' total capital commitment and their total capital
contributions made and their unfunded capital commitment for each Partnership as
of December 31, 1998 are set forth in Part III of Schedule 4.11. Each of the
Grantors has paid in full to each Partnership when due its entire commitment to
make contributions to the capital of such Partnership and there is no unfunded
capital commitment or other obligations under any Partnership Agreement in
respect of its Partnership Interest. None of the Grantors is not now, and to its
knowledge, has never been, in default under or in breach of, any of its
obligations,
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duties, representations, warranties, covenants or agreements contained in any
Partnership Agreement.
(j) Copies of Agreements. The Grantors have delivered to the Agent
true, correct and complete copies of (i) the Agreement of Limited Partnership of
each of the Partnerships, together with all amendments and waivers thereto and
(ii) all agreements and other documents pursuant to which each Grantor acquired
each Pledged Partnership Interest. Except as set forth in Part III of Schedule
4.11, no Partnership Agreement has been amended and no terms thereof waived and
there are no side letters outstanding with respect to any Partnership. Except
for the Partnership Agreements, the Grantors are not party to or bound by any
agreements or understandings affecting or relating to any of the Pledged
Partnership Interests.
Section 4.12. Inventory, Equipment and Fixtures.
(a) Possession. Each of the Grantors has exclusive possession and
control of its 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 one of the Grantors has an interest as of the
date of this Agreement.
Section 4.13. Vehicles. Schedule 4.13 sets forth a true, correct and
complete list and description of all Vehicles in which one of the Grantors 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
Guarantee Collateral which is a Governmental Body as of the date of this
Agreement whose payments must be segregated from other receivables of any of the
Grantors under Medicare. The Grantors have 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 Grantors to make such
payments only to the Medicare Collection Account.
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ARTICLE V
Covenants of the Grantors
Section 5.01. No Liens on Guarantee Collateral. None of the Grantors
will create, incur, assume or permit to exist, will defend the Guarantee
Collateral against, and will take such other actions as is necessary to remove,
any Lien or claim on or to the Guarantee 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 Guarantee Collateral against the
claims and demands of any and all Persons.
Section 5.02. Perfection. Each of the Grantors will take any and all
actions, at such Grantor's expense, which are necessary or advisable to ensure
that (a) the Liens granted pursuant to this 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
Guarantee Collateral and will be enforceable as such against all creditors of,
and purchasers from, such Grantor 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 to the Company Security
Agreement, from all of the landlords owing property at which the Grantors
conduct business or have Equipment.
Section 5.03. Limitations on Dispositions of Guarantee Collateral. Each
of the Grantors agrees that it will not sell, transfer, lease, convey or
otherwise dispose of any of the Guarantee 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 such
Grantor's business consistent with past practice of property not material to the
conduct of the Company's or such Grantor's respective businesses.
Section 5.04. Payment of Obligations. Each of the Grantors 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 Guarantee Collateral or such Grantor or in respect of such
Grantor'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 Guarantee Collateral.
Section 5.05. Compliance with Laws, etc. Each of the Grantors will
comply in all material respects with all Regulations applicable to the Guarantee
Collateral or any part thereof or to the operation of such Grantor's business.
Section 5.06. Maintenance of Records. Each of the Grantors will keep
and maintain, at its own cost and expense, satisfactory and complete records of
the Guarantee Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Accounts. Each of
the Grantors will xxxx its books and records pertaining to the Guarantee
Collateral to evidence this Agreement and the Liens, security interests and
pledges
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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 Grantors' books and records pertaining to the Guarantee
Collateral and, upon the occurrence of an Event of Default which is continuing,
each of the Grantors 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 Grantors, 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
each of the Grantors agrees to render to the Collateral Agent, the Agent and the
Lenders, at such Grantor'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 Guarantee Collateral is located for the purpose of
inspecting the same, observing its use or otherwise protecting their interests
therein.
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Section 5.08. Impairment of Guarantee Collateral.
