Exhibit 10.2
EXECUTION COPY
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COLLATERAL AND GUARANTEE AGREEMENT
dated as of
March 10, 2006
among
HEALTHSOUTH CORPORATION,
THE SUBSIDIARIES OF HEALTHSOUTH CORPORATION
IDENTIFIED HEREIN,
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
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TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement.................................................1
SECTION 1.02. Other Defined Terms..............................................1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee........................................................5
SECTION 2.02. Guarantee of Payment.............................................5
SECTION 2.03. No Limitations...................................................5
SECTION 2.04. Reinstatement....................................................6
SECTION 2.05. Agreement To Pay; Subrogation....................................7
SECTION 2.06. Information......................................................7
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge...........................................................7
SECTION 3.02. Delivery of Pledged Intercompany Notes...........................8
SECTION 3.03. Representations, Warranties and Covenants........................8
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests...........................................10
SECTION 3.05. Voting Rights; Dividends and Interest...........................10
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest...............................................12
SECTION 4.02. Representations and Warranties..................................14
SECTION 4.03. Covenants.......................................................16
SECTION 4.04. Other Actions...................................................19
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral..22
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default...........................................24
SECTION 5.02. Application of Proceeds.........................................25
SECTION 5.03. Grant of License to Use Intellectual Property...................26
SECTION 5.04. Securities Act..................................................26
SECTION 5.05. Registration....................................................27
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation.......................................28
SECTION 6.02. Contribution and Subrogation....................................28
SECTION 6.03. Subordination...................................................28
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices ........................................................29
SECTION 7.02. Waivers; Amendment..............................................29
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification...........29
SECTION 7.04. Successors and Assigns..........................................30
SECTION 7.05. Survival of Agreement...........................................30
SECTION 7.06. Counterparts; Effectiveness; Several Agreement..................31
SECTION 7.07. Severability....................................................31
SECTION 7.08. Right of Set-Off................................................31
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process......31
SECTION 7.10. WAIVER OF JURY TRIAL............................................32
SECTION 7.11. Headings........................................................32
SECTION 7.12. Security Interest Absolute......................................33
SECTION 7.13. Termination or Release..........................................33
SECTION 7.14. Additional Subsidiaries.........................................33
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact.....................34
Schedules
Schedule I Subsidiary Parties
Schedule II Pledged Stock; Debt Securities
Schedule III Intellectual Property
Schedule IV Insurance Requirements
Schedule V Commercial Tort Claims
Schedule VI Limited Liability Company and Limited Partnership Interest
Certificates
Schedule VII Intercompany Indebtedness
Schedule VIII Specified Borrower Litigation
Schedule IX Specified Third Party Litigation
Exhibits
Exhibit I Form of Supplement
Exhibit II Form of Perfection Certificate
COLLATERAL AND GUARANTEE AGREEMENT dated
as of March 10, 2006 (this "Agreement"), among
HEALTHSOUTH CORPORATION, a Delaware corporation
(the "Borrower"), the Subsidiaries identified
herein and JPMORGAN CHASE BANK, N.A., as Collateral
Agent.
Reference is made to the Credit Agreement dated as of March 10, 2006
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto,
JPMorgan Chase Bank, N.A., as administrative agent and collateral agent,
Citicorp North America, Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, as co-syndication agents, and Deutsche Bank Securities Inc.,
Xxxxxxx Sachs Credit Partners L.P. and Wachovia Bank, National Association, as
co-documentation agents. The Lenders have agreed to extend credit to the
Borrower on the terms and subject to the conditions set forth in the Credit
Agreement. The obligations of the Lenders to extend such credit are
conditioned upon, among other things, the execution and delivery by the
parties hereto of this Agreement. Accordingly, the parties hereto agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement (including the preamble hereto) and not otherwise defined herein
have the meanings specified in the Credit Agreement. All terms defined in the
New York UCC (as defined herein) and not defined in this Agreement or in the
Credit Agreement have the meanings specified therein; the term "instrument"
shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of
the Credit Agreement shall also apply to this Agreement.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Account Debtor" means any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Article 9 Collateral" has the meaning assigned to such term in
Section 4.01.
"Cash Management Arrangements" means agreements and other
arrangements in respect of treasury, depository and other cash management
services, including cash pooling, zero balance and sweep accounts, purchasing
card accounts and intra-day and overdraft facilities and other similar
facilities in various currencies.
"Claiming Party" has the meaning assigned to such term in Section
6.02.
"Collateral" means Article 9 Collateral and Pledged Collateral.
"Contributing Party" has the meaning assigned to such term in Section
6.02.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any right to any Grantor under any copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule III.
"Credit Agreement" has the meaning assigned to such term in the
preliminary statement of this Agreement.
"Federal Securities Laws" has the meaning assigned to such term in
Section 5.04.
"General Intangibles" means all choses in action and causes of
action, all other intangible personal property of every kind and nature (other
than Accounts) now owned or hereafter acquired by any Grantor and all other
"general intangibles", as defined in the New York UCC (other than Accounts),
including corporate or other business records, indemnification claims,
contract rights (including rights under leases, whether entered into as lessor
or lessee, Swap Agreements and other agreements), Intellectual Property,
goodwill, registrations, franchises, tax refund claims and any letter of
credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts.
"Grantors" means the Borrower and the Subsidiary Parties.
"Guarantors" means the Subsidiary Parties.
"Intellectual Property" means all intellectual and similar property
of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks,
trade secrets, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and
all embodiments or fixations thereof and related documentation, registrations
and franchises, and all additions, improvements and accessions to, and books
and records describing or used in connection with, any of the foregoing.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party, including those listed on Schedule III.
"Loan Document Obligations" means (a) the due and punctual payment of
(i) the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of LC
Disbursements, interest thereon (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) and
obligations to provide cash collateral, and (iii) all other monetary
obligations of the Borrower to any of the Secured Parties under the Credit
Agreement and each of the other Loan Documents, including obligations to pay
fees, expense reimbursement obligations and indemnification obligations,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrower under or pursuant to the Credit
Agreement and each of the other Loan Documents, and (c) the due and punctual
payment and performance of all the obligations of each other Loan Party under
or pursuant to this Agreement and each of the other Loan Documents.
"New York UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"Obligations" means (a) the Loan Document Obligations and (b) the due
and punctual payment and performance of all obligations of each Loan Party
under each Swap Agreement and each Cash Management Arrangement that (i) is in
effect on the Effective Date with a counterparty that is a Lender or an
Affiliate of a Lender as of the Effective Date or (ii) is entered into after
the Effective Date with any counterparty that is a Lender or an Affiliate of a
Lender at the time such Swap Agreement is entered into.
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a patent,
now or hereafter owned by any third party, is in existence, and all rights of
any Grantor under any such agreement.
"Patents" means all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and
all applications for letters patent of the United States or the equivalent
thereof in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule III, and (b)
all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed
therein.
"Perfection Certificate" means a certificate substantially in the
form of Exhibit II, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"Pledged Collateral" has the meaning assigned to such term in Section
3.01.
"Pledged Debt Securities" has the meaning assigned to such term in
Section 3.01.
"Pledged Intercompany Note" has the meaning assigned to such term in
Section 3.02.
"Pledged Securities" means any promissory notes, stock certificates
or other securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.
"Pledged Stock" has the meaning assigned to such term in Section
3.01.
"Proceeds" has the meaning specified in Section 9-102 of the New York
UCC.
"Secured Parties" means (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) each Issuing Bank, (e) each counterparty
to any Swap Agreement with a Loan Party the obligations under which constitute
Obligations, (f) the beneficiaries of each indemnification obligation
undertaken by any Loan Party under any Loan Document, (g) any other Person to
which any Obligation is owed and (h) the successors and assigns of each of the
foregoing.
