EXHIBIT 10.98
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 20, 2000 ("Agreement") among MARINER
HEALTH GROUP, INC. ("MHG") and the OTHER BORROWERS (this and other capitalized
terms used in this introduction and the recitals below are defined in Section 1
hereof), each as debtor and debtor-in-possession, PNC BANK, NATIONAL
ASSOCIATION, as Collateral Agent and for purposes of Section 6 hereof, First
Union National Bank.
WHEREAS, the Borrowers are entering into the Credit Agreement described in
Section 1 below, pursuant to which the Borrowers intend to borrow funds and
obtain letters of credit, all on the terms and conditions set forth therein;
WHEREAS, the Borrowers are willing to secure their obligations under the
Credit Agreement and the other Financing Documents by granting Liens on their
respective assets to the Collateral Agent as provided in this Agreement and the
other Collateral Documents;
WHEREAS, the Lenders and the LC Issuing Bank are not willing to make loans
or maintain, issue or participate in letters of credit under the Credit
Agreement unless the foregoing obligations of the Borrowers are secured by Liens
on their assets as provided in the Collateral Documents; and
WHEREAS, upon any foreclosure or other enforcement of the Collateral
Documents, the net proceeds of the relevant Collateral are to be received by or
paid over to the Collateral Agent and applied as provided in Section 15 of this
Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
meanings:
"Accounts" means, with respect to any Grantor, all " accounts" (as defined
in the UCC) now owned or hereafter acquired by such Grantor, and also means and
includes all Medicare Receivables, Medicaid Receivables, VA Receivables,
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to such Grantor arising from the performance
of services by it and/or the sale, lease or exchange of goods or other property
by it (including, without limitation, any such obligation or indebtedness which
might be characterized as an account, contract right or general intangible under
the Uniform Commercial Code in effect in any applicable jurisdiction) and all of
such Grantor's rights in, to and under all contracts or purchase orders for
goods, services or other property, and all of such Grantor's rights to any
goods, services or other property represented by any of the foregoing and all
monies due to or to become due to such Grantor under all contracts for the
performance of services by it and/or the sale, lease or exchange of goods or
other property by it (whether or not yet earned by performance on the part of
such Grantor), in each case whether now existing or hereafter arising
or acquired, including, without limitation, the right to receive the proceeds of
said contracts and purchase orders and all collateral security and guarantees of
any kind given by any Person with respect to any of the foregoing.
"Borrowers" means Mariner Health Group, Inc. and each of its Subsidiaries
party as a "Borrower" to the Credit Agreement.
"Cash Distributions" means dividends, interest and other payments and
distributions made in cash upon or with respect to the Collateral.
"Cash Management System" means the cash management system of the Borrowers
described in the Credit Agreement.
"Cash Proceeds Account" has the meaning set forth in Section 7(d).
"Casualty Proceeds Account" has the meaning set forth in Section 7(b).
"Collateral" means all property, whether now owned or hereafter acquired,
in which a security interest or other Lien is granted or purported to be granted
to the Collateral Agent pursuant to the Collateral Documents. When used with
respect to a specific Grantor, the term "Collateral" means all such property in
which such a security interest or other Lien is granted or purported to be
granted to the Collateral Agent by such Grantor.
"Collateral Accounts" means the Casualty Proceeds Accounts, the Cash
Proceeds Accounts and the LC Collateral Account.
"Collateral Agent" means PNC Bank, National Association, in its capacity as
Collateral Agent for the holders of the Secured Obligations under the Collateral
Documents, and its successors in such capacity.
"Collateral Documents" means this Agreement, the Mortgages and all other
supplemental or additional security agreements, mortgages or similar instruments
delivered pursuant hereto or thereto.
"Concentration Account Bank" has the meaning set forth in Section 6(a).
"Concentration Accounts" has the meaning set forth in Section 6(a).
"Contingent Secured Obligation" means, at any time, any Secured Obligation
(or portion thereof) that is contingent in nature at such time, including
(without limiting the generality of the foregoing):
(i) any obligation to reimburse a bank for drawings not yet made
under a letter of credit issued by such bank, or any Guarantee of any such
obligation;
(ii) any obligation to provide collateral to or for the benefit of a
bank to secure reimbursement obligations arising from drawings not yet made
under a letter of credit issued by such bank, or any Guarantee of any such
obligation; and
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(iii) any other Secured Obligation which is contingent in nature at
the time of determination.
"Copyright License" means any agreement now or hereafter in existence
granting to any Grantor, or pursuant to which any Grantor has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare derivative
works, display or publish any records or other materials on which a Copyright is
in existence or may come into existence.
"Copyrights" means all the following: (i) all copyrights under the laws of
the United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including, without limitation, registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, (ii) all renewals thereof, (iii) all claims for,
and rights to xxx for, past or future infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
"Credit Agreement" means the Debtor-In-Possession Credit Agreement dated as
of January 20, 2000 among the Borrowers, the Lenders, First Union National Bank,
as Syndication Agent, PNC Capital Markets, Inc. and First Union Securities,
Inc., as Co-Arrangers and PNC Bank, National Association, as Collateral Agent
and Administrative Agent, and as an issuing bank for Letters of Credit
thereunder, as amended from time to time.
"Documents" means, with respect to any Grantor, all "documents" (as defined
in the UCC) or other receipts covering, evidencing or representing goods, now
owned or hereafter acquired by such Grantor.
"Enforcement Notice" means a notice delivered to the Collateral Agent by
the Administrative Agent pursuant to Section 8.03 of the Credit Agreement
directing the Collateral Agent to exercise one or more specific rights or
remedies under the Collateral Documents.
"Equipment" means, with respect to any Grantor, all "equipment" (as defined
in the UCC) now owned or hereafter acquired by it, wherever located.
"Equity Interest" means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof or
(v) any warrant, option or other right to acquire any Equity Interest described
in the foregoing clauses (i), (ii), (iii) and (iv).
"General Intangibles" means, with respect to any Grantor, all "general
intangibles" (as defined in the UCC) now owned or hereafter acquired by such
Grantor, including, without limitation, (i) all obligations or indebtedness
owing to such Grantor (other than Accounts) from whatever source arising, (ii)
all Intellectual Property, goodwill, trade names, service marks, trade
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secrets, permits and licenses, (iii) all rights or claims in respect of refunds
for taxes paid and (iv) all rights in respect of any pension plan or similar
arrangement maintained for employees of any member of the ERISA Group.
"Goods" means, with respect to any Grantor, all "goods" (as defined in the
UCC) now owned or hereafter acquired by it, wherever located.
"Grantor" means any Borrower.
"Instruments" means, with respect to any Grantor, all "instruments",
"chattel paper" or "letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any Account or other obligation or
indebtedness owing to such Grantor, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by such Grantor.
"Intellectual Property" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Copyrights and (vi) Copyright Licenses,
and all rights in or under any of the foregoing.
"Inventory" means, with respect to any Grantor, all "inventory" (as defined
in the UCC), now owned or hereafter acquired by it, wherever located.
"LC Collateral Account" has the meaning set forth in Section 7(e).
"Liquid Investments" has the meaning set forth in Section 7(g).
"Medicaid Receivable" means any Account with respect to which the obligor
is a state governmental authority (or agent thereof) obligated to pay, pursuant
to federal or state Medicaid program statutes or regulations, for services
rendered to eligible beneficiaries thereunder.
"Medicare Receivable" means any Account with respect to which the obligor
is a federal governmental authority (or agent thereof) obligated to pay,
pursuant to federal Medicare program statutes or regulations, for services
rendered to eligible beneficiaries thereunder.
"Non-Contingent Secured Obligation" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"Notice of Redirection" has the meaning set forth in Section 6.
"Patent License" means any agreement now or hereafter in existence granting
any Grantor, or pursuant to which any Grantor has granted to any other Person,
any right with respect to any Patent or any invention now or hereafter in
existence, whether patentable or not, whether a patent or application for patent
is in existence on such invention or not, and whether a patent or application
for patent on such invention may come into existence or not.
"Patents" means (i) all letters patent and design letters patent of the
United States or any other country and all applications for letters patent and
design letters patent of the United States
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or any other country, including, without limitation, applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, (ii) all reissues, divisions, continuations, continuations-
in-part, revisions and extensions thereof, (iii) all claims for, and rights to
xxx for, past or future infringements of any of the foregoing and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
"Perfection Certificate" means, with respect to any Grantor, a certificate
substantially in the form of Exhibit A hereto, completed and supplemented with
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the schedules and attachments contemplated thereby to the satisfaction of the
Collateral Agent, and duly executed by a duly authorized officer of such
Grantor.
"Permitted Liens" means (i) the Security Interests and (ii) the other Liens
on the Collateral permitted to be created or assumed or to exist pursuant to
Section 7.02 of the Credit Agreement.
"Personal Property Collateral" means at any time, with respect to any
Grantor, all its property included in the Collateral at such time, other than
its Real Property Collateral.
"Personal Property Security Interests" means the security interests in
Personal Property Collateral granted by the Grantors under the Collateral
Documents.
"Pledged Equity Interests" means at any time all Equity Interests included
in the Collateral at such time.