(a) General. None of the Grantors shall take, or fail to take, any
action in connection with any Guarantee Collateral that would impair the value
of the Guarantee Collateral or the interest or rights of any Grantor, the
Collateral Agent, the Agent or any Lender in, to or under that Guarantee
Collateral.
(b) Certain Actions Prohibited. None of the Grantors will (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 Guarantee Collateral or the interest of such Grantor, the
Collateral Agent, the Agent or the Lenders in such Guarantee 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 the Guarantee
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 Guarantee
Collateral.
(c) Limitations on Discounts, Compromises, Extensions of Accounts.
Other than in the ordinary course of the Grantors' business consistent with past
practice, none of the Grantors will 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. Each of the Grantors 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 Guarantee Collateral and (ii) the occurrence of any other
event which could reasonably be expected to have a material adverse effect on
(x) the aggregate value of the Guarantee Collateral or (y) the Liens created
hereunder.
(b) Reports, Notices, Etc. Each of the Grantors 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
Guarantee Collateral, (ii) promptly upon the request of the Agent, information
and reports regarding that Guarantee Collateral and (iii) promptly upon the
request of the Agent, make the demands and requests for information or action
that such Grantor is entitled to make under that Guarantee Collateral. Each of
the Grantors will also promptly furnish to the Collateral Agent copies of any
monthly management reports prepared by the Grantors.
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(c) Further Identification of Guarantee Collateral. Each of the
Grantors will furnish to the Collateral Agent and the Agent from time to time
statements and schedules further listing, identifying and describing the
Guarantee Collateral and such other reports in connection with the Guarantee
Collateral as the Agent may reasonably request, all in reasonable detail.
Section 5.10. Changes in Locations, Name, etc. None of the Grantors
will (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 Guarantee
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 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, each of the Grantors shall timely collect all amounts
due or to become due to such Grantor under the Accounts, Negotiable Collateral,
Instruments, General Intangibles, Contracts and Investment Property and
otherwise enforce its rights under and in respect of such Guarantee Collateral.
(b) Deliver Guarantee Collateral to Agent. In the event that any
Account, Negotiable Collateral, Instrument, General Intangible or Investment
Property is evidenced by a promissory note, certificate or instrument, the
Grantors 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. Each of the Grantors 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 Guarantee Collateral. If any amount payable
under or in connection with any of the Guarantee 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 Guarantee Collateral
pursuant to this Agreement.
Section 5.12. Contracts. Each of the Grantors will fully and timely
perform and comply in all material respects with all its obligations under the
Contracts and all its other contractual
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obligations relating to the Guarantee Collateral and maintain such Guarantee
Collateral in full force and effect.
Section 5.13. Copyrights.
(a) No Bad Acts. Each of the Grantors (either itself or through
licensees) will, except with respect to any Copyright that such Grantor 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. None
of the Grantors 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) Each of the Grantors 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 such Grantor's ownership of any such
Copyright or its validity.
(ii) Each of the Grantors 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. Each of the Grantors 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 such Grantor 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.
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Section 5.14. Patents and Trademarks.
(a) No Bad Acts. Each of the Grantors (either itself or through
licensees) will, except with respect to any Trademark that such Grantor 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.
None of the Grantors will, except with respect to any Patent that such Grantor
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) Each of the Grantors will notify the
Collateral Agent 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 such Grantor'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
Guarantee Collateral is infringed, misappropriated or diluted by a third party,
the Grantors shall promptly notify the Collateral Agent after any Grantor learns
thereof and, at the Grantors' sole expense, shall, unless the Grantors shall
reasonably determine that such Patent or Trademark is of negligible economic
value to the Grantors, 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 Grantors shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
(c) Regulatory Filings. Whenever any of the Grantors, 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, such Grantor 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. Each of the Grantors 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
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registration of the Patents and Trademarks, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
(d) Further Filings. Each of the Grantors 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 to the Company Security Agreement as Exhibit
5.14(d)(i) and the Memorandum of Security Agreement - Trademarks attached to the
Company Security Agreement 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 Grantors relating
thereto or represented thereby, and each of the Grantors 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 Guarantee Collateral. Each of the Grantors 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. Each of the Grantors 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
Guarantee 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. Each of the Grantors 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.