"Security Interest" has the meaning assigned to such term in Section
4.01.
"Specified Borrower Litigation" means litigation described in
Schedule VIII.
"Specified Deposit Accounts" means all concentration accounts,
investment accounts, automated clearing house accounts and similar accounts
maintained by the Borrower.
"Specified Third Party Litigation" means litigation described in
Schedule IX.
"Subsidiary Parties" means (a) the Subsidiaries identified on
Schedule I and (b) each other Subsidiary that becomes a party to this
Agreement as a Subsidiary Party after the Effective Date.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark now or
hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office or any similar offices in any State of the United
States or any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule III, (b)
all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
ARTICLE II
Guarantee
SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, the due and punctual payment and performance of the
Obligations. Each of the Guarantors further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation. Each of the Guarantors waives
presentment to, demand of payment from and protest to the Borrower or any
other Loan Party of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.
SECTION 2.02. Guarantee of Payment. Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment when
due and not of collection, and waives any right to require that any resort be
had by the Collateral Agent or any other Secured Party to any security held
for the payment of the Obligations or to any balance of any deposit account or
credit on the books of the Collateral Agent or any other Secured Party in
favor of the Borrower or any other Person.
SECTION 2.03. No Limitations. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 7.13, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (i) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce any right or remedy
under the provisions of any Loan Document or otherwise; (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, any Loan Document or any other agreement, including with
respect to any other Guarantor under this Agreement; (iii) the release of, or
any impairment of or failure to perfect any Lien on or security interest in,
any security held by the Collateral Agent or any other Secured Party for the
Obligations or any of them; (iv) any default, failure or delay, wilful or
otherwise, in the performance of the Obligations; or (v) any other act or
omission that may or might in any manner or to any extent vary the risk of any
Guarantor or otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the indefeasible payment in full in cash of all the
Obligations). Each Guarantor expressly authorizes the Secured Parties to take
and hold security in accordance with the provisions of this Agreement for the
payment and performance of the Obligations, to exchange, waive or release any
or all such security (with or without consideration), to enforce or apply such
security and direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other guarantors or
obligors upon or in respect of the Obligations, all without affecting the
obligations of any Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each Guarantor
waives any defense based on or arising out of any defense of the Borrower or
any other Loan Party or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of
the Borrower or any other Loan Party, other than the indefeasible payment in
full in cash of all the Obligations. The Collateral Agent and the other
Secured Parties may, at their election, foreclose on any security held by one
or more of them in accordance with the provisions of this Agreement by one or
more judicial or nonjudicial sales, accept an assignment of any such security
in lieu of foreclosure, compromise or adjust any part of the Obligations, make
any other accommodation with the Borrower or any other Loan Party or exercise
any other right or remedy available to them against the Borrower or any other
Loan Party, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been fully and
indefeasibly paid in full in cash. To the fullest extent permitted by
applicable law, each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of such Guarantor against the Borrower or any other Loan
Party, as the case may be, or any security.
SECTION 2.04. Reinstatement. Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower or any
other Loan Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral
Agent for distribution to the applicable Secured Parties in cash the amount of
such unpaid Obligation. Upon payment by any Guarantor of any sums to the
Collateral Agent as provided above, all rights of such Guarantor against the
Borrower or any other Loan Party arising as a result thereof by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise shall in
all respects be subject to Article VI.
SECTION 2.06. Information. Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's and each other Loan
Party's financial condition and assets and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Collateral Agent or the other Secured Parties will
have any duty to advise such Guarantor of information known to it or any of
them regarding such circumstances or risks.
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge. As security for the payment or performance, as
the case may be, in full of the Obligations, each Grantor hereby assigns and
pledges to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest in, all of such Grantor's right, title and interest in, to and under
(i) the shares of capital stock and other Equity Interests owned by it on the
date hereof (including all such shares and Equity Interests listed on Schedule
II) and any other Equity Interests obtained in the future by such Grantor, and
the certificates representing all the foregoing shares and Equity Interests
(the "Pledged Stock"); provided that the Pledged Stock shall not include any
Excluded Equity Interests; (ii) all debt securities or Indebtedness (including
intercompany Indebtedness) held by it on the date hereof (including all such
debt securities or Indebtedness listed on Schedule II) and any debt securities
or Indebtedness in the future issued to or held by such Grantor, and the
promissory notes and any other instruments evidencing such debt securities or
Indebtedness (the "Pledged Debt Securities"); (iii) all other property that
may be pledged to the Collateral Agent pursuant to the terms of this Section
3.01; (iv) all payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for or upon the conversion of, and all
other Proceeds received in respect of, the securities referred to in clauses
(i) and (ii) above; (v) all rights and privileges of such Grantor with respect
to the securities and other property referred to in clauses (i), (ii), (iii)
and (iv) above; and (vi) all Proceeds of any of the foregoing (the items
referred to in clauses (i) through (vi) above being collectively referred to
as the "Pledged Collateral").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, during the term of this Agreement; subject,
however, to the terms, covenants, conditions and termination and release
provisions hereinafter set forth.
SECTION 3.02. Delivery of Pledged Intercompany Notes. (a) Each
Grantor will cause any Indebtedness (other than Indebtedness under the
Borrower's cash management system) owed to such Grantor by the Borrower or any
Subsidiary to be evidenced as of the Effective Date by a duly executed
promissory note (a "Pledged Intercompany Note") that is pledged and delivered
to the Collateral Agent pursuant to the terms of Section 3.01.
(b) Upon delivery to the Collateral Agent, any Pledged Intercompany
Notes shall be accompanied by instruments of transfer reasonably satisfactory
to the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Intercompany
Notes shall be accompanied by a schedule describing such notes, which schedule
shall be attached hereto as Schedule II and made a part hereof; provided that
failure to attach any such schedule hereto shall not affect the validity of
such pledge of such Pledged Intercompany Notes. Each schedule so delivered
shall supplement any prior schedules so delivered.
(c) Schedule VII sets forth all Indebtedness owed to a Grantor by the
Borrower or any Subsidiary as of December 31, 2005.
SECTION 3.03. Representations, Warranties and Covenants. The Grantors
jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the issued and
outstanding units of each class of the Equity Interests of the issuer thereof
represented by the Pledged Stock and includes all Equity Interests, debt
securities and promissory notes required to be pledged hereunder in order to
satisfy the Collateral and Guarantee Requirement;
(b) the Pledged Stock and Pledged Debt Securities have been duly and
validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of
Pledged Debt Securities, are legal, valid and binding obligations of the
issuers thereof;
(c) except for the security interests granted hereunder, each of the
Grantors (i) is and, subject to any transfers made in compliance with the
Credit Agreement, will continue to be the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule II as owned by such
Grantor, (ii) holds the same free and clear of all Liens, other than Liens
created by this Agreement, Liens permitted pursuant to Section 6.06 of the
Credit Agreement and transfers made in compliance with the Credit Agreement,
(iii) will make no assignment, pledge, hypothecation or transfer of, or create
or permit to exist any security interest in or other Lien on, the Pledged
Collateral, other than Liens created by this Agreement, Liens permitted
pursuant to Section 6.06 of the Credit Agreement and transfers made in
compliance with the Credit Agreement, and (iv) will defend its title or
interest thereto or therein against any and all Liens (other than the Lien
created by this Agreement and Liens permitted pursuant to Section 6.06 of the
Credit Agreement), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations imposed or permitted by
the Loan Documents, including restrictions and limitations permitted under
Section 6.07 of the Credit Agreement, or securities laws generally, the
Pledged Collateral is and will continue to be freely transferable and
assignable, and none of the Pledged Collateral is or will be subject to any
option, right of first refusal, shareholders agreement, charter or by-law
provisions or contractual restriction of any nature that might prohibit,
impair, delay or otherwise affect the pledge of such Pledged Collateral
hereunder, the sale or disposition thereof pursuant hereto or the exercise by
the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the validity of
the pledge effected hereby (other than such as have been obtained and are in
full force and effect);
(g) by virtue of the execution and delivery by the Grantors of this
Agreement, when (i) any Pledged Intercompany Notes are delivered to the
Collateral Agent in accordance with this Agreement or (ii) the appropriate
Uniform Commercial Code filings and other appropriate filings, recordings or
registrations prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in Schedule 2 to the
Perfection Certificate (or specified by notice from the Borrower to the
Collateral Agent after the Effective Date in the case of filings, recordings
or registrations required by Section 5.14 of the Credit Agreement) are made
with respect to the other Pledged Securities, the Collateral Agent will obtain
a legal, valid and perfected lien upon and security interest in the Pledged
Securities as security for the payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the Collateral
Agent, for the benefit of the Secured Parties, the rights of the Collateral
Agent in the Pledged Collateral as set forth herein.