"Pledged Equity Securities" means at any time all "certificated securities"
(as such term is defined in Article 8 of the UCC) that evidence or represent
Pledged Equity Interests at such time.
"Pledged Instruments" means at any time all Instruments included in the
Collateral at such time.
"Pledged LLC Interest" means at any time any membership interest or similar
interest in a limited liability company that is included in the Pledged Equity
Interests at such time.
"Pledged Partnership Interest" means at any time any partnership interest
(whether general or limited) that is included in the Pledged Equity Interests at
such time.
"Post-Petition Interest" means any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrowers, whether or not such interest is
allowed or allowable as a claim in any such proceeding.
"Proceeds" means, with respect to any Grantor, all proceeds of, and all
other profits, products, rents or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other disposition
of, or other realization upon, its Collateral, including without limitation all
claims of such Grantor against third parties for loss of, damage to or
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destruction of, or for proceeds payable under, or unearned premiums with respect
to, policies of insurance in respect of, any of its Collateral, and any
condemnation or requisition payments with respect to any of its Collateral, in
each case whether now existing or hereafter arising.
"Real Property Collateral" means at any time, with respect to any Grantor,
all its real property (including leasehold interests in real property) included
in the Collateral at such time.
"Real Property Security Interests" means the security interests in Real
Property Collateral granted by the Grantors under the Mortgages and the other
Collateral Documents.
"Secured Obligations" means the Obligations including, without limitation,
Obligations arising under this Agreement.
"Secured Parties" means the holders from time to time of the Secured
Obligations.
"Secured Parties Requesting Notice" means, at any time, each Secured Party
which has, at least five Business Days prior thereto, delivered to the
Collateral Agent a written notice (a) stating that it holds one or more Secured
Obligations and wishes to receive copies of the notices referred to in Section
16(i) and (b) setting forth its address or facsimile number to which copies of
such notices should be sent.
"Security Interests" means the Personal Property Security Interests and the
Real Property Security Interests.
"Trademark License" means any agreement now or hereafter in existence
granting to any Grantor, or pursuant to which any Grantor has granted to any
other Person, any right to use any Trademark.
"Trademarks" means: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and any other
source or business identifiers, and general intangibles of like nature, and the
rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including,
without limitation, registrations and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
(iv) all renewals thereof, (v) all claims for, and rights to xxx for, past or
future infringements of any of the foregoing and (vi) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York; provided that if, by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of any
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-
perfection.
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"VA Receivable" means any Account with respect to which the obligor is the
Veterans' Administration or any successor thereto (or any agent thereof).
SECTION 2. Representations and Warranties. Each Grantor represents and
warrants that:
(a) As of the Closing Date, such Grantor owns the Equity Interests listed
as being owned by it in Schedule 3 to the Credit Agreement, free and clear of
any Lien other than Permitted Liens. All shares of capital stock identified in
such Schedule as being beneficially owned by such Grantor have been duly
authorized and validly issued, are fully paid and non-assessable, and are
subject to no option to purchase or similar right of any Person. Such Grantor
is not and will not become a party to or otherwise bound by any agreement, other
than the Financing Documents and the Organizational Documents of the issuer of
such Pledged Equity Interests, which restricts in any manner the rights of any
present or future holder of any Pledged Equity Interest with respect thereto.
(b) Such Grantor has good and marketable title to all of its Collateral,
free and clear of any Liens other than Permitted Liens. Such Grantor has taken
all actions necessary under the UCC to perfect its interest in any Accounts
purchased or otherwise acquired by it, as against its assignors and creditors of
its assignors.
(c) Other than granting Permitted Liens, such Grantor has not performed
any acts that might prevent the Collateral Agent from enforcing any of the
provisions of the Collateral Documents or that would limit the Collateral Agent
in any such enforcement. No financing statement, security agreement, mortgage or
similar or equivalent document or instrument covering all or any part of the
Collateral owned by it is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect or record a Lien on such
Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to Permitted Liens. After the Closing, no
Collateral owned by it will be in the possession of any Person (other than such
Grantor) asserting any claim thereto or security interest therein (except
Permitted Liens), except that (i) the Collateral Agent or its designee may have
possession of Collateral as contemplated hereby and (ii) cash and Temporary Cash
Investments may be held in the Concentration Accounts or in other accounts to
the extent permitted by Section 7.13 of the Credit Agreement.
(d) Such Grantor has delivered a Perfection Certificate to the Collateral
Agent. The information set forth therein is correct and complete as of the
Closing Date.
(e) The Security Interests constitute valid security interests in all
Collateral owned by such Grantor, thereby securing its Secured Obligations, and,
upon entry of the Interim Borrowing Order or the Borrowing Order, constitute
security interests therein prior to all other Liens other than Liens permitted
under the Credit Agreement to be senior in priority to the liens of the Lenders.
(f) Such Grantor's Collateral is insured in accordance with, and to the
extent required by, the requirements of the Credit Agreement.
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SECTION 3. The Security Interests.
(a) In order to secure the full and punctual payment of its Secured
Obligations in accordance with the terms thereof, each Grantor hereby pledges
and assigns to the Collateral Agent and grants to the Collateral Agent for the
benefit of the Secured Parties a continuing security interest in and to all
right, title and interest of such Grantor in, to and under all of the following
property of such Grantor, whether now owned or existing or hereafter acquired or
arising and regardless of where located:
(i) all Accounts;
(ii) all Documents;
(iii) all Equipment;
(iv) all General Intangibles;
(v) all Goods;
(vi) all Instruments;
(vii) all Inventory;
(viii) all Equity Interests in other Persons now or hereafter
beneficially owned by such Grantor, all rights and privileges of such Grantor
with respect to such Equity Interests, and all dividends, distributions and
other payments with respect thereto;
(ix) all Real Property;
(x) all books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer materials
and records) of such Grantor pertaining to any of its Collateral;
(xi) such Grantor's ownership interest in all Deposit Accounts in
the Cash Management System including, without limitation, the Collateral
Accounts, all cash deposited therein from time to time, all Liquid Investments
made with amounts on deposit therein and all of such Grantor's other monies and
property of any kind in the possession or under the control of the Collateral
Agent; and
(xii) all Proceeds of the collateral described in the foregoing
clauses (i) through (xi).
(b) The Security Interests are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of any Grantor with
respect to any of the Collateral or any transaction in connection therewith.
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Notwithstanding the foregoing, the security interest granted under clause
(xi) shall be subject to rights in favor of any bank administering any account
in the Cash Management System under any applicable order of the Court or under
Applicable Law.
SECTION 4. Delivery of Certain Collateral. (a) On the Closing Date, each
Grantor is delivering to the Collateral Agent as Collateral hereunder all stock
certificates or other certificates representing Equity Interests in other
Persons then owned by it and not previously delivered to the "Collateral Agent"
under the Existing Credit Facilities. All such previously delivered certificates
held on the Closing Date by such "Collateral Agent" shall be deemed held by the
Collateral Agent hereunder.
(b) After the Closing Date, if any Grantor receives (i) any stock
certificate or other certificate representing Equity Interests in another Person
then owned by it or (ii) any Instrument, in which a security interest is granted
pursuant to Section 3 hereof, such Grantor will immediately deliver such
certificate or Instrument to the Collateral Agent to be held by it as Collateral
hereunder.
(c) Notwithstanding the foregoing, so long as no Event of Default shall
have occurred and be continuing, each Grantor may retain for collection in the
ordinary course any Instruments received by it in the ordinary course of
business, and the Collateral Agent shall, promptly upon request by such Grantor,
make appropriate arrangements for making any other Instrument pledged by such
Grantor hereunder available to it for purposes of presentation, collection or
renewal (any such arrangement to be effected, to the extent deemed appropriate
by the Collateral Agent, against trust receipt or like document).
(d) All Pledged Equity Securities delivered to the Collateral Agent
hereunder will be delivered in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Collateral Agent. All Pledged
Instruments delivered to the Collateral Agent hereunder will be endorsed to the
order of the Collateral Agent, or accompanied by duly executed instruments of
assignment, all in form and substance satisfactory to the Collateral Agent.
SECTION 5. Further Assurances; Covenants. Each Grantor covenants as
follows:
(a) It will not change its name, identity or corporate structure in any
manner unless permitted by Section 7.03 of the Credit Agreement and unless such
Grantor shall have given the Collateral Agent prior notice thereof and delivered
an updated Perfection Certificate.
(b) It will not change (i) the location of its chief executive office or
principal place of business or (ii) the locations where it keeps or holds any
Collateral or any records relating thereto from the applicable locations
described in its Perfection Certificate (after the delivery of such Perfection
Certificate), unless such Grantor shall have given the Collateral Agent prior
notice thereof. It will not in any event change the location of any Collateral
owned by it if such change would cause the Security Interests in such Collateral
to lapse or, if perfected prior to such change of location, cease to be
perfected.