Section 5.16. Vehicles. Each of the Grantors 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. Each of the Grantors will notify
the Collateral 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 each of the Grantors 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.
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Section 5.17. Maintenance of Insurance.
(a) Adequate Insurance. Each of the Grantors will maintain at its own
expense, with financially sound and reputable companies, insurance policies
covering the Guarantee Collateral (i) insuring the Guarantee 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 Grantors, the Collateral Agent, the Agent
and the Lenders against liability for personal injury and property damage
relating to such Guarantee 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 Grantors, 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 Grantors, (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 Grantors 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 Guarantee Collateral,
the Grantors 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 Grantors for the costs of any repairs
or replacements from such proceeds.
(e) Assignment of Policies. At the request of the Agent, each of the
Grantors 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, each of the
Grantors 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 Grantors, jointly and severally,
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 any Grantor contained in this Agreement or in any
certificate delivered hereunder;
(b) the nonfulfillment of any covenant, undertaking, agreement
or other obligation of any Grantor contained in this Agreement or in
any certificate delivered hereunder;
(c) the failure or delay by any Grantor 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 Guarantee Collateral; or
(d) any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the account debtor or obligor under any of
the Guarantee Collateral, arising out of a breach by any Grantor 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 Grantors.
Section 5.19. Medicare Matters.
(a) Directions to Obligors. Each of the Grantors 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. Each of the Grantors 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. Each of the Grantors 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. Each of the Grantors agrees that
all other funds of such Grantor will be deposited or paid, in accordance with
the Cash Management System, into Pledged Accounts other than the Medicare
Collection Account.
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(c) Certification. Within 10 days after the end of each calendar month,
each of the Grantors will provide to the Agent (i) a written certification of
the Chief Financial Officer of such Grantor 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 Grantors,
each of the Grantors will promptly and duly execute and deliver such further
instruments and documents and 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 Guarantee Collateral. Each of the Grantors
also hereby authorizes the Collateral Agent to file any such financing or
continuation statement without the signature of any Grantor to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this 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 Guarantee 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 Guarantee Collateral), by law
or otherwise.
(b) Exercise Rights of the Grantors. The Collateral Agent or
the Agent may exercise any and all rights and remedies of the Grantors
under or in respect of the Guarantee Collateral, including, without
limitation, any and all rights of the Grantors to demand or otherwise
require payment of any amount under, or performance of any provision
of, the Guarantee Collateral, or the right of the Grantors to vote or
consent with respect to any Guarantee Collateral.
(c) Take Possession of Guarantee Collateral. The Collateral
Agent or the Agent may take possession of the Guarantee Collateral and,
without liability for trespass, enter
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on any premises for the purpose of taking possession of or removing any
Guarantee Collateral.
(d) Right to Sell Guarantee 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 any of the Grantors 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 Guarantee 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) Each of the Grantors agrees that, to the extent notice of
sale shall be required by law, at least ten days notice to the Grantors
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
Guarantee 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 place to which the sale was so adjourned.
(iii) For purposes of this Agreement, a written agreement to
purchase all or any of the Guarantee 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 Guarantee 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
Guarantee 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. Each of the
Grantors 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.
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(vi) To the extent permitted by law, the Collateral Agent, the
Agent or any Lender may purchase all or any part of the Guarantee
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 any of
the Grantors (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 any of the Grantors 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 any of the Grantors.
(vii) Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any of the
Grantors, and each of the Grantors hereby waives (to the extent
permitted by law) all rights of redemption, stay, valuation and
appraisal which any such Grantor now has or may at any time in the
future have under rule of law or statute now existing or hereafter
enacted.