Notwithstanding any other provision of this Agreement, no
representation or warranty contained in this Section 3.03 shall be made or
deemed to be made with respect to any Subsidiary Party that is an Immaterial
Subsidiary until September 30, 2006; provided that (i) such representations
and warranties shall be deemed to be made with respect to each Subsidiary
Party that is an Immaterial Subsidiary on such date and (ii) after such date,
representations and warranties shall be made, and shall be deemed to be made,
with respect to each Subsidiary Party that is an Immaterial Subsidiary in
accordance with the terms of this Agreement and the other Loan Documents.
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests. Each interest in any limited liability company or
limited partnership controlled by any Grantor and pledged hereunder shall not
be represented by a certificate, other than as set forth in Schedule VI, and
the Loan Parties shall not take any action, or permit any action to be taken,
that could reasonably be expected to result in any such interest (i)
constituting a "security" within the meaning of Article 8 of the New York UCC
or (ii) otherwise being governed by Article 8 of the New York UCC.
Notwithstanding any other provision of this Agreement, no
representation or warranty contained in this Section 3.04 shall be made or
deemed to be made with respect to any Subsidiary Party that is an Immaterial
Subsidiary until September 30, 2006; provided that (i) such representations
and warranties shall be deemed to be made with respect to each Subsidiary
Party that is an Immaterial Subsidiary on such date and (ii) after such date,
representations and warranties shall be made, and shall be deemed to be made,
with respect to each Subsidiary Party that is an Immaterial Subsidiary in
accordance with the terms of this Agreement and the other Loan Documents.
SECTION 3.05. Voting Rights; Dividends and Interest. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.05 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner
of Pledged Securities or any part thereof for any purpose consistent
with the terms of this Agreement, the Credit Agreement and the other
Loan Documents; provided that such rights and powers shall not be
exercised in any manner that could reasonably be expected to
materially and adversely affect the rights inuring to a holder of any
Pledged Securities or the rights and remedies of any of the
Collateral Agent or the other Secured Parties under this Agreement or
the Credit Agreement or any other Loan Document or the ability of the
Secured Parties to exercise the same.
(ii) The Collateral Agent shall promptly execute and deliver to
each Grantor, or cause to be promptly executed and delivered to such
Grantor, all such proxies, powers of attorney and other instruments
as such Grantor may reasonably request for the purpose of enabling
such Grantor to exercise the voting and/or consensual rights and
powers it is entitled to exercise pursuant to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any
and all dividends, interest, principal and other distributions paid
on or distributed in respect of the Pledged Securities to the extent
and only to the extent that such dividends, interest, principal and
other distributions are permitted by, and otherwise paid or
distributed in accordance with, the terms and conditions of the
Credit Agreement, the other Loan Documents and applicable laws;
provided that any noncash dividends, interest, principal or other
distributions that would constitute Pledged Stock or Pledged Debt
Securities, whether resulting from a subdivision, combination or
reclassification of the outstanding Equity Interests of the issuer of
any Pledged Securities or received in exchange for Pledged Securities
or any part thereof, or in redemption thereof, or as a result of any
merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become
part of the Pledged Collateral, and, if received by any Grantor,
shall not be commingled by such Grantor with any of its other funds
or property but shall be held separate and apart therefrom and shall
be held in trust for the benefit of the Collateral Agent; provided,
further, that non-cash consideration received from Permitted Debt
Activities shall not be required to be so held separate and apart.
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.05, all
rights of any Grantor to dividends, interest, principal or other distributions
that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of
this Section 3.05 shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to receive and retain such dividends, interest, principal or
other distributions. All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of this Section 3.05 shall
be held in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Grantor and shall be forthwith delivered
to the Collateral Agent upon demand in the form in which so received (with any
necessary endorsement). Any and all money and other property paid over to or
received by the Collateral Agent pursuant to the provisions of this paragraph
(b) shall be retained by the Collateral Agent in an account to be established
by the Collateral Agent upon receipt of such money or other property and shall
be applied in accordance with the provisions of Section 5.02. After all Events
of Default have been cured or waived and the Borrower has delivered to the
Collateral Agent a certificate to that effect, the Collateral Agent shall
promptly repay to each Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) of this
Section 3.05 that shall remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.05, all
rights of any Grantor to exercise the voting and consensual rights and powers
it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.05,
and the obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 3.05, shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Grantors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.05 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one
or more of the Grantors at the same or different times and (iii) may suspend
the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in
part without suspending all such rights (as specified by the Collateral Agent
in its sole and absolute discretion) and without waiving or otherwise
affecting the Collateral Agent's rights to give additional notices from time
to time suspending other rights so long as an Event of Default has occurred
and is continuing.
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby assigns and pledges to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, a security interest (the "Security Interest") in, all right, title or
interest in or to any and all of the following assets and properties now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Article 9 Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-Credit rights;
(xi) all rights and claims in respect of Federal, state or
other tax refunds;
(xii) all commercial tort claims set forth in Schedule V;
(xiii) all books and records pertaining to the Article 9
Collateral; and
(xiv) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
Notwithstanding anything herein to the contrary, (i) the Pledged
Stock shall not include any Excluded Equity Interest, (ii) the Article 9
Collateral shall not include any application to register a trademark or
service xxxx in the U.S. Patent and Trademark Office based upon a Grantor's
"intent to use" such trademark or service xxxx pursuant to 15 U.S.C. ss. 1051
unless and until a "statement of use" or "Amendment to Allege Use" is filed
with and accepted by the U.S. Patent and Trademark Office with respect
thereto, at which point the Article 9 Collateral shall include, and the
security interest granted hereunder shall attach to, such application, and
(iii) with respect to the Specified Borrower Litigation, each Grantor shall
only be required to assign and pledge its right to the net proceeds received
in connection with such Specified Borrower Litigation and any such assignment
and pledge shall be subject to any limitations set forth in the Settlement
Agreements.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings) with respect to the
Article 9 Collateral or any part thereof and amendments thereto that (i)
indicate the Collateral as all assets of such Grantor or words of similar
effect as being of an equal or lesser scope or with greater detail, and (ii)
contain the information required by Article 9 of the Uniform Commercial Code
of each applicable jurisdiction for the filing of any financing statement or
amendment, including (a) whether such Grantor is an organization, the type of
organization and any organizational identification number issued to such
Grantor and (b) in the case of a financing statement filed as a fixture filing
or covering Article 9 Collateral constituting minerals or the like to be
extracted or timber to be cut, a sufficient description of the real property
to which such Article 9 Collateral relates. Each Grantor agrees to provide
such information to the Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral Agent
to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with respect to or
arising out of the Article 9 Collateral.