(c) It will, from time to time, at its expense, execute, deliver, file and
record any statement, assignment, instrument, document, agreement or other paper
and take any other action
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(including, without limitation, any Intellectual Property Filings and any
filings of financing or continuation statements under the UCC) that from time to
time may be reasonably necessary or desirable, or that the Collateral Agent may
reasonably request, in order to create, preserve, perfect, confirm or validate
the Security Interests in such Grantor's Collateral or to enable the Collateral
Agent and the other Secured Parties to obtain the full benefits of the
Collateral Documents, or to enable the Collateral Agent to exercise and enforce
any of its rights, powers and remedies thereunder with respect to any of such
Grantor's Collateral. To the extent permitted by applicable law, such Grantor
authorizes the Collateral Agent to execute and file such financing statements or
continuation statements without such Grantor's signature appearing thereon. Such
Grantor agrees that a carbon, photographic, photostatic or other reproduction of
this Agreement or of a financing statement is sufficient as a financing
statement. Such Grantor shall pay the costs of, or incidental to, any recording
or filing of any such financing or continuation statements in which it is named
as the debtor. Such Grantor hereby constitutes the Collateral Agent its
attorney-in-fact to execute and file all Intellectual Property Filings required
or so requested for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; and such power, being coupled with an interest,
shall be irrevocable until such Grantor's Collateral is released pursuant to
Section 18.
(d) At least 30 days before it takes any action contemplated by Section
5(a) or 5(b), such Grantor will, at its expense, cause to be delivered to the
Collateral Agent an officer's certificate, in form and substance satisfactory to
the Collateral Agent, to the effect that all financing statements and amendments
or supplements thereto, continuation statements and other documents required to
be recorded or filed in order to perfect and protect the Security Interests
against all creditors of and purchasers from such Grantor (except any
continuation statements specified in such officer's certificate that are to be
filed more than six months after the date thereof) have been filed in each
filing office necessary for such purpose and that all filing fees and taxes, if
any, payable in connection with such filings have been paid to the Collateral
Agent or otherwise paid in full.
(e) If any of its Collateral is at any time in the possession or control
of any warehouseman, bailee or agent, such Grantor will notify such
warehouseman, bailee or agent of the Security Interests and instruct it to hold
all such Collateral for the Collateral Agent's account subject to the Collateral
Agent's instructions.
(f) It shall keep full and accurate books and records relating to its
Collateral, and stamp or otherwise xxxx such books and records in such manner as
the Collateral Agent may reasonably request in order to reflect the Security
Interests.
(g) It shall use its best efforts, consistent with past practices, to
cause to be collected from its account debtors, as and when due, any and all
amounts owing under or on account of each of its Accounts (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Accounts. Subject to the rights of the Collateral Agent and the other
Secured Parties hereunder if an Event of Default shall have occurred and be
continuing, such Grantor may allow in the ordinary course of business as
adjustments to amounts owing under its Accounts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
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balance, which such Grantor finds appropriate in accordance with sound business
judgment and (ii) refunds or credits, all in accordance with such Grantor's
ordinary course of business consistent with its historical collection practices.
The reasonable costs and expenses (including, without limitation, attorney's
fees) of collection, whether incurred by such Grantor or the Collateral Agent,
shall be borne by such Grantor.
(h) If an Enforcement Notice is in effect, such Grantor will, consistent
with the terms of the Credit Agreement, the Interim Borrowing Order and the
Borrowing Order, if requested to do so by the Collateral Agent, promptly notify
(and such Grantor hereby authorizes the Collateral Agent so to notify) each
account debtor in respect of any of its Accounts or Instruments that such
Collateral has been assigned to the Collateral Agent hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Collateral Agent or its designee.
(i) Such Grantor will not sell, lease, exchange, assign or otherwise
dispose of, or grant any option with respect to, any of its Collateral; provided
that, unless an Enforcement Notice is in effect, such Grantor may sell, lease or
exchange its Inventory and surplus or worn-out Equipment in the ordinary course
of business and such Grantor may sell any of its Collateral if (x) the sale
thereof does not violate any covenant in the Credit Agreement and (y) in the
case of an Asset Sale, the Net Cash Proceeds thereof are applied to prepay Loans
if required by and as provided in Section 2.08 of the Credit Agreement.
Concurrently with any sale or exchange permitted by the foregoing proviso, the
Security Interests in the assets sold or exchanged (but not in any Proceeds
arising from such sale or exchange) shall cease immediately without any further
action on the part of the Collateral Agent or any other Secured Party. Upon any
such release of the Security Interests with respect to particular Collateral,
the Collateral Agent will, at the expense of the relevant Grantor, execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence the release of such Security Interests.
(j) Such Grantor will, promptly upon request, provide to the Collateral
Agent all information and evidence it may reasonably request concerning its
Collateral to enable the Collateral Agent to enforce the provisions of the
Collateral Documents.
(k) Such Grantor shall notify the Collateral Agent promptly if it knows
that any application or registration relating to any material Intellectual
Property owned or licensed by it 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 Copyright Office, the United States Patent and Trademark
Office or any court) regarding such Grantor's ownership of such material
Intellectual Property, its right to register or patent the same, or its right to
keep and maintain the same. If any of such Grantor's rights to any material
Intellectual Property are infringed, misappropriated or diluted by a third
party, such Grantor shall notify the Collateral Agent within 30 days after it
learns thereof and shall, unless such Grantor shall reasonably determine that
any such action would be of negligible value, economic or otherwise, promptly
xxx for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such other
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property.
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SECTION 6. Concentration Accounts. (a) MHG shall establish one or more
accounts (collectively, the "Concentration Accounts") which shall be maintained
under the sole dominion and control of the Collateral Agent with First Union
National Bank (in such capacity, the "Concentration Account Bank") and into
which all deposits and collected cash owned by the Borrowers shall be deposited
from time to time.
(b) In relationship to the Concentration Bank and all persons and entities
other than the Borrowers, and notwithstanding designation of any of the
Concentration Accounts as in the name of MHG, the Collateral Agent, for the
benefit of itself and the Lenders, shall possess sole dominion and control over
all of the items from time to time on deposit in the Concentration Accounts and
their proceeds, and the Concentration Bank shall be the Collateral Agent's agent
for the purpose of holding and collecting such items and their proceeds. The
Borrowers hereby expressly acknowledge and agree that, except as expressly
provided in clause (c) of this Section 6, the Borrowers do not have any dominion
or control over the use of, or any right or power to withdraw any funds
contained in, to direct any payment from, or to debit, the Concentration
Accounts. The Collateral Agent hereby acknowledges for the benefit of the
Borrowers that the Collateral Agent holds all amounts on deposit from time to
time in the Concentration Accounts, and all proceeds thereof, as collateral
security for the obligations of the Borrowers under the Financing Documents.
(c) Subject to clause (d) of this Section 6, the Collateral Agent hereby
delegates to MHG, prior to delivery by the Collateral Agent to the Concentration
Bank and MHG of written notice substantially in the form of Exhibit B annexed
---------
hereto (any such notice a "Notice of Redirection"), the exclusive right to
instruct the Concentration Bank with respect to matters relating to the
operation and administration of the Concentration Accounts and to withdraw funds
contained in, to direct payments from, and to debit the Accounts; provided that,
--------
upon the delivery by the Collateral Agent to the Concentration Bank and the
Company of a Notice of Redirection, such delegation shall terminate, in which
case the Collateral Agent shall thereafter have the exclusive right with respect
to all such matters relating to the Concentration Accounts and to take all such
actions with respect thereto, unless and until the Collateral Agent notifies the
Concentration Bank to the contrary; and provided further, that nothing in this
-------- -------
Agreement shall affect the obligation of the Borrowers to maintain the Cash
Management System as required under the Credit Agreement. The Concentration Bank
may rely on all instructions given to it by MHG in accordance with this clause
(c) as fully as if such instructions were given by the Collateral Agent. The
Concentration Bank may rely upon any Notice of Redirection and any other
instructions received from the Collateral Agent without independent
determination of whether the Lenders have authorized issuance of such notice or
other instructions or whether such notice or other instructions are otherwise
validly given, and shall have no liability or responsibility to the Borrowers,
the Collateral Agent, any Lender or any other party by reason of any action
taken in conformity with any such Notice of Redirection or other instruction
received from the Collateral Agent.
(d) The Borrowers hereby agree that except as the Collateral Agent and the
Concentration Bank may otherwise agree in advance, no funds and deposits in the
Concentration Accounts shall be invested except pursuant to (i) the "Amended and
Restated CashPivot Agreement" (the "CashPivot Agreement"), a copy of which is
attached as Exhibit C or (ii) the "Repurchase Master Agreement" (the "Repurchase
---------
Agreement"), a copy of which is attached
12
as Exhibit D, in either case, only upon the approval of the Court. The Borrowers
---------
hereby assign to the Collateral Agent, as additional collateral for the
Obligations, a security interest in the Borrowers' interest in (i) the CashPivot
Trust Account and the MMA Account, as each is defined in the CashPivot
Agreement, as well as in any other funds that may from time to time be the
subject of investments pursuant to the CashPivot Agreement and (ii) the
Securities, as defined in the Repurchase Agreement.
(e) The Concentration Bank shall deliver its regular bank statements with
respect to the Accounts to the Borrowers and the Collateral Agent at their
notice addresses specified in Section 9.