(e) Store Guarantee Collateral. The Collateral Agent or the
Agent may cause any Guarantee Collateral to be held, stored, processed
or completed prior to sale, and expenses incurred for this purpose
shall constitute Obligations hereunder. Each of the Grantors agrees to
assemble the Guarantee 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 a Grantor's premises or
elsewhere.
(f) Notices to Account Debtors, Obligors, Etc. The Collateral
Agent or the Agent may, without notice to any of the Grantors, (i)
notify the account debtors, obligors or bailees under or of any of the
Guarantee Collateral of the assignment and pledge to the Collateral
Agent of the Guarantee 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 Grantors under the
Guarantee Collateral and (iii) collect, adjust, settle or compromise
those obligations. While the Collateral Agent is exercising any
authority under this Section none of the Grantors shall adjust, settle
or compromise any obligation under the Guarantee Collateral, release
wholly or partly any account debtor or obligor in respect of those
obligations, or allow any credit or discount on those obligations.
(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, each
of the Grantors 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.
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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 any of the Grantors under or in respect of any
Guarantee Collateral shall be received in trust for the Collateral Agent,
segregated from other funds of such Grantor 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 Guarantee 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 Guarantee Collateral in accordance with
the Credit Agreement.
(b) Grantors Remain Liable. Each of the Grantors shall remain fully
liable for any deficiency if the proceeds or other realization of the Guarantee
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) Guarantee 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 Grantors
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. Each of the
Grantors hereby irrevocably appoints the Collateral Agent (with full power of
substitution) such Grantor's attorney-in-fact, with full authority in the place
and stead of such Grantor and in the name of such Grantor or otherwise, from
time to time in the Agent's discretion, to execute any instrument and
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to take any other action that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) Further Documents. To execute, deliver and file on behalf
of and in the name of such Grantor 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 Guarantee Collateral without the signature of
such Grantor where permitted by law. Each of the Grantors agrees that a
carbon, photographic or other reproduction of this Agreement, any
financing statement, notice or other document covering the Guarantee
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 such Grantor, at such Grantor's expense, which
are necessary or advisable to ensure that (i) the Liens granted
pursuant to this 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
Guarantee Collateral and will be enforceable as such against all
creditors of, and purchasers from, such Grantor 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 Guarantee Collateral, to effect any
repairs called for by the terms of this Agreement and to pay all or any
part of the costs thereof.
(e) Collect Guarantee 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 Guarantee Collateral (whether as interest,
dividend, other distribution or otherwise) and to direct any party
liable for any payment under any of the Guarantee 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 Guarantee Collateral or otherwise
to
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enforce the rights of the Collateral Agent with respect to all or any
part of the Guarantee Collateral.
(g) Transfer Guarantee Collateral Into Collateral Agent's
Name. Upon the occurrence and during the continuation of an Event of
Default, to transfer any Guarantee Collateral into the Collateral
Agent's or its nominee's name.
(h) Vote Guarantee 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 Guarantee
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 the Grantors' mail to an address
designated by Agent, and open all mail addressed to such Grantor, and
(iii) do all other acts and things necessary, in Agent's determination,
to fulfill the Grantors' 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 the Grantors' name of
any of the documents described in Sections 5.20 and 7.02(a) or on any
other similar documents to be executed, recorded or filed 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 the Grantors' 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 the
Grantors' name on any invoices, bills of lading, freight bills, chattel
paper, documents, instruments or similar documents or agreements
relating to any Accounts or any goods pertaining thereto or any other
Collateral, (v) sign the Grantors' name on any verification of Accounts
and notices thereof to Account debtors.
Each of the Grantors 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 any of the Grantors
shall fail to perform any obligation under this Agreement or under or in respect
of any Guarantee Collateral or any representation of any Grantor contained in
this Agreement or in any document included in the Guarantee 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
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Collateral Agent and the Agent in connection with the performance of the
obligation or the remedy of the breach shall constitute Obligations.