SECTION 4.02. Representations and Warranties. The Grantors jointly
and severally represent and warrant to the Collateral Agent and the Secured
Parties that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent, for the benefit of the Secured Parties, the Security
Interest in such Article 9 Collateral pursuant hereto and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person other than any consent or
approval that has been obtained.
(b) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Grantor, is correct and complete as of the Effective Date. The Uniform
Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations prepared
by the Collateral Agent based upon the information provided to the Collateral
Agent in the Perfection Certificate for filing in each governmental, municipal
or other office specified in Schedule 2 to the Perfection Certificate (or
specified by notice from the Borrower to the Collateral Agent after the
Effective Date in the case of filings, recordings or registrations required by
Section 5.14 of the Credit Agreement), are all the filings, recordings and
registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Article 0 Xxxxxxxxxx xxxxxxxxxx xx Xxxxxx
Xxxxxx Patents, Trademarks and Copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the benefit
of the Secured Parties) in respect of all Article 9 Collateral in which the
Security Interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements. Each Grantor represents and warrants that a
fully executed copy of this Agreement, containing a description of all Article
9 Collateral consisting of Intellectual Property with respect to United States
Patents and United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and United States
registered Copyrights, has been delivered to the Collateral Agent for
recording by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or
17 U.S.C. ss. 205 and the regulations thereunder, as applicable, and otherwise
as may be required pursuant to the laws of any other necessary jurisdiction,
to protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Article 9 Collateral consisting of
registered or issued Patents, Trademarks and Copyrights in which a security
interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance
of the Obligations, (ii) subject to the filings described in and limitations
set forth in Section 4.02(b), a perfected security interest in all Article 9
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United
States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (iii) subject to the filings described in and
limitations set forth in Section 4.02(b), a security interest that shall be
perfected in all Article 9 Collateral in which a security interest may be
perfected upon the receipt and recording of this Agreement with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction. The Security Interest is and shall be prior to any
other Lien on any of the Article 9 Collateral, other than Liens permitted
under the Credit Agreement.
(d) The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.06 of
the Credit Agreement. None of the Grantors has filed or consented to the
filing of (i) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Article 9 Collateral
with the United States Patent and Trademark Office or the United States
Copyright Office, other than Liens permitted pursuant to Section 6.06 of the
Credit Agreement, or (iii) any assignment in which any Grantor assigns any
Article 9 Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
Liens expressly permitted pursuant to Section 6.06 of the Credit Agreement.
Notwithstanding any other provision of this Agreement, no
representation or warranty contained in this Section 4.02 shall be made or
deemed to be made with respect to any Subsidiary Party that is an Immaterial
Subsidiary until September 30, 2006; provided that (i) such representations
and warranties shall be deemed to be made with respect to each Subsidiary
Party that is an Immaterial Subsidiary on such date and (ii) after such date,
representations and warranties shall be made, and shall be deemed to be made,
with respect to each Subsidiary Party that is an Immaterial Subsidiary in
accordance with the terms of this Agreement and the other Loan Documents.
SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify
the Collateral Agent in writing of any change (i) in corporate name, (ii) in
its identity or type of organization or corporate structure, (iii) in its
Federal Taxpayer Identification Number or organizational identification number
or (iv) in its jurisdiction of organization. Each Grantor agrees to promptly
provide the Collateral Agent with certified organizational documents
reflecting any of the changes described in the first sentence of this
paragraph. Each Grantor agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral
Agent to continue at all times following such change to have a valid, legal
and perfected first priority security interest in all the Article 9
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Article 9 Collateral owned or held by such Grantor is
damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Article 9 Collateral
owned by it as is consistent with its current practices and in accordance with
such prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Article 9 Collateral, and, at such time or times as
the Collateral Agent may reasonably request, promptly to prepare and deliver
to the Collateral Agent a duly certified schedule or schedules in form and
detail satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Article 9 Collateral.
(c) Each year, upon the request of the Collateral Agent, at the time
of delivery of annual financial statements with respect to the preceding
fiscal year pursuant to Section 5.01(b) of the Credit Agreement, the Borrower
shall deliver to the Collateral Agent a certificate executed by a Financial
Officer and the chief legal officer of the Borrower setting forth the
information required pursuant to the Perfection Certificate or confirming that
there has been no change in such information since the date of such
certificate or the date of the most recent certificate delivered pursuant to
this Section 4.03(c). Each certificate delivered pursuant to this Section
4.03(c) shall identify in the format of Schedule III all registered or applied
for Intellectual Property of any Grantor in existence on the date thereof and
not then listed on such Schedules or previously so identified to the
Collateral Agent.
(d) Each Grantor shall, at its own expense, take any and all actions
reasonably necessary to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent in the
Article 9 Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 6.06 of the Credit Agreement.
(e) Except as otherwise agreed to in Section 3.02, each Grantor
agrees, at its own expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all such
actions as the Collateral Agent may from time to time reasonably request to
better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and
taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors,
to supplement this Agreement by supplementing Schedule III or adding
additional schedules hereto to specifically identify any asset or item that
constitutes registered or applied for Copyrights, Licenses, registered or
applied for Patents or registered or applied for Trademarks; provided that any
Grantor shall have the right, exercisable within 10 Business Days after it has
been notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral. Each Grantor agrees that it will use its reasonable efforts
to take such action as shall be necessary in order that all representations
and warranties hereunder shall be true and correct with respect to such
Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.
(f) The Collateral Agent and such Persons as the Collateral Agent may
reasonably designate shall have the right, at the Grantors' own cost and
expense and with at least 10 Business Days prior notice, to inspect the
Article 9 Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Article 9
Collateral is located, to discuss the Grantors' affairs with the officers of
the Grantors and their independent accountants and to verify under reasonable
procedures, in accordance with Section 5.07 of the Credit Agreement, the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Article 9 Collateral, including, in the case of
Accounts or Article 9 Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Article 9
Collateral for the purpose of making such a verification, provided that (i)
such inspection, discussion and verification shall be during normal business
hours and shall not be materially disruptive to the business of the applicable
Grantor, (ii) unless a Default or Event of Default shall have occurred and be
continuing, there shall be no more than two separate instances of such
inspections, discussions and verifications in any calendar year and (iii) no
prior notice in respect of any such inspections, discussions and verifications
shall be required if a Default or Event of Default shall have occurred and be
continuing. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party.
(g) At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not permitted
pursuant to Section 6.06 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral
Agent on demand for any payment made or any expense incurred by the Collateral
Agent pursuant to the foregoing authorization; provided that nothing in this
paragraph shall be interpreted as excusing any Grantor from the performance
of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect
to taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan
Documents.
(h) If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent; provided that this requirement shall not
apply to security interests that, in the aggregate, apply to property with a
value of $1,000,000 or less. Such assignment need not be filed of public
record unless necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account Debtor or other
Person granting the security interest.
(i) Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.