(f) If an Enforcement Notice is in effect, the Collateral Agent may,
consistent with the terms of the Interim Borrowing Order and the Borrowing
Order, (i) instruct the Concentration Account Bank to retain, in any
Concentration Account, the CashPivot Trust Account or the MMA Account maintained
by it, all cash or other funds and deposits then held by it in the Concentration
Account, the CashPivot Trust Account or the MMA Account, (ii) instruct the
Concentration Account Bank to cease investing any funds and deposits in the
Concentration Account pursuant to the Cash Payout Agreement and/or (iii)
withdraw any amounts held in any Concentration Account, the CashPivot Trust
Account or the MMA Account and apply such amounts in the manner specified in
Section 15.
(g) The Concentration Bank shall in no event be liable or otherwise
responsible to the Borrowers, the Collateral Agent, any Lender or any other
person, firm or corporation for any action taken or any omission under or with
respect to this Agreement in the absence of the Concentration Bank's own gross
negligence or willful misconduct. The Borrowers agree to indemnify, pay and hold
the Concentration Bank and its officers, directors, employees and agents
(collectively the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party thereto)
which may be imposed on, incurred by, or asserted against such Indemnitees, in
any manner relating to or arising out of this Agreement or the Concentration
Accounts (the "Indemnified Liabilities"); provided that the Borrowers shall not
--------
have any obligations to an Indemnitee hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnitee. Nothing in this Agreement shall be construed to limit any right of
the Concentration Bank to close or terminate the Concentration Account or any
other account in the Cash Management System or otherwise to terminate its
relationship with any Borrower.
SECTION 7. Collateral Accounts.
(a) Promptly after the Collateral Agent determines that any Casualty
Proceeds are to be deposited pursuant to Section 5.08 of the Credit Agreement
with respect to property of any Grantor, the Collateral Agent shall establish an
account (such Grantor's "Casualty Proceeds Account") with the Collateral Agent,
in the name and under the exclusive control of the
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Collateral Agent, into which all Casualty Proceeds to be deposited with respect
to property of such Grantor shall be deposited from time to time.
(b) So long as no Enforcement Notice is in effect, Casualty Proceeds to be
released from a Casualty Proceeds Account pursuant to Section 5.08(a)(i) of the
Credit Agreement shall be distributed by the Collateral Agent to the relevant
Grantor at such times and in such amounts as such Grantor shall request for the
purpose of restoring, repairing, replacing or rebuilding the asset in respect of
which such Casualty Proceeds were received. Any such request shall be
accompanied by a certificate of a Financial Officer describing in reasonable
detail the restoration, repair, replacement or rebuilding for which such funds
have been or will be expended and the date (which shall not be later than 30
days after the date of such certificate) by which such Grantor is obligated to
make such payment, provided that no such certificate shall be required if the
aggregate Casualty Proceeds requested for the restoration, repair, replacement
or rebuilding of the relevant asset is less than $100,000 with respect to any
Casualty Event. If immediately available cash on deposit in any Grantor's
Casualty Proceeds Account is not sufficient to make any such distribution to it,
the Collateral Agent shall cause to be liquidated, as promptly as practicable,
such Liquid Investments in such Casualty Proceeds Account as shall be required
to obtain sufficient cash to make such distribution and, notwithstanding any
other provision of this Section 7, such distribution shall not be made until
such liquidation has taken place.
(c) So long as no Enforcement Notice is in effect, the Collateral Agent
shall distribute to the Administrative Agent, at its request from time to time,
the amounts on deposit in the Casualty Proceeds Account which are required to be
applied to prepay Loans in accordance with Section 2.08(e) of the Credit
Agreement.
(d) Promptly after the Collateral Agent determines that any cash proceeds
of any Grantor's Collateral are to be realized upon any exercise of remedies
pursuant to the Collateral Documents, the Collateral Agent shall establish an
account with respect to such Grantor (such Grantor's "Cash Proceeds Account")
with the Collateral Agent, in the name and under the exclusive control of the
Collateral Agent, into which all such cash proceeds of such Grantor's Collateral
shall be deposited from time to time (unless required to be deposited in another
Collateral Account). This subsection (e) shall not apply to any cash proceeds
that are deposited in a Concentration Account and are not required to be
deposited in any Collateral Account.
(e) Promptly after the Collateral Agent determines that any cash
collateral is to be deposited to secure LC Reimbursement Obligations pursuant to
Section 8.04 of the Credit Agreement or in the event any prepayment amounts are
applied pursuant to Section 2.08 of the Credit Agreement to reduce the Tranche A
Commitments below the aggregate amount of the LC Exposure, the Collateral Agent
shall establish a cash collateral account (the "LC Collateral Account") with the
Collateral Agent, in the name and under the exclusive control of the Collateral
Agent, into which all cash collateral deposited pursuant to said Section 2.08(h)
or 8.04 shall be deposited. If and when any LC Issuing Bank pays a draft drawn
under any outstanding Letter of Credit on which any deposit in the LC Collateral
Account was based, the amount so paid by it (but not more than the amount in the
LC Collateral Account at the time) shall, promptly after such LC Issuing Bank
notifies the Collateral Agent of such payment, be withdrawn by the Collateral
Agent from the LC Collateral Account and paid to the relevant LC
14
Issuing Bank or the Lenders, as appropriate. If at any time the amount in the LC
Collateral Account exceeds the aggregate amount then required to pay all
unreimbursed drawings under, and to cover all possible subsequent drawings
under, all outstanding Letters of Credit on which any deposits in the LC
Collateral Account were based, the excess amount shall, so long as no
Enforcement Notice is in effect, be withdrawn by the Collateral Agent and paid
to the Borrowers. If immediately available cash on deposit in the LC Collateral
Account is not sufficient to make any distribution referred to in this
subsection (e), the Collateral Agent shall cause to be liquidated, as promptly
as practicable, such Liquid Investments in the LC Collateral Account as shall be
required to obtain sufficient cash to make such distribution and,
notwithstanding any other provision of this Section 7, such distribution shall
not be made until such liquidation has taken place.
(f) Amounts on deposit in any Collateral Account shall be invested and re-
invested from time to time in such Liquid Investments as MHG, as agent or
attorney-in-fact for the relevant Grantor shall direct. Any income received with
respect to the balance from time to time standing to the credit of any
Collateral Account, including any interest or capital gains on Liquid
Investments, shall remain, or be deposited, in such Collateral Account. All
right, title and interest in and to the cash amounts on deposit from time to
time in any Collateral Account together with any Liquid Investments from time to
time made pursuant to this subsection (f) shall vest in the Collateral Agent,
shall constitute part of the relevant Grantor's Collateral hereunder and shall
not constitute payment of its Secured Obligations until applied thereto as
provided in Section 15. If an Enforcement Notice is in effect, any amounts held
in any Collateral Account shall be retained in such Collateral Account and, if
and when requested by the Administrative Agent, shall be withdrawn by the
Collateral Agent and applied in the manner specified in Section 15.
(g) For purposes hereof, "Liquid Investments" means any Temporary Cash
Investment that (i) matures within 30 days after it is acquired by or for the
account of the Collateral Agent and (ii) in order to provide the Collateral
Agent, for the benefit of the Secured Parties, with a perfected security
interest therein, either:
(i) is issued in the name of the Collateral Agent or a financial
intermediary acting for its account or is evidenced by a negotiable
certificate or instrument which (together with any appropriate instrument
of transfer) is delivered to, and held by, the Collateral Agent or an agent
thereof (which shall not be any Grantor or any of its Affiliates) in a
State where possession thereof perfects the Security Interest therein; or
(ii) if not so issued or evidenced, is a Temporary Cash Investment
which is subject to pledge under applicable law and regulations and as to
which (in the opinion of counsel to the Collateral Agent) appropriate
measures shall have been taken to perfect the relevant Security Interest.
(h) For the purposes hereof, any accounts presently existing pursuant to
the Existing Credit Facilities that correspond to accounts which are required to
be created pursuant to the provisions of this Section 7 shall be deemed to be
the same accounts as are required to be created for the purposes of this Section
7; provided, that the terms of such accounts shall be deemed to be governed
exclusively by the provisions of the Financing Documents and all amounts therein
15
shall be applied as set forth herein until all the Commitments shall have
expired or been terminated, all Letters of Credit shall have expired or been
canceled or been secured with cash collateral in an amount and on terms
satisfactory to the relevant LC Issuing Bank, and all outstanding Secured
Obligations shall have been paid in full, whereupon any amounts remaining in
such accounts shall be governed by and distributed in accordance with the
provisions of the Existing Credit Facilities.
SECTION 8. Record Ownership of Pledged Equity Securities. If directed to
do so by the Required Lenders at any time when an Event of Default has occurred
and is continuing, the Collateral Agent shall cause the Pledged Equity
Securities (or any portion thereof specified in such directions) to be
transferred of record into the name of the Collateral Agent or its nominee.