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Section 7.04. Duties of Collateral Agent.
(a) Duties. The powers conferred on the Collateral Agent and the Agent
by this Agreement are solely to protect the Collateral Agent's, the Agent's and
the Lenders' interest in the Guarantee 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 Guarantee 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 Guarantee 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 Guarantee Collateral. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Guarantee
Collateral in its possession if the Collateral Agent treats the Guarantee
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, conversions, exchanges, maturities, tenders or
other matters relative to any Guarantee 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 Guarantee Collateral, (iii) collecting any proceeds
of any Guarantee 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.
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 Guarantee
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 any of the Grantors, 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 Guarantee Collateral
shall revert to the Grantors. At the Grantors' expense, the
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Collateral Agent shall then execute and deliver to the Grantors the documents
reasonably requested and prepared by the Grantors to evidence the termination.
Section 8.03. Waiver. Each of the Grantors unconditionally waives, to
the full extent permitted by law:
(a) Set-Off. Any defense, set-off or counterclaim which such
Grantor may otherwise assert against the Company, 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 such Grantor under any Loan
Document or as a requirement to the enforcement, assertion or
exercise against such Grantor 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 Guarantee
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 such Grantor of
its rights, if any, of subrogation or contribution.
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(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 such Grantor.
Section 8.04. Obligations Not Affected. The rights of the Collateral
Agent, the Agent and the Lenders and the obligations of the Grantors 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 any
Grantor, 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, and
Grantor 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 Guarantee Collateral
and the guarantees by the Grantors, 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, any Grantor 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.
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(g) Reorganizations. The liquidation, dissolution, merger or
consolidation of the Company, any Grantor or any other Person, or the
transfer by the Company, any Grantor 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, any Grantor 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 Grantor, any other Person or
any of their property.
(i) Release. The release or discharge, by operation of law or
otherwise, of the Company, and Grantor 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 any Grantor 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 any Grantor 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 the
Grantors, 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 Grantors, jointly and severally, agree 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.
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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".
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.
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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
Grantors, 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
Grantors, 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 Grantors, the Collateral Agent, the
Agent and the Lenders hereby irrevocably waives 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,
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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.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above in New York, New York.
AGENT:
CERBERUS CAPITAL MANAGEMENT, LLC,
Address: as Agent for the Lenders
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx-Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
COLLATERAL AGENT:
THE CHASE MANHATTAN BANK, as
Address: Collateral Agent for the Lenders
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Capital Markets Fiduciary
Services, Cerberus Capital
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
GRANTORS:
Address: NSHS SERVICES, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
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Address: KEYSTONE REHABILITATION
SYSTEMS, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
Address: KEYSTONE REHABILITATION
MANAGEMENT, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
Address: NORTHSTAR MEDICAL SERVICES, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
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Address: NORTHSTAR DIAGNOSTIC SERVICES, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
Address: VASCUSONICS, INC.
c/o Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 By:______________________________
Name:
Title:
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List of Annexes, Schedules and Exhibits
Schedule I Grantors
Schedule 4.08(a) Certain Accounts
Schedule 4.08(c) List of Grantors' Accounts, Chattel Paper,
Instruments, General Intangibles and Documents
Schedule 4.09(b) Certain Grantors' Contracts
Schedule 4.09(d) List of Grantors' Contracts
Schedule 4.10 Grantors' Proprietary Rights
Schedule 4.11 Grantors' Investment Property
Schedule 4.12 Grantors' Inventory, Equipment and Fixtures
Schedule 4.13 Grantors' Vehicles
Schedule 4.14 Governmental Obligors
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SCHEDULE I
to
AMENDED AND RESTATED SUBSIDIARIES SECURITY AGREEMENT
Grantors
NSHS Services, Inc.
Keystone Rehabilitation Systems, Inc.
Keystone Rehabilitation Management Inc.
Northstar Medical Services, Inc.
Northstar Diagnostic Services, Inc.
Vascusonics Inc.
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