(j) Except as permitted by the Credit Agreement, this Agreement or
any other Loan Document, none of the Grantors shall make or permit to be made
an assignment, pledge or hypothecation of the Article 9 Collateral, shall
grant any other Lien in respect of the Article 9 Collateral or make or permit
to be made any transfer of the Article 9 Collateral, and the Article 9
Collateral owned by each Grantor shall remain at all times in possession of
the Borrower or a Subsidiary of the Borrower; provided, however, that if the
Collateral Agent shall notify the Grantors that an Event of Default shall have
occurred and be continuing, during the continuance thereof the Grantors shall
not sell, convey, lease, assign, transfer or otherwise dispose of any Article
9 Collateral (which notice may be given by telephone if promptly confirmed in
writing). Without limiting the generality of the foregoing, each Grantor
agrees that it shall not permit any Inventory (other than Inventory that, in
the aggregate, has a value of $1,000,000 or less) to be in the possession or
control of any warehouseman, agent, bailee, or processor at any time unless
such warehouseman, bailee, agent or processor shall have been notified of the
Security Interest and shall have acknowledged in writing, in form and
substance reasonably satisfactory to the Collateral Agent, that such
warehouseman, agent, bailee or processor holds the Inventory for the benefit
of the Collateral Agent subject to the Security Interest and shall act upon
the instructions of the Collateral Agent without further consent from the
Grantor, and that such warehouseman, agent, bailee or processor further agrees
to waive and release any Lien held by it with respect to such Inventory,
whether arising by operation of law or otherwise.
(k) None of the Grantors will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of any Accounts
included in the Article 9 Collateral, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, compromises, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent
with its current practices and in accordance with such prudent and standard
practice used in industries that are the same as or similar to those in which
such Grantor is engaged.
(l) The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Schedule IV hereto
and Section 5.05 of the Credit Agreement. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent (and attorney-in-fact) for the purpose, during the continuance of an
Event of Default, of making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Grantors hereunder or any Event of Default, in its reasonable
discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral
Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this paragraph, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.
(m) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
SECTION 4.04. Other Actions. In order to further ensure the
attachment, perfection and priority of, and the ability of the Collateral
Agent to enforce, the Security Interest, each Grantor agrees, in each case at
such Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
(a) Deposit Accounts. For each Specified Deposit Account that any
Grantor at any time opens or maintains, such Grantor shall cooperate fully in
taking such actions as any Secured Party may reasonably request in order to
cause the depositary bank to agree to comply with instructions from the
Collateral Agent to such depositary bank directing the disposition of funds
from time to time credited to such Specified Deposit Account, without further
consent of such Grantor or any other Person, pursuant to an agreement
satisfactory to the Collateral Agent. The Collateral Agent agrees with each
Grantor that the Collateral Agent shall not give any such instructions or
withhold any withdrawal rights from any Grantor unless an Event of Default has
occurred and is continuing, or, after giving effect to any withdrawal would
occur. The provisions of this paragraph shall not apply to (A) any deposit
account for which any Grantor, the depositary bank and the Collateral Agent
have entered into a cash collateral agreement specially negotiated among such
Grantor, the depositary bank and the Collateral Agent for the specific purpose
set forth therein, (B) deposit accounts for which the Collateral Agent is the
depositary and (C) any deposit account that is not a Specified Deposit
Account.
(b) Investment Property. Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any Pledged
Intercompany Notes, such Grantor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer
or assignment duly executed in blank as the Collateral Agent may from time to
time specify. With respect to any securities now or hereafter acquired by any
Grantor, such Grantor shall promptly notify the Collateral Agent thereof and,
at the Collateral Agent's request and option, pursuant to an agreement in form
and substance reasonably satisfactory to the Collateral Agent, either (i)
cause the issuer to agree to comply with instructions from the Collateral
Agent as to such securities, without further consent of any Grantor or such
nominee, or (ii) arrange for the Collateral Agent to become the registered
owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by any
Grantor are held by such Grantor or its nominee through a securities
intermediary or commodity intermediary, such Grantor shall promptly notify the
Collateral Agent thereof and, at the Collateral Agent's request and option,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (i) cause such securities intermediary or (as the
case may be) commodity intermediary to agree to comply with entitlement orders
or other instructions from the Collateral Agent to such securities
intermediary as to such security entitlements, or (as the case may be) to
apply any value distributed on account of any commodity contract as directed
by the Collateral Agent to such commodity intermediary, in each case without
further consent of any Grantor or such nominee, or (ii) in the case of
Financial Assets or other Investment Property held through a securities
intermediary, arrange for the Collateral Agent to become the entitlement
holder with respect to such investment property, with the Grantor being
permitted, only with the consent of the Collateral Agent, to exercise rights
to withdraw or otherwise deal with such investment property. The requirements
set forth in the two immediately preceding sentences shall not apply to
securities acquired or held by the Grantors which have an individual value of
$100,000 or less or which, in the aggregate, have a value of $1,000,000 or
less. The Collateral Agent agrees with each of the Grantors that the
Collateral Agent shall not give any such entitlement orders or instructions or
directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by any Grantor, unless an Event of Default has
occurred and is continuing, or, after giving effect to any such investment and
withdrawal rights would occur. The provisions of this paragraph shall not
apply to any financial assets credited to a securities account for which the
Collateral Agent is the securities intermediary.
(c) Electronic Chattel Paper and Transferable Records. If any Grantor
at any time holds or acquires an interest in any electronic chattel paper or
any "transferable record," as that term is defined in Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request of the Collateral Agent, shall take such action as
the Collateral Agent may reasonably request to vest in the Collateral Agent
control under New York UCC Section 9-105 of such electronic chattel paper or
control under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record; provided that this requirement shall not apply to any
such interests in electronic chattel paper or transferable records which have
an individual value of $100,000 or less or which, in the aggregate, have a
value of $1,000,000 or less. The Collateral Agent agrees with such Grantor
that the Collateral Agent will arrange, pursuant to procedures reasonably
satisfactory to the Collateral Agent and so long as such procedures will not
result in the Collateral Agent's loss of control, for the Grantor to make
alterations to the electronic chattel paper or transferable record permitted
under UCC Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16 of the
Uniform Electronic Transactions Act for a party in control to allow
alterations without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by such
Grantor with respect to such electronic chattel paper or transferable record.
(d) Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of such
Grantor, such Grantor shall promptly notify the Collateral Agent thereof and,
at the request and option of the Collateral Agent, such Grantor shall,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer of such
letter of credit to consent to an assignment to the Collateral Agent of the
proceeds of any drawing under the letter of credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of the letter of credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the letter of credit are to be paid to the applicable Grantor
unless an Event of Default has occurred or is continuing; provided that this
requirement shall not apply to all such letters of credit which have an
individual value of $100,000 or less or which, in the aggregate, are in an
amount of $1,000,000 or less.
(e) Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to exceed
$1,000,000 the Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor including a summary description of such claim
and grant to the Collateral Agent in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Collateral
Agent; provided that, unless an Event of Default shall have occurred and be
continuing, (i) upon delivery of a certificate of a Financial Officer to the
Collateral Agent setting forth the amount of any monetary judgments,
settlements and costs associated therewith of the Borrower or any Subsidiary
resulting from any Specified Third Party Litigation and stating the amount of
any proceeds from any Specified Borrower Litigation that the Borrower or any
Subsidiary will apply to the payment of such judgments, settlements and
associated costs, the Borrower shall be permitted to apply such amount of such
proceeds against such judgments, settlements and associated costs and all
security interests and other rights of the Collateral Agent in such amount of
such proceeds shall be automatically released and terminated upon such
application thereof and (ii) upon delivery of a certificate of a Financial
Officer to the Collateral Agent stating the claims of the Borrower or any
Subsidiary under the Specified Borrower Litigations that the Borrower or any
Subsidiary will assign in connection with the settlement of any Specified
Third Party Litigation, the Borrower shall be permitted to make such
assignments and all security interests and other rights of the Collateral
Agent in such claims shall be automatically released and terminated upon such
assignments thereof. For the avoidance of doubt, nothing in this Agreement
shall require the Borrower or any Subsidiary to obtain the Collateral Agent's
consent with respect to any settlement, or the terms thereof, entered into by
or on behalf of the Borrower or any Subsidiary in connection with any
commercial tort claim between the Borrower or any Subsidiary and any third
party.