Promptly upon receiving any such directions, the Collateral Agent will notify
each relevant Grantor thereof. Each Grantor will promptly give to the Collateral
Agent copies of any notices and other communications received by it with respect
to Pledged Equity Securities registered in its name, and the Collateral Agent
will promptly give to such Grantor copies of any notices and other
communications received by the Collateral Agent with respect to such Grantor's
Pledged Equity Securities registered in the name of the Collateral Agent or its
nominee. So long as no Enforcement Notice is in effect, the Collateral Agent
shall pay over to each relevant Grantor all Cash Distributions received by the
Collateral Agent upon or with respect to any Pledged Equity Securities held of
record in the name of the Collateral Agent or its nominee.
SECTION 9. Right to Vote Pledged Equity Securities. (a) Unless an
Enforcement Notice directing the Collateral Agent to vote the Pledged Equity
Securities is in effect, each Grantor shall have the right, from time to time,
to vote and to give consents, ratifications and waivers with respect to the
Pledged Equity Securities owned by it, and the Collateral Agent shall, upon
receiving a written request from such Grantor, deliver to such Grantor or as
specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of such Pledged Equity Securities
which are registered in the name of the Collateral Agent or its nominee as shall
be specified in such request and be in form and substance satisfactory to the
Collateral Agent. Unless an Enforcement Notice directing the Collateral Agent to
do so is in effect, the Collateral Agent shall have no right to take any action
which the owner of a Pledged Partnership Interest or Pledged LLC Interest is
entitled to take with respect thereto, except the right to receive and retain
payments and other distributions to the extent provided in Section 10.
(b) If an Enforcement Notice directing the Collateral Agent to do so is in
effect, the Collateral Agent shall have the right to the extent permitted by law
(and, in the case of a Pledged Partnership Interest or Pledged LLC Interest, by
the relevant partnership agreement, operating agreement or other governing
document) and each Grantor shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give consents,
ratifications and waivers, and take any other action with respect to any or all
of the Pledged Equity Interests with the same force and effect as if the
Collateral Agent were the absolute and sole owner thereof.
SECTION 10. Right to Receive Distributions on Collateral. Subject to
Section 18, the Collateral Agent shall have the right to receive and to retain
as Collateral hereunder all dividends, interest and other payments and
distributions made upon or with respect to the Pledged Equity Interests and each
Grantor shall take all such action as the Collateral Agent may
16
reasonably deem necessary or appropriate to give effect to such right; provided
that, unless an Enforcement Notice is in effect, this sentence shall not apply
to Cash Distributions. All such dividends, interest and other payments and
distributions which are received by any Grantor (except Cash Distributions
received when no Enforcement Notice is in effect) shall be received in trust for
the benefit of the Secured Parties and shall be segregated from other assets of
such Grantor and shall, promptly upon such Grantor's receipt thereof, be
delivered or paid over to the Collateral Agent in the same form as received
(with any necessary endorsements or executed assignments in blank), together
with a statement identifying the source of such Collateral and stating that it
is being delivered to the Collateral Agent to be held as Collateral under this
Agreement. If an Enforcement Notice is withdrawn pursuant to Section 21 (and no
other Enforcement Notice is then in effect), the Collateral Agent's right to
retain Cash Distributions under this Section 10 shall cease and the Collateral
Agent shall pay over to the relevant Grantor(s) any Cash Distributions retained
by it during the continuance of such Enforcement Notice.
SECTION 11. General Authority. Each Grantor hereby irrevocably appoints
the Collateral Agent its true and lawful attorney, with full power of
substitution, in the name of such Grantor, any Secured Party or otherwise, for
the sole use and benefit of the Secured Parties, but at the expense of such
Grantor, to the extent permitted by law to exercise, at any time and from time
to time while an Enforcement Notice directing it to do so is in effect, all or
any of the following powers with respect to all or any of such Grantor's
Collateral:
(i) to demand, xxx for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give such Grantor not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any Personal Property Collateral owned by such Grantor and such
other notices as may be required by the Credit Agreement, the Interim Borrowing
Order and the Borrowing Order, except any such Personal Property Collateral
which threatens to decline speedily in value or is of a type customarily sold on
a recognized market. The Collateral Agent and each Grantor agree that such
notice constitutes "reasonable notification" within the meaning of Section 9-
504(3) of the UCC.
SECTION 12. Remedies Upon Enforcement Notice. (a) Upon being instructed to
do so in an Enforcement Notice or in written instructions given by the Required
Lenders at any time while an Enforcement Notice is in effect, the Collateral
Agent may exercise (or cause its co-
17
agents and co-trustees, if any, to exercise) any or all of the remedies
available to it (or to such co-agents or co-trustees) under the Collateral
Documents.
(b) Upon being instructed to do so in an Enforcement Notice or in written
instructions given by the Required Lenders at any time while an Enforcement
Notice is in effect, the Collateral Agent may exercise on behalf of the Secured
Parties all the rights of a secured party under the UCC (whether or not in
effect in the jurisdiction where such rights are exercised) with respect to any
Collateral and, in addition, the Collateral Agent may, without being required to
give any notice, except as provided in the Credit Agreement, the Interim
Borrowing Order and the Borrowing Order or herein or as may be required by
mandatory provisions of law, withdraw all cash and Temporary Cash Investments
held in any of the Collateral Accounts or Concentration Accounts and apply such
cash and Temporary Cash Investments and other cash, if any, then held by it as
Collateral as specified in Section 15 and, if there shall be no such cash or if
such cash shall be insufficient to pay all the Secured Obligations in full, sell
the Collateral or any part thereof at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery, and at such price or prices as the Required Lenders shall have advised
the Collateral Agent are satisfactory. Any Secured Party may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the Collateral
is of a type customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations, at any private
sale). The Collateral Agent is authorized, in connection with any such sale, if
it deems it advisable so to do, to restrict the prospective bidders on or
purchasers of any of the securities included in the Collateral to a limited
number of sophisticated investors who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or sale of any of such securities, to cause to be placed on any
security included in the Collateral a legend to the effect that such security
has not been registered under the Securities Act of 1933 and may not be disposed
of in violation of the provisions of said Act, and to impose such other
limitations or conditions in connection with any such sale as the Collateral
Agent deems necessary or advisable in order to comply with said Act or any other
law. Each Grantor agrees that it will execute and deliver such documents and
take such other action as the Collateral Agent deems necessary or advisable in
order that any such sale may be made in compliance with law. Upon any such sale
the Collateral Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of any Grantor
which may be waived, and each Grantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted. Notice of any such
sale shall be given to the relevant Grantor(s) as required by Section 11
(including, as required by the Credit Agreement, the Interim Borrowing Order and
the Borrowing Order) and shall in case of a public sale, state the time and
place fixed for such sale, in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered for sale at such board or exchange, and in case of a
private sale, state the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix in the notice of
such sale. At any such sale the Collateral may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may determine. The Collateral
Agent shall not be obligated to make any such sale pursuant to any such notice.
The Collateral Agent may, without notice or
18
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Collateral
Agent until the selling price is paid by the purchaser thereof, but the
Collateral Agent shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice. Upon being
instructed to do so by the Required Lenders in an Enforcement Notice or in
written instructions given at any time while an Enforcement Notice is in effect,
the Collateral Agent, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction. The foregoing
provisions of this subsection shall apply to Real Property Collateral only to
the extent permitted by applicable law and the provisions of any applicable
Mortgage or other document.
(c) For the purpose of enforcing any and all rights and remedies under
this Agreement, the Collateral Agent may (i) require each Grantor to, and each
Grantor agrees that it will, at its expense and upon the request of the
Collateral Agent, forthwith assemble all or any part of its Personal Property
Collateral as directed by the Collateral Agent and make it available at a place
designated by the Collateral Agent which is, in its opinion, reasonably
convenient to the Collateral Agent and such Grantor, whether at the premises of
such Grantor or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace, any
premises where any of the Personal Property Collateral is or may be located, and
without charge or liability to it seize and remove such Personal Property
Collateral from such premises, (iii) have access to and use such Grantor's books
and records relating to its Collateral and (iv) prior to the disposition of its
Personal Property Collateral, store or transfer it without charge in or by means
of any storage or transportation facility owned or leased by such Grantor,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent the Collateral Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by such
Grantor. The Collateral Agent may also render any or all of such Personal
Property Collateral unusable at such Grantor's premises and may dispose of such
Personal Property Collateral on such premises without liability for rent or
costs. The foregoing provisions of this subsection shall apply to Real Property
Collateral only to the extent permitted by applicable law and the provisions of
any applicable Mortgage or other document.