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not do any act, or omit to do
any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act), whereby any Patent
that is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
xxxx any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
valid claim of abandonment or invalidity for non-use, (ii) maintain the
quality of products and services offered under such Trademark, (iii) display
such Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a material Copyright, continue to
publish, reproduce, display, adopt and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
maximum rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it
knows or has reason to know that any Patent, Trademark or Copyright material
to the conduct of its business may become abandoned, lost or dedicated to the
public, or of any materially adverse determination or development (including
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any such Patent, Trademark or Copyright, its right to
register the same, or its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United
States or in any other country or any political subdivision thereof, unless it
promptly informs the Collateral Agent, and, upon request of the Collateral
Agent, executes and delivers any and all agreements, instruments, documents
and papers as the Collateral Agent may reasonably request to evidence the
Collateral Agent's security interest in such Patent, Trademark or Copyright,
and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact
to execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with
an interest, is irrevocable.
(f) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency
in any political subdivision of the United States or in any other country or
any political subdivision thereof, to maintain and pursue each material
application relating to the Patents, Trademarks and/or Copyrights (and to
obtain the relevant grant or registration) and to maintain each issued Patent
and each registration of the Trademarks and Copyrights that is material to the
conduct of any Grantor's business, including timely filings of applications
for renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material
to the conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall
notify the Collateral Agent and shall, if consistent with good business
judgment, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as are appropriate under the
circumstances to protect such Article 9 Collateral.
(h) Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent
License or Trademark License to effect the assignment of all such Grantor's
right, title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Collateral Agent on demand, and it is agreed that
the Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of
or all such Article 9 Collateral by the applicable Grantors to the Collateral
Agent, or to license or sublicense, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any such Article 9 Collateral
throughout the world on such terms and conditions and in such manner as the
Collateral Agent shall determine (other than in violation of any applicable
laws or regulations or then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Article 9 Collateral and without liability for trespass to enter any premises
where the Article 9 Collateral may be located for the purpose of taking
possession of or removing the Article 9 Collateral and, generally, to exercise
any and all rights afforded to a secured party under the Uniform Commercial
Code or other applicable law. Without limiting the generality of the
foregoing, each Grantor agrees that the Collateral Agent shall have the right,
subject to the mandatory requirements of applicable law, to sell or otherwise
dispose of all or any part of the Collateral at a public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale of securities (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution
or sale thereof, and upon consummation of any such sale the Collateral Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any sale of
Collateral shall hold the property sold absolutely, free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
such Grantor now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time
and place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is
to be made and the day on which the Collateral, or portion thereof, will first
be offered for sale at such board or exchange. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or
places as the Collateral Agent may fix and state in the notice (if any) of
such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
such Collateral shall have been given. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold
may be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Agreement, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to
such Secured Party from any Grantor as a credit against the purchase price,
and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any
Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such
agreement and no Grantor shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of
Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section 5.01 shall be deemed to
conform to the commercially reasonable standards as provided in Section
9-610(b) of the New York UCC or its equivalent in other jurisdictions.
SECTION 5.02. Application of Proceeds. The Collateral Agent shall
apply the proceeds of any collection or sale of Collateral, including any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement, any other Loan Document
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations secured by
such Collateral (the amounts so applied to be distributed among the
Secured Parties pro rata in accordance with the amounts of such
Obligations owed to them on the date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use of
such license by the Collateral Agent may be exercised, at the option of the
Collateral Agent, solely upon the occurrence and during the continuation of an
Event of Default; provided that any license, sublicense or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon the Grantors notwithstanding any subsequent cure of an Event of Default.
SECTION 5.04. Securities Act. In view of the position of the Grantors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now
or hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Collateral,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous
in purpose or effect. Each Grantor recognizes that in light of such
restrictions and limitations the Collateral Agent may, with respect to any
sale of the Pledged Collateral, limit the purchasers to those who will agree,
among other things, to acquire such Pledged Collateral for their own account,
for investment, and not with a view to the distribution or resale thereof.
Each Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate
with a single potential purchaser to effect such sale. Each Grantor
acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale
without such restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability for selling all or any part of the
Pledged Collateral at a price that the Collateral Agent, in its sole and
absolute discretion, may in good xxxxx xxxx reasonable under the
circumstances, notwithstanding the possibility that a substantially higher
price might have been realized if the sale were deferred until after
registration as aforesaid or if more than a single purchaser were approached.
The provisions of this Section 5.04 will apply notwithstanding the existence
of a public or private market upon which the quotations or sales prices may
exceed substantially the price at which the Collateral Agent sells.
SECTION 5.05. Registration. Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any
reason the Collateral Agent desires to sell any of the Pledged Collateral at a
public sale, it will, at any time and from time to time, upon the written
request of the Collateral Agent, use its reasonable efforts to take or to
cause the issuer of such Pledged Collateral to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public
sale of such Pledged Collateral. Each Grantor further agrees to indemnify,
defend and hold harmless the Collateral Agent, each other Secured Party, any
underwriter and their respective officers, directors, affiliates and
controlling persons from and against all loss, liability, expenses, costs of
counsel (including reasonable fees and expenses to the Collateral Agent of
legal counsel), and claims (including the costs of investigation) that they
may incur insofar as such loss, liability, expense or claim arises out of or
is based upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information
furnished in writing to such Grantor or the issuer of such Pledged Collateral
by the Collateral Agent or any other Secured Party expressly for use therein.
Each Grantor further agrees, upon such written request referred to above, to
use its reasonable efforts to qualify, file or register, or cause the issuer
of such Pledged Collateral to qualify, file or register, any of the Pledged
Collateral under the Blue Sky or other securities laws of such states as may
be requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. Each Grantor
will bear all costs and expenses of carrying out its obligations under this
Section 5.05. Each Grantor acknowledges that there is no adequate remedy at
law for failure by it to comply with the provisions of this Section 5.05 and
that such failure would not be adequately compensable in damages, and
therefore agrees that its agreements contained in this Section 5.05 may be
specifically enforced.
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 6.03), the Borrower agrees that (a) in
the event a payment of an obligation shall be made by any Guarantor under this
Agreement, the Borrower shall indemnify such Guarantor for the full amount of
such payment and such Guarantor shall be subrogated to the rights of the
Person to whom such payment shall have been made to the extent of such payment
and (b) in the event any assets of any Grantor shall be sold pursuant to this
Agreement or any other Security Document to satisfy in whole or in part an
obligation owed to any Secured Party, the Borrower shall indemnify such
Grantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 6.02. Contribution and Subrogation. Each Subsidiary Party (a
"Contributing Party") agrees (subject to Section 6.03) that, in the event a
payment shall be made by any other Subsidiary Party hereunder in respect of
any Obligation or assets of any other Subsidiary Party shall be sold pursuant
to any Security Document to satisfy any Obligation owed to any Secured Party
and such other Subsidiary Party (the "Claiming Party") shall not have been
fully indemnified by the Borrower as provided in Section 6.01, the
Contributing Party shall indemnify the Claiming Party in an amount equal to
the amount of such payment or the greater of the book value or the fair market
value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Party on the date hereof and the denominator shall be the aggregate net worth
of all the Subsidiary Parties on the date hereof (or, in the case of any
Subsidiary Party becoming a party hereto pursuant to Section 7.14, the date of
the supplement hereto executed and delivered by such Subsidiary Party). Any
Contributing Party making any payment to a Claiming Party pursuant to this
Section 6.02 shall be subrogated to the rights of such Claiming Party under
Section 6.01 to the extent of such payment.
SECTION 6.03. Subordination. (a) Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors and Grantors
under Sections 6.01 and 6.02 and all other rights of indemnity, contribution
or subrogation under applicable law or otherwise shall be fully subordinated
to the indefeasible payment in full in cash of the Obligations. No failure on
the part of the Borrower or any Guarantor or Grantor to make the payments
required by Sections 6.01 and 6.02 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor or Grantor with respect to its obligations
hereunder, and each Guarantor and Grantor shall remain liable for the full
amount of the obligations of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all Indebtedness
and other monetary obligations owed by it to any other Guarantor, Grantor or
any other Subsidiary shall be fully subordinated to the indefeasible payment
in full in cash of the Obligations.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Party shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. Waivers; Amendment. (a) No failure or delay by the
Collateral Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent, each
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section 7.02, and then
such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Collateral
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default at the time. No notice or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject
to any consent required in accordance with Section 9.02 of the Credit
Agreement.
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification.
(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.03
of the Credit Agreement.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
to any of the foregoing agreement or instrument contemplated hereby, or to the
Collateral, (including any such claim, litigation, investigation or proceeding
brought by or on behalf of any Grantor, Guarantor or any Related Party of a
Grantor or Guarantor) whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence, wilful misconduct or bad
faith of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other
Secured Party. All amounts due under this Section 7.03 shall be payable on
written demand therefor.
SECTION 7.04. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Guarantor, Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns.
SECTION 7.05. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any fee or any other
amount payable under any Loan Document is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or
terminated.
SECTION 7.06. Counterparts; Effectiveness; Several Agreement. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute single
contract. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement. This Agreement shall become effective as to any
Loan Party when a counterpart hereof executed on behalf of such Loan Party
shall have been delivered to the Collateral Agent and a counterpart hereof
shall have been executed on behalf of the Collateral Agent, and thereafter
shall be binding upon such Loan Party and the Collateral Agent and their
respective permitted successors and assigns, and shall inure to the benefit of
such Loan Party, the Collateral Agent and the other Secured Parties and their
respective successors and assigns, except that no Loan Party shall have the
right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer
shall be void) except as expressly contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each Loan Party and may be amended, modified, supplemented,
waived or released with respect to any Loan Party without the approval of any
other Loan Party and without affecting the obligations of any other Loan Party
hereunder.
SECTION 7.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction. The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7.08. Right of Set-Off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of
any Subsidiary Party against any of and all the obligations of such Subsidiary
Party now or hereafter existing under this Agreement owed to such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of
each Lender under this Section 7.08 are in addition to other rights and
remedies (including other rights of set-off) which such Lender may have.
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Loan Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any other Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any other
Loan Document shall affect any right that the Collateral Agent, any Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Grantor or
Guarantor, or its properties in the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section
7.09. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor and
Guarantor hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in
the time, manner or place of payment of, or in any other term of, all or any
of the Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of any
Lien on other collateral, or any release or amendment or waiver of or consent
under or departure from any guarantee, securing or guaranteeing all or any of
the Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Grantor or Guarantor in respect
of the Obligations or this Agreement.
SECTION 7.13. Termination or Release. (a) This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate automatically hereunder and all rights to the
Collateral shall automatically revert to the Grantors with no further action
on the part of any Person when all the Obligations have been indefeasibly paid
in full and the Lenders have no further commitment to lend under the Credit
Agreement, the LC Exposure has been reduced to zero and each Issuing Bank has
no further obligations to issue Letters of Credit under the Credit Agreement
and, as of such date, the Collateral Agent shall be deemed to have authorized
each Grantor to file financing statements, including amendments and
terminations, to evidence such termination.
(b) Any Subsidiary Party shall be released from its obligations
hereunder, and the Liens created hereunder in any Collateral shall be
released, as provided in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Grantor, at such Grantor's expense, all documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 7.13 shall be without recourse
to or warranty by the Collateral Agent.
(d) Upon any disposition of property permitted by the Credit
Agreement and subject to all applicable requirements of the Credit Agreement,
(i) the Security Interest granted herein on such property shall be
automatically released in accordance with Section 9.14 of the Credit Agreement
and (ii) the Collateral Agent shall as of such date be deemed to have
authorized the filing of financing statement amendments to evidence the
foregoing release. The Collateral Agent shall further execute and deliver to
any Grantor, at such Grantor's expense, all documents that such Grantor shall
reasonably request to evidence such release.
SECTION 7.14. Additional Subsidiaries. Each Subsidiary that was not
in existence, was not a Subsidiary or was an Excluded Subsidiary on the
Effective Date, is required to enter into this Agreement as a Subsidiary Party
upon becoming a Subsidiary that is not an Excluded Subsidiary. Upon the
execution and delivery by the Collateral Agent and a Subsidiary of an
instrument in the form of Exhibit I hereto, such Subsidiary shall become a
Subsidiary Party hereunder with the same force and effect as if originally
named as a Subsidiary Party herein. The execution and delivery of any such
instrument shall not require the consent of any other Loan Party. The rights
and obligations of each Loan Party hereunder shall remain in full force and
effect notwithstanding the addition of any Subsidiary as a party to this
Agreement.
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect,
receive payment of, give receipt for and give discharges and releases of all
or any of the Collateral; (c) to sign the name of any Grantor on any invoice
or xxxx of lading relating to any of the Collateral; (d) to send verifications
of Accounts Receivable to any Account Debtor; (e) to commence and prosecute
any and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the
Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; (g) to notify, or to
require any Grantor to notify, Account Debtors to make payment directly to the
Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of
this Agreement, as fully and completely as though the Collateral Agent were
the absolute owner of the Collateral for all purposes; provided that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or
any property covered thereby. The Collateral Agent and the other Secured
Parties shall be accountable only for amounts actually received as a result of
the exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act hereunder, except for their own gross
negligence, bad faith or wilful misconduct.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
HEALTHSOUTH CORPORATION,
By /s/ XXX XXXXXXX
---------------------------------------------
Name: Xxx Xxxxxxx
Title: President and Chief Executive Officer
JPMORGAN CHASE BANK, N.A.,
AS COLLATERAL AGENT,
By /s/ XXXX X. XXXXXXX
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
EACH CORPORATION SET FORTH
ON ANNEX I HERETO
By /s/ XXX XXXXXXX
---------------------------------------------
Name: Xxx Xxxxxxx
Title: President
Collin County Rehabilitation Associates Limited Partnership
By: Rehabilitation Hospital of Plano, Inc.
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Bakersfield Rehabilitation Hospital Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Diagnostic Center of Colorado Springs Limited Partnership
By: Diagnostic Health Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Diagnostic Centers of Tennessee Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Diagnostic Centers of Texas Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Meridian Point Rehabilitation Hospital Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Northern Kentucky Rehabilitation Hospital Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH of Largo Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH of Fort Lauderdale Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH of Ohio Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH of Sarasota Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH of Tallahassee Limited Partnership
By: HEALTHSOUTH Real Property Holding Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Rehabilitation Center of New Hampshire, Ltd.
By: HEALTHSOUTH Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Rehabilitation Hospital of Arlington Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Rehabilitation Institute of Tucson Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
HEALTHSOUTH Valley of the Sun Rehabilitation Hospital Limited Partnership
By: HEALTHSOUTH Properties Corporation
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
Rehabilitation Hospital of Nevada-Las Vegas, L.P.
By: Rehabilitation Hospital of Nevada-Las Vegas, Inc.
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
Sarasota LTAC Properties, LLC
By: HEALTHSOUTH Corporation
Its: Member
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
Southern Arizona Regional Rehabilitation Hospital, L.P.
By: Continental Rehabilitation Hospital of Arizona, Inc.
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
Terre Haute Regional Rehabilitation Hospital, L.P.
By: Terre Haute Rehabilitation Hospital, Inc.