(d) Without limiting the generality of the foregoing, if an Enforcement
Notice is in effect,
(i) the Collateral Agent may, upon proper notice as provided in
Section 11 hereof, license, or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any
Intellectual Property included in the Collateral throughout the world for
such term or terms, on such conditions and in such manner as the Collateral
Agent shall in its sole discretion determine; provided that such licenses
do not conflict with any existing licenses or sublicenses;
19
(ii) the Collateral Agent may, upon proper notice as provided in
Section 11 hereof (without assuming any obligations or liability
thereunder), at any time and from time to time, in its sole and reasonable
discretion, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of any Grantor in, to
and under any of its Intellectual Property and take or refrain from taking
any action under any thereof, and each Grantor hereby releases the
Collateral Agent and each of the other Secured Parties from, and agrees to
hold the Collateral Agent and each of the other Secured Parties free and
harmless from and against any claims and expenses arising out of, any
lawful action so taken or omitted to be taken with respect thereto, except
for claims and expenses arising from the Collateral Agent's or such Secured
Party's gross negligence or willful misconduct; and
(iii) upon request by the Collateral Agent (which shall not be
construed as implying any limitation on the rights or powers of the
Collateral Agent), each Grantor will execute and deliver to the Collateral
Agent a power of attorney, in form and substance satisfactory to the
Collateral Agent, for the implementation of any lease, assignment, license,
sublicense, grant of option, sale or other disposition of an Intellectual
Property owned by such Grantor or any action related thereto. In the event
of any such disposition pursuant to this Section, subject to
confidentiality restrictions imposed on such Grantor in any license or
similar agreement, and upon request by the Collateral Agent, such Grantor
shall supply its know-how and expertise relating to or the products or
services made or rendered in connection with Patents, and its customer
lists and other records relating to such Intellectual Property and to the
distribution of said products or services, to the Collateral Agent.
SECTION 13. Fees and Expenses; Indemnification. The Borrowers agree that
they will forthwith upon demand pay to the Collateral Agent:
(i) the amount of any taxes which the Collateral Agent may have been
required to pay by reason of the Security Interests or to free any of the
Collateral from any Lien thereon;
(ii) the amount of any and all reasonable out-of-pocket expenses,
including transfer taxes and reasonable fees and disbursements of counsel
and of any other experts, which the Collateral Agent may incur in
connection with (w) the administration or enforcement of this Agreement,
including such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of any Security
Interest, and all insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and
shipping any Collateral, (x) the collection, sale or other disposition of
any Collateral, (y) the exercise by the Collateral Agent of any of the
rights or powers conferred upon it hereunder or (z) any Enforcement Notice;
(iii) the amount of any fees that the Borrowers shall have agreed in
writing to pay to the Collateral Agent and that shall have become due and
payable in accordance with such written agreement; and
20
(iv) the amount required to indemnify the Collateral Agent for, or hold it
harmless and defend it against, any loss, liability or expense (including the
reasonable fees and expenses of its counsel and any experts or co-agents
appointed hereunder) incurred or suffered by the Collateral Agent in connection
with this Agreement, except to the extent that such loss, liability or expense
arises from the Collateral Agent's gross negligence or willful misconduct or a
breach of any duty that the Collateral Agent has under this Agreement (after
giving effect to Sections 14 and 16).
Any such amount not paid to the Collateral Agent on demand shall bear interest
for each day until paid at a rate per annum equal to the Tranche A Default Rate.
SECTION 14. Limitation on Duty of Collateral Agent in Respect of
Collateral. Beyond the exercise of reasonable care in the custody and
preservation thereof, the Collateral Agent shall have no duty as to any
Collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of any act or
omission of any agent or bailee selected by the Collateral Agent in good faith
or by reason of any act or omission by the Collateral Agent pursuant to
instructions from the Required Lenders (including, without limitation, any
voting instruction pursuant to Section 9), except to the extent that such
liability arises from the Collateral Agent's gross negligence or willful
misconduct.
SECTION 15. Application Of Proceeds. (a) Upon being instructed to do so
in an Enforcement Notice or in written instructions given by the Required
Lenders at any time while an Enforcement Notice is in effect, the Collateral
Agent shall apply the proceeds of any sale of, or other realization upon, all
or any part of the Collateral, any cash held in the Cash Proceeds Accounts and
any cash withdrawn by it from the Concentration Accounts in the following order
of priorities:
first, to pay the expenses of such sale or other realization, including
reasonable compensation to agents of and counsel for the Collateral Agent,
and all expenses, liabilities and advances incurred or made by the
Collateral Agent in connection with the Collateral Documents, and any other
amounts then due and payable to the Collateral Agent pursuant to Section 13
hereof and to the other Agents pursuant to Section 11.03 of the Credit
Agreement;
second, to pay the unpaid principal of the Secured Obligations ratably (or
provide for the payment thereof pursuant to subsection (b) of this
Section), until payment in full of the principal of all Secured Obligations
shall have been made (or so provided for);
third, to pay all interest (including Post-Petition Interest) on the
Secured Obligations and all letter of credit fees and commitment fees
payable under the Credit Agreement ratably, until payment in full of all
such interest and fees shall have been made;
21
fourth, to pay all other Secured Obligations ratably (or provide for the
payment thereof pursuant to subsection (b) of this Section), until payment
in full of all such other Secured Obligations shall have been made (or so
provided for); and
finally, to pay to the relevant Grantor or its successors or assigns, or as
a court of competent jurisdiction may direct, any surplus then remaining
from the proceeds of the Collateral owned by it.
The Collateral Agent may make such distributions hereunder in cash or in kind
or, on a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received by the
Collateral Agent would, but for the provisions of this subsection (b), be
payable pursuant to subsection (a) of this Section in respect of a Contingent
Secured Obligation, the Collateral Agent shall not apply any monies to pay such
Contingent Secured Obligation but instead shall request the holder thereof, at
least 10 days before each proposed distribution hereunder, to notify the
Collateral Agent as to the maximum amount of such Contingent Secured Obligation
if then ascertainable (e.g., in the case of a letter of credit, the maximum
amount available for subsequent drawings thereunder). If the holder of such
Contingent Secured Obligation does not notify the Collateral Agent of the
maximum ascertainable amount thereof at least two Business Days before such
distribution, such holder shall not be entitled to share in such distribution.
If such holder does so notify the Collateral Agent as to the maximum
ascertainable amount thereof, the Collateral Agent will allocate to such holder
a portion of the monies to be distributed in such distribution, calculated as if
such Contingent Secured Obligation were outstanding in such maximum
ascertainable amount. However, the Collateral Agent shall not apply such
portion of such monies to pay such Contingent Secured Obligation, but instead
shall hold such monies or invest such monies in Liquid Investments at the
direction of MHG as agent and attorney-in-fact for the relevant Grantor. The
Collateral Agent shall hold all such monies and all such Liquid Investments and
the net proceeds thereof in trust until such time as all or part of such
Contingent Secured Obligation becomes a Non-Contingent Secured Obligation,
whereupon the Collateral Agent at the request of the relevant Secured Party
shall apply the amount so held in trust to pay such Non-Contingent Secured
Obligation; provided that, if the other Secured Obligations theretofore paid
pursuant to the same clause of subsection (a) (i.e., clause second or fourth)
were not paid in full, the Collateral Agent shall apply the amount so held in
trust to pay the same percentage of such Non-Contingent Secured Obligation as
the percentage of such other Secured Obligations theretofore paid pursuant to
the same clause of subsection (a). If (i) the holder of such Contingent Secured
Obligation shall advise the Collateral Agent that no portion thereof remains in
the category of a Contingent Secured Obligation and (ii) the Collateral Agent
still holds any amount held in trust pursuant to this subsection (b) in respect
of such Contingent Secured Obligation (after paying all amounts payable pursuant
to the preceding sentence with respect to any portions thereof that became Non-
Contingent Secured Obligations), such remaining amount shall be applied by the
Collateral Agent in the order of priorities set forth in subsection (a) of this
Section.
(c) In making the payments and allocations required by this Section, the
Collateral Agent may rely upon information supplied to it pursuant to Section
16(f). All distributions made by the Collateral Agent pursuant to this Section
shall be final (except in the event of manifest
22
error) and the Collateral Agent shall have no duty to inquire as to the
application by the Secured Parties of any amount distributed to them.
SECTION 16. Concerning The Collateral Agent. (a) The Collateral Agent is
authorized to take all such action as is provided or permitted to be taken by it
as Collateral Agent under the Collateral Documents and all other action
reasonably incidental thereto. As to any matters not expressly provided for
herein or in an Enforcement Notice or in written requests, directions or
instructions given as expressly provided in Section 6, 7, 9, 12 or 15 ,
including, without limitation, the timing and methods of realization upon the
Collateral, the Collateral Agent shall act or refrain from acting in accordance
with written instructions from the Required Lenders or, in the absence of such
instructions, in accordance with its discretion (subject to Section 16(c));
provided that the Collateral Agent shall not be obligated to comply with any
such instructions that are inconsistent with the provisions of the Collateral
Documents.
(b) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any Collateral or for the validity, perfection, priority
or enforceability of the Security Interests in any Collateral, whether impaired
by operation of law or by reason of any action or omission to act on its part
under the Collateral Documents. The Collateral Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement, the Credit Agreement or any other agreement relating to the
Secured Obligations.
(c) The obligations of the Collateral Agent under the Collateral Documents
are only those expressly set forth therein. In any case in which the Collateral
Agent is authorized to exercise any power or discretion, the Collateral Agent
may refrain from such exercise unless directed in writing by the Required
Lenders to act in the manner specified in such direction. Without limiting the
generality of the foregoing, the Collateral Agent shall not be required to take
any action with respect to any Enforcement Notice, except as expressly provided
in Sections 12 and 15.
(d) The Collateral Agent may:
(i) consult with legal counsel (who may be counsel for any MHG
Company) and
(ii) to the extent that the Collateral Agent in good xxxxx xxxxx it
appropriate in connection with its duties hereunder to do so, consult with
independent public accountants and other experts selected by it in
connection with any matter arising under the Collateral Documents and shall
not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or
experts.
(e) Neither the Collateral Agent nor any of its directors, officers,
agents, or employees shall be liable for any action taken or not taken by it in
connection with any Collateral Document in accordance with directions set forth
in an Enforcement Notice or with the consent or at the request of the Required
Lenders or in the absence of its own gross negligence or willful misconduct.
However, nothing in this subsection (e) shall affect any rights any Grantor may
have (x) against the Required Lenders for requesting the Administrative Agent to
give the
23
directions set forth in an Enforcement Notice or (y) against the Required
Lenders for giving any other consent, request, notice or instruction. Neither
the Collateral Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with any
Collateral Document, (ii) the performance or observance of any of the covenants
or agreements of any Grantor or (iii) the validity, effectiveness or genuineness
of any Collateral Document or any other instrument or writing furnished in
connection therewith. The Collateral Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, telex, facsimile or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.
(f) For all purposes of the Collateral Documents, including without
limitation determining from time to time the amounts of the Secured Obligations,
whether a Secured Obligation is a Contingent Secured Obligation or not, or
whether any notice, direction or instruction has been given by the Required
Lenders or any other Secured Party or Secured Parties entitled to give the same
under any provision of the Collateral Documents, the Collateral Agent shall be
entitled to rely upon information from the following sources (and may refrain
from acting on the basis of such information until two Business Days after it
receives all such information required to enable it to take such action):
(i) the Administrative Agent for information as to the Lender
Parties and their respective Secured Obligations outstanding under the
Credit Agreement (including whether any action has been taken or
instruction given by the Required Lenders);
(ii) any Secured Party for information as to itself and its Secured
Obligations, to the extent that the Collateral Agent has not received such
information from the Administrative Agent; and
(iii) any Grantor for information as to any Secured Party and its
Secured Obligations, to the extent that the Collateral Agent has not
received such information from the sources referred to in clauses (i) and
(ii) above.
(g) The Collateral Agent shall have no liability to any Grantor or any
Secured Party for actions taken in reliance on such information, except to the
extent that such liability arises from the Collateral Agent's gross negligence
or willful misconduct.
(h) The Collateral Agent may resign at any time (effective upon acceptance
by a successor Collateral Agent of its appointment hereunder) by giving written
notice thereof to the Administrative Agent, each of the Secured Parties
Requesting Notice and the Borrowers. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the retiring
Collateral Agent gives notice of resignation, the retiring Collateral Agent may,
on behalf of the Secured Parties, appoint a successor Collateral Agent, which
shall be a commercial bank organized or licensed under the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least $100,000,000. Upon the acceptance of its appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon
24
succeed to and become vested with all the rights and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations hereunder. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this Section and
Sections 13 and 14 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Collateral Agent.
(i) Within two Business Days after it receives or sends any notice
referred to in this subsection (i), the Collateral Agent shall send to the
Administrative Agent and each of the Secured Parties Requesting Notice, copies
of any Enforcement Notice received by the Collateral Agent, any notice
withdrawing an Enforcement Notice received by the Collateral Agent pursuant to
Section 21 and any other notice given by the Collateral Agent to any Grantor, or
received by it from any Grantor, pursuant to Section 11, 12, 15 or 18. The
Collateral Agent shall also send to the Grantors copies of any Enforcement
Notice or any notice withdrawing an Enforcement Notice received by the
Collateral Agent.
(j) The Collateral Agent may refuse to act on any notice, direction or
instruction from the Administrative Agent, the Required Lenders or any Secured
Party, or any agent, trustee or similar representative thereof which, in the
Collateral Agent's opinion, is contrary to law or the provisions of any
Collateral Document, is unduly prejudicial to Secured Parties not joining in
such notice, direction or instruction or may expose the Collateral Agent to
liability (unless the Collateral Agent shall have been adequately indemnified
for such liability by the Secured Parties that gave, or instructed the
Administrative Agent to give, such notice, direction or instruction).
SECTION 17. Appointment of Co-Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction, the Collateral
Agent may appoint another bank or trust company or one or more other persons,
either to act as co-agent or co-agents, jointly with the Collateral Agent, or to
act as separate agent or agents on behalf of the Secured Parties with such power
and authority as may be necessary for the effectual operation of the provisions
of any Collateral Document and may be specified in the instrument of appointment
(which may, in the discretion of the Collateral Agent, include provisions for
the protection of such co-agent or separate agent similar to the provisions of
Section 16).
SECTION 18. Termination of Security Interests; Release of Collateral. (a)
When (i) all the Commitments shall have expired or been terminated, (ii) all
Letters of Credit shall have expired or been canceled or been secured with cash
collateral in an amount and on terms satisfactory to the relevant LC Issuing
Bank, and (iii) all outstanding Secured Obligations shall have been paid in
full, the Security Interests shall terminate and all rights to each item of
Collateral shall revert to the Grantor that owns such item of Collateral.
(b) At any time before the Security Interests terminate pursuant to
subsection (a) of this Section, so long as an Enforcement Notice is not in
effect, the Collateral Agent shall, upon the written request of the Borrowers
and the approval of the Court (to the extent that such Court approval is
required pursuant to an order of the Court or the Bankruptcy Code), release any
of the Collateral (but not all or substantially all of the Collateral) with the
prior written consent of the Required Lenders. Upon any such termination of the
Security Interests or release of Collateral, the Collateral Agent will, at the
expense of the relevant Grantor, execute and deliver
25
to such Grantor such documents as such Grantor shall reasonably request to
evidence the termination of the Security Interests or the release of such
Collateral, as the case may be.
SECTION 19. [** Reserved **]
SECTION 20. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party in the manner set forth in the
Credit Agreement.
SECTION 21. Withdrawal of Enforcement Notice. An Enforcement Notice, once
given, shall remain in effect unless and until the Required Lenders notify the
Collateral Agent that they wish to withdraw such Enforcement Notice, no monies
have been applied to pay any Secured Obligations pursuant to Section 15 (except
pursuant to clause first thereof) as a result of such Enforcement Notice and the
Collateral Agent determines that the withdrawal of such Enforcement Notice will
not result in any liability or unreimbursed loss to the Collateral Agent by
reason of actions taken by it in reliance thereon.
SECTION 22. Waivers, Remedies Not Exclusive. No failure on the part of
the Collateral Agent to exercise, and no delay in exercising and no course of
dealing with respect to, any right or remedy under any Collateral Document shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent of any right or remedy under the Credit Agreement or any
Collateral Agreement preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies specified in the
Collateral Documents and the Credit Agreement are cumulative and are not
exclusive of any other rights or remedies provided by law.
SECTION 23. Successors And Assigns. This Agreement is for the benefit of
the Collateral Agent and the Secured Parties and their respective successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights of the holder thereof hereunder, to the extent
applicable to the indebtedness so assigned, shall be deemed transferred with
such indebtedness. This Agreement shall be binding on the Grantors and their
respective successors and assigns.
SECTION 24. Changes In Writing. Neither this Agreement nor any provision
hereof may be amended, waived, discharged or terminated except in accordance
with Section 11.05 of the Credit Agreement.
SECTION 25. NEW YORK LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE BANKRUPTCY CODE (WITH RESPECT ONLY TO THOSE PROVISIONS
OF THE AGREEMENT WHICH, BY THEIR EXPRESS TERMS, ARE GOVERNED BY THE BAKRUPTCY
CODE) AND, EXCEPT WITH RESPECT TO CONCENTRATION ACCOUNTS AND OTHER CASH
MANAGEMENT SYSTEM ACCOUNTS (WHICH SHALL CONTINUE TO BE GOVERNED BY THE LAW OF
JURISDICTION(S) SPECIFIED IN AGREEMENTS EXECUTED WITH RESPECT TO SUCH ACCOUNTS),
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
26
CONFLICTS OF LAWS PRINCIPLES, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF
SUCH JURISDICTION.
SECTION 26. Severability. If any provision of any Collateral Document is
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, the other provisions of the Collateral Documents shall remain
in full force and effect in such jurisdiction and shall be liberally construed
in favor of the Collateral Agent and the Secured Parties in order to carry out
the intentions of the parties thereto as nearly as may be possible; and the
invalidity or unenforceability of any provision thereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
[Remainder of page intentionally left blank]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
BORROWERS:
---------
Mariner Health Group, Inc.
Aid & Assistance, Inc.
Beechwood Heritage Retirement Community, Inc.
Bride Brook Nursing & Rehabilitation Center, Inc.
Compass Pharmacy Services, Inc.
Compass Pharmacy Services of Maryland, Inc.
Compass Pharmacy Services of Texas, Inc.
Cypress Nursing Facility, Inc.
Long Ridge Nursing and Rehabilitation Center, Inc.
Long Wood Rehabilitation Center, Inc.
Mariner Health at Bonifay, Inc.
Mariner Health Care, Inc.
Mariner Health Care of Atlantic Shores, Inc.
Mariner Health Care of Deland, Inc.
Mariner Health Care of Fort Xxxxx, Inc.
Mariner Health Care of Great Laurel, Inc.
Mariner Health Care of Inverness, Inc.
Mariner Health Care of Lake Worth, Inc.
Mariner Health Care of MacClenny, Inc.
Mariner Health Care of Metrowest, Inc.
Mariner Health Care of Nashville, Inc.
Mariner Health Care of North Hills, Inc.
Mariner Health Care of Orange City, Inc.
Mariner Health Care of Palm City, Inc.
Mariner Health Care of Pinellas Point, Inc.
Mariner Health Care of Port Orange, Inc.
Mariner Health Care of Southern Connecticut, Inc.
Mariner Health Care of Toledo, Inc.
Mariner Health Care of Tuskawilla, Inc.
Mariner Health Care of West Hills, Inc.
Mariner Health Central, Inc.
Mariner Health Home Care, Inc.
Mariner Health of Florida, Inc.
Mariner Health of Jacksonville, Inc.
Mariner Health of Maryland, Inc.
Mariner Health of Orlando, Inc.
Mariner Health of Palmetto, Inc.
Mariner Health of Seminole County, Inc.
Mariner Health of Tampa, Inc.
Mariner Health Resources, Inc.
Mariner Physician Services, Inc.
Mariner Practice Corporation
S-1
Mariner - Regency Health Partners, Inc.
MarinerSelect Staffing Solutions, Inc.
Mariner Supply Services, Inc.
MedRehab, Inc.
MedRehab of Indiana, Inc.
MedRehab of Louisiana, Inc.
MedRehab of Missouri, Inc.
Merrimack Valley Nursing & Rehabilitation Center,
Inc.
Methuen Nursing & Rehabilitation Center, Inc.
MHC Rehab. Corp.
MHC Transportation, Inc.
Mystic Nursing & Rehabilitation Center, Inc.
National Health Strategies, Inc.
Park Terrace Nursing & Rehabilitation Center, Inc.
Xxxxxxxxx Nursing & Rehabilitation Center, Inc.
Pinnacle Care Corporation
Pinnacle Care Corporation of Huntington
Pinnacle Care Corporation of Nashville
Pinnacle Care Corporation of Seneca
Pinnacle Care Corporation of Sumter
Pinnacle Care Corporation of Xxxxxxxx Bay
Pinnacle Care Corporation of Wilmington
Pinnacle Care Management Corporation
Pinnacle Pharmaceuticals, Inc.
Pinnacle Pharmaceutical Services, Inc.
Pinnacle Rehabilitation, Inc.
Pinnacle Rehabilitation of Missouri, Inc.
Prism Care Centers, Inc.
Prism Health Group, Inc.
Prism Home Care Company, Inc.
Prism Home Care, Inc.
Prism Home Health Services, Inc.
Prism Hospital Ventures, Inc.
Prism Rehab Systems, Inc.
Regency Health Care Center of Seminole County,
Inc.
Sassaquin Nursing & Rehabilitation Center, Inc.
Tampa Medical Associates, Inc.
The Ocean Pharmacy, Inc.
Tri-State Health Care, Inc.
Windward Health Care, Inc.
By: ____________________________________
Xxxx X. Xxxxxx
Vice President for each of the foregoing
Borrowers
S-2
IHS Rehab Partnership, Ltd.
By: Mariner Health Care Of Nashville, Inc., its
General Partner
By:___________________________________
Name:
Title:
Mariner Health Properties IV, Ltd.
By: Mariner Health Of Florida, Inc., its General
Partner
By:___________________________________
Name:
Title:
Mariner Health Properties VI, Ltd.
By: Mariner Health Of Florida, Inc., its General
Partner
By:___________________________________
Name:
Title:
Seventeenth Street Associates Limited Partnership
By: Tri-state Health Care, Inc., its General Partner
By:___________________________________
Name:
Title:
S-3
Allegis Health and Living Center at Heritage
Harbour, L.L.C.
By: Mariner Health of Maryland, Inc., its
Managing Member
By:___________________________________
Name:
Title:
S-4
PNC Bank, National Association,
as Collateral Agent
By: _________________________________
Name:
Title:
S-5
LIMITED JOINDER. First Union National Bank ("First Union") joins in this
---------------
Security Agreement for the sole purpose of evidencing its agreement to serve as
"Concentration Bank" subject to the terms, provisions and protections of Section
6; neither execution nor any term or provision of this Security Agreement shall
be interpreted or construed as a representation, warranty or other affirmation
by First Union as to the validity or priority of any security interest or
agreement between and among the Borrowers, the Collateral Agent, and Lenders or
any other party, or to impose upon First Union any obligation or responsibility
except as expressly provided in Section 6 of the Security Agreement.
First Union National Bank,
as Concentration Bank
By: _________________________________
Name:
Title:
S-6
EXHIBIT A
to Security Agreement
PERFECTION CERTIFICATE
The undersigned, an authorized officer of [NAME OF GRANTOR], a
[jurisdiction of incorporation] corporation/1/ (the "Company"), hereby certifies
with reference to the Security Agreement dated as of January __,2000 among the
Company, the other Grantors and PNC Bank, National Association, as Collateral
Agent (terms defined therein being used herein as therein defined), to the
Collateral Agent and each other Lender Party as follows:
1. Names/1/ (a) The exact corporate name of the Company as it appears in
its certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Company has had
since its organization, together with the date of the relevant change.
(c) Except as set forth in Schedule 1, the Company has not changed
its identity or corporate structure in any way within the past five years.
[Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature
or jurisdiction of corporate organization. If any such change has occurred,
include in Schedule 1 the information required by paragraphs 1, 2 and 3 of
this certificate as to each acquiree or constituent party to a merger or
consolidation.]
(d) The following is a list of all other names (including trade names
or similar appellations) used by the Company or any of its divisions or
other business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Company is
located at the following address:
(b) The following are all the locations where the Company maintains
any books or records relating to any Accounts:
(c) The following are all the places of business of the Company not
identified above:
_______________
/1/ Modify as needed for any Grantor that is not a corporation.
A-1
(d) The following are all the locations where the Company maintains
any Inventory not identified above:
(e) The following are the names and addresses of all Persons other
than the Company which have possession of any of the Company's Inventory:
3. Prior Locations. (a) Set forth below is the information required by
subparagraphs 2(a), 2(b) and 2(c) above with respect to each location or place
of business maintained by the Company at any time during the past five years:
(b) Set forth below is the information required by subparagraphs 2(d)
and 2(e) above with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
4. Unusual Transactions. Except as set forth in Schedule 4, all Accounts
have been originated by the Company and all Inventory and Equipment has been
acquired by the Company in the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a true copy
of a file search report from the Uniform Commercial Code filing officer in each
jurisdiction identified in paragraph 2 or 3 above with respect to each name set
forth in paragraph 1 above. Attached hereto as Schedule 5(B) is a true copy of
each financing statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form UCC-1 in the
form required by Collateral Agent pursuant to the Security Agreement has been
provided to the Collateral Agent for due filing in the Uniform Commercial Code
filing office in each jurisdiction identified in paragraph 2 hereof.
A-2
IN WITNESS WHEREOF, the undersigned has executed this Perfection
Certificate this __ day of __________, 2000.
By: ____________________________
Name:
Title:
A-3
EXHIBIT B
to
Security Agreement
[Letterhead of Collateral Agent]
Notice of Redirection
_______________, 0000
Xxxxx Xxxxx Xxxxxxxx Xxxx
XX0000
000 Xxxxx Xxxxxxx Xxxxxx, XX0
Xxxxxxxxx, XX 00000-0000
Attn: __________
Re: ________________, Account Nos. _____________ (the "Accounts")
Ladies and Gentlemen:
Reference is made to that certain Security Agreement dated as of
January ___, 2000 (the "Security Agreement") among you, us, as Collateral Agent,
and Mariner Health Group, Inc. and the other borrowers party thereto pursuant to
which we, for our benefit and for the benefit of Lenders (as defined in the
Security Agreement), were given exclusive dominion and control over the
Accounts. This notice is given in accordance with the terms of the Security
Agreement.
Effective immediately and continuing until we shall authorize you in
writing to do otherwise, we hereby (i) give you notice of our sole control over
the Accounts and all financial assets credited thereto and instruct you not to
accept any direction, instructions or entitlement order with respect to the
Accounts or the financial assets credited thereto from any person other than the
undersigned, and (ii) direct you to transfer, by wire transfer of immediately
available funds not later than 3:00 p.m. E.S.T. on each banking day, all
collected funds contained in the Accounts in accordance with the following
transfer instructions:
[insert appropriate transfer instructions]
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION,
as Collateral Agent
By:________________________________
Title:_____________________________
B-1
Exhibit C
[See Attached]
X-0
Xxxxxxx X
[Xxx Xxxxxxxx]
X-0