Its: General Partner
By: /s/ XXX XXXXXXX
-----------------
Xxx Xxxxxxx, its President
Annex I
Transaction Parties
-------------------
Advantage Health Corporation
Advantage Health Harmarville Rehabilitation Corporation
ASC Network Corporation
Baton Rouge Rehab, Inc.
CMS Jonesboro Rehabilitation, Inc.
Continental Medical Systems, Inc.
HEALTHSOUTH Medical Center, Inc. LTAC of Sarasota, Inc.
HEALTHSOUTH of Altoona, Inc.
HEALTHSOUTH of Austin, Inc.
HEALTHSOUTH of Charleston, Inc.
HEALTHSOUTH of East Tennessee, Inc.
HEALTHSOUTH of Fort Xxxxx, Inc.
HEALTHSOUTH of Xxxxxxxxx, Inc.
HEALTHSOUTH of Houston, Inc.
HEALTHSOUTH of Xxxxxxxxxx, Inc.
HEALTHSOUTH of Nittany Valley, Inc.
HEALTHSOUTH of Reading, Inc.
HEALTHSOUTH of San Antonio, Inc.
HEALTHSOUTH of South Carolina, Inc.
HEALTHSOUTH of Spring Hill, Inc.
HEALTHSOUTH of Texarkana, Inc.
HEALTHSOUTH of Texas, Inc.
HEALTHSOUTH of Toms River, Inc.
HEALTHSOUTH of Utah, Inc.
HEALTHSOUTH of York, Inc.
HEALTHSOUTH of Yuma, Inc.
HEALTHSOUTH Properties Corporation
HEALTHSOUTH Real Property Holding Corporation
HEALTHSOUTH Rehabilitation Center, Inc.
HEALTHSOUTH Specialty Hospital, Inc.
HEALTHSOUTH Sub-Acute Center of Mechanicsburg, Inc.
HEALTHSOUTH Surgery Centers-West, Inc.
HEALTHSOUTH Surgical Center of Tuscaloosa, Inc.
Kansas Rehabilitation Hospital, Inc.
National Surgery Centers, Inc.
New England Rehabilitation Center, Inc.
Rebound, Inc.
Rehab Concepts Corp.
Rehabilitation Hospital Corporation of America
Rehabilitation Hospital of Colorado Springs, Inc.
Rehabilitation Hospital of Nevada - Las Vegas, Inc.
Surgery Center Holding Corporation
Surgical Care Affiliates, Inc.
Surgical Health Corporation
Tarrant County Rehabilitation Hospital, Inc.
Terre Haute Rehabilitation Hospital, Inc.
Chiron, Inc.
CMS Development and Management Company, Inc.
Continental Medical of Arizona, Inc.
Continental Rehabiltiaiton Hospital of Arizona, Inc.
Diagnostic Health Corporation
HEALTHSOUTH Diagnostic Centers, Inc.
HEALTHSOUTH Holdings, Inc.
HEALTHSOUTH of Dohan, Inc.
HEALTHSOUTH of Erie, Inc.
HEALTHSOUTH of Mechanicsburg, Inc.
HEALTHSOUTH of Midland, Inc.
HEALTHSOUTH of New Mexico, Inc.
HEALTHSOUTH of Pittsburgh, Inc.
HEALTHSOUTH of Treasure Coast, Inc.
HEALTHSOUTH Rehabilitation Center of New Hampshire, Ltd.
HEALTHSOUTH S.C. of Portland, Inc.
HEALTHSOUTH S.C. of Scottsdale-Xxxx Road, Inc.
HEALTHSOUTH Surgery Center of Fairfield, Inc.
HSC of Beaumont, Inc.
HVPG of California, Inc.
Lakeland Physicians Medical Building, Inc.
Lakeshore System Services of Florida, Inc.
Little Rock-SC, Inc.
National Imaging Affiliates of Fayetteville, Inc.
National Imaging Affiliates, Inc.
Neuro Imaging Institute, Inc.
New England Rehabilitation Hospital, Inc.
NSC Connecticut, Inc.
NSC Houston, Inc.
NSC Seattle, Inc.
Pacific Rehabilitation & Sports Medicine, Inc.
Rehabilitation Hospital of Plano, Inc.
SCA-Roseland, Inc.
SCA-Shelby Development Corp.
SelectRehab, Inc.
Sherwood Rehabilitation Hospital, Inc.
Surgicare of Huntsville, Inc.
Surgicare of Laguna Hills, Inc.
Tyler Rehabilitation Hospital, Inc.
Western Neuro Care, Inc.
Exhibit I to
the Collateral and
Guarantee Agreement
SUPPLEMENT NO. __, dated as of [ ], 20[ ],
to the Collateral and Guarantee Agreement dated as
of March 10, 2006, among HEALTHSOUTH CORPORATION, a
Delaware corporation (the "Borrower"), the
Subsidiaries of HEALTHSOUTH CORPORATION identified
therein and JPMORGAN CHASE BANK, N.A., as Collateral
Agent (in such capacity, the "Collateral Agent").
A. Reference is made to the Credit Agreement dated as of
March 10, 2006 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the lenders from time to
time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and
collateral agent, Citicorp North America, Inc. and Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, as co-syndication agents, and Deutsche Bank
Securities Inc., Xxxxxxx Sachs Credit Partners L.P. and Wachovia Bank, National
Association, as co-documentation agents.
B. Capitalized terms used herein (including in this preamble)
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement and the Collateral and Guarantee Agreement (the
"Collateral Agreement") referred to therein.
C. The Grantors have entered into the Collateral Agreement in
order to induce the Lenders to make Loans and each Issuing Bank to issue
Letters of Credit. Section 7.14 of Collateral Agreement provides that
additional Subsidiaries of the Borrower may become Subsidiary Parties under the
Collateral Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Subsidiary") is executing
this Supplement in accordance with the requirements of the Credit Agreement and
the Collateral Agreement to become a Subsidiary Party under the Collateral
Agreement in order to induce the Lenders to make additional Loans and each
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary
agree as follows:
SECTION 1. In accordance with Section 7.14 of the Collateral
Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party
(and accordingly, becomes a Guarantor and a Grantor), Grantor and Guarantor
under the Collateral Agreement with the same force and effect as if originally
named therein as a Subsidiary Party and the New Subsidiary hereby (a) agrees to
all the terms and provisions of the Collateral Agreement applicable to it as a
Subsidiary Party, Grantor and Guarantor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Grantor and
Guarantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Subsidiary, as security for the payment
and performance in full of the Obligations (as defined in the Collateral
Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Subsidiary's right, title and interest in and to the Collateral (as defined in
the Collateral Agreement) of the New Subsidiary and subject to the provisions
of the Collateral Agreement. Each reference to a "Guarantor" or "Grantor" in
the Collateral Agreement shall be deemed to include the New Subsidiary. The
Collateral Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received a counterpart of this Supplement that
bears the signature of the New Subsidiary and the Collateral Agent has executed
a counterpart hereof. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Supplement.
SECTION 4. The New Subsidiary hereby represents and warrants
that (a) set forth on Schedule I attached hereto is a true and correct schedule
of the location of any and all Collateral of the New Subsidiary and (b) set
forth under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of formation and the location of its chief
executive office.
SECTION 5. Except as expressly supplemented hereby, the
Collateral Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Collateral Agreement shall not in any
way be affected or impaired thereby (it being understood that the invalidity of
a particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 7.01 of the Collateral Agreement.
SECTION 9. The New Subsidiary agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary and the Collateral
Agent have duly executed this Supplement to the Collateral Agreement as of the
day and year first above written.
[NAME OF NEW SUBSIDIARY],
by
---------------------------------------
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive office:
JPMORGAN CHASE BANK, N.A.,
AS COLLATERAL AGENT,
By
---------------------------------------
Name:
Title:
