EXHIBIT 10.20
COLLATERAL AGREEMENT
COLLATERAL AGREEMENT, dated as of August 11, 1998, made by each of the
signatories hereto (together with any other entity that may become a party
hereto as provided herein, the "Grantors"), in favor of THE CHASE MANHATTAN
--------
BANK, a New York banking corporation, as administrative agent (in such capacity,
the "Administrative Agent") for the banks and other financial institutions (the
--------------------
"Lenders") and the investors (the "Synthetic Investors" and, together with the
------- -------------------
Lenders, the "Secured Parties") from time to time parties to one or more of the
---------------
following agreements:
(a) the Credit Agreement, dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the "Corporate Credit
----------------
Agreement"), among Harborside Healthcare Corporation, a Delaware
---------
corporation (the "Company"), the other Grantors referred to therein, the
-------
Lenders, Chase Securities Inc., as arranger (in such capacity, the
"Arranger"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc. and BT Alex. ▇▇▇▇▇
--------
Incorporated, as co-arrangers (collectively, in such capacity, the "Co-
Arrangers"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as syndication agent (in
---------
such capacity, the "Syndication Agent"), Bankers Trust Company, as
-----------------
documentation agent (in such capacity, the "Documentation Agent"), and the
-------------------
Administrative Agent and
(b) the Credit Agreement, dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the "Synthetic Credit
----------------
Agreement" and, together with the Corporate Credit Agreement, the "Credit
--------- ------
Agreements") among HHC 1998-1 Trust, a Delaware business trust (the
----------
"Synthetic Borrower"), the Lenders, the Arranger, the Co-Arrangers, the
------------------
Syndication Agent, the Documentation Agent and the Administrative Agent;
and
(c) the Participation Agreement, dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), among the Company, the Synthetic Borrower, the
-----------------------
Synthetic Investors, the Lenders and the Administrative Agent.
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Corporate Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Grantors on a joint and
several basis upon the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Synthetic Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Synthetic Borrower upon the
terms and subject to the conditions set forth therein, the proceeds of which
shall be used by the Synthetic Borrower to purchase real properties that will be
simultaneously leased to the Company;
2
WHEREAS, pursuant to the Participation Agreement, the Synthetic
Investors have agreed to make certain investments (the "Investor Contributions")
----------------------
in the Synthetic Borrower upon the terms and subject to the conditions set forth
therein;
WHEREAS, the Grantors have entered into a Guarantee, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "Synthetic Guarantee"), in favor of the Administrative Agent, for the
-------------------
benefit of the Lenders, the Synthetic Investors and the Synthetic Borrower,
pursuant to which the Grantors have agreed, jointly and severally, to guarantee
the Note Obligations, the Contribution Obligations and the Lease Obligations (as
each such term is defined in the Synthetic Guarantee);
WHEREAS, the Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of
the extensions of credit under the Corporate Credit Agreement and the Synthetic
Credit Agreement and from the making of the Investor Contributions; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Grantors under the
Corporate Credit Agreement and to the Synthetic Borrower under the Synthetic
Credit Agreement, and to the obligation of the Synthetic Investors to make the
Investor Contributions, that each Grantor shall have executed and delivered this
Agreement to the Administrative Agent, for the benefit of the Secured Parties,
to secure such Grantor's obligations under the Corporate Credit Agreement and
under the Synthetic Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders, the Arranger, the Co-Arrangers, the Syndication Agent, the
Documentation Agent and the Administrative Agent to enter into the Corporate
Credit Agreement and the Synthetic Credit Agreement, to induce the Lenders to
make their respective extensions of credit to the Grantors and the Synthetic
Borrower, as applicable, thereunder, and to induce the Synthetic Investors to
make the Investor Contributions, each Grantor hereby agrees with the
Administrative Agent, for the benefit of the Secured Parties, as follows:
1. Defined Terms. Unless otherwise defined herein or in the preamble
-------------
or recitals hereto, terms which are defined in the Corporate Credit Agreement
and used herein are so used as so defined; the following terms which are defined
in the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Certificated Security, Chattel Paper,
Documents, Farm Products, Goods, Instruments and Inventory; and the following
terms shall have the following meanings:
"Accounts" means all accounts receivable, book debts, notes, drafts,
--------
instruments, documents, acceptances and other forms of obligations now
owned or hereafter received or acquired by or belonging or owing to any
Grantor (including under any trade names,
3
styles or divisions thereof) whether arising out of personal property owned
or leased by it, Goods sold by it or services rendered by it or from any
other transaction, whether or not the same involves the lease of personal
property, sale of Goods or performance of services by such Grantor
(including, without limitation, any such obligation which would be
characterized as an account, general intangible or chattel paper under the
Code) and all of such Grantor's rights in, to and under all purchase orders
now owned or hereafter received or acquired by it for Goods or services,
and all of such Grantor's rights to any Goods represented by any of the
foregoing (including returned or repossessed Goods and unpaid seller's
rights) and all moneys due or to become due to such Grantor under all
contracts for the sale of Goods and/or the performance of services by it
(whether or not yet earned by performance), under any lease of real or
personal property (to the extent the grant of such a security interest is
permitted by applicable law and is not prohibited by such lease), or under
any franchise agreement, or in connection with any other transaction, now
in existence or hereafter arising, including without limitation the right
to receive the proceeds of said purchase orders and contracts and rents
under such leases, and all collateral security and guarantees of any kind
given by any Person with respect to any of the foregoing; provided,
--------
however, that for each Grantor, "Account" shall not include any of the
-------
foregoing acquired in the ordinary course of business of an Acquired
Business acquired after the date hereof to the extent that the transfer,
assignment or grant of a security interest in such item is prohibited by
such Grantor's Contractual Obligations with third parties in connection
with lease arrangements or Indebtedness for borrowed money so long as such
Contractual Obligations are permitted by the Corporate Credit Agreement.
"Agreement" means this Collateral Agreement, as the same may be
---------
amended, supplemented or otherwise modified from time to time.
"Borrower Obligations" means the unpaid principal of and interest on
--------------------
the Loans and Reimbursement Obligations and all other obligations and
liabilities of each Grantor (including, without limitation, interest
accruing at the then applicable rate provided in the Corporate Credit
Agreement after the maturity of the Loans and Reimbursement Obligations and
interest accruing at the then applicable rate provided in the Corporate
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to such Grantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Arranger, any Co-Arranger,
the Syndication Agent, the Documentation Agent, the Administrative Agent or
any Lender (or, in the case of any Interest Rate Agreement, any affiliate
of any Lender), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Corporate Credit Agreement, this
Agreement, the other Credit Documents, any Letter of Credit, any Interest
Rate Agreement or any other document made, delivered or given in connection
with any of the foregoing, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
4
counsel to the Arranger, the Co-Arrangers, the Syndication Agent, the
Documentation Agent, the Administrative Agent or the Lenders that are
required to be paid by such Grantor pursuant to the terms of any of the
foregoing agreements).
"Code" means the Uniform Commercial Code as from time to time in
----
effect in the State of New York.
"Collateral" has the meaning assigned to it in Section 2 of this
----------
Agreement.
"Contract" means, with respect to an Account, any agreement relating
--------
to the terms of payment or the terms of performance thereof, including,
without limitation, (a) all rights of each Grantor to receive moneys due
and to become due to it thereunder or in connection therewith, (b) all
rights of each Grantor to damages arising out of, or for, breach or default
in respect thereof and (c) all rights of each Grantor to perform and to
exercise all remedies thereunder.
"Copyright License" means any written agreement, naming any Grantor,
-----------------
as licensor or licensee, granting any right in the United States to use any
Copyright including, without limitation, any referred to in Schedule I
----------
hereto; provided, however, that for each Grantor, "Copyright License" shall
-------- -------
not include any of the foregoing acquired in the ordinary course of
business of an Acquired Business acquired after the date hereof to the
extent that the transfer, assignment or grant of a security interest in
such item is prohibited by such Grantor's Contractual Obligations with
third parties in connection with lease arrangements or Indebtedness for
borrowed money so long as such Contractual Obligations are permitted by the
Corporate Credit Agreement.
"Copyrights" means all of the following to the extent any Grantor now
----------
or hereafter has any right, title or interest: (a) all United States
copyrights and all registrations and applications therefor, including,
without limitation, any referred to in Schedule I hereto, and (b) all
----------
renewals of such copyrights; provided, however, that for each Grantor,
-------- -------
"Copyright" shall not include any of the foregoing acquired in the ordinary
course of business of an Acquired Business acquired after the date hereof
to the extent that the transfer, assignment or grant of a security interest
in such item is prohibited by such Grantor's Contractual Obligations with
third parties in connection with lease arrangements or Indebtedness for
borrowed money so long as such Contractual Obligations are permitted by the
Corporate Credit Agreement.
"Deposit Account" has the meaning given to it in the Uniform
---------------
Commercial Code of any applicable jurisdiction and, in any event,
including, without limitation, any demand, time, savings, passbook or like
account maintained with a depositary institution.
"Equipment" means all machinery, equipment and furniture except
---------
Vehicles, now owned or hereafter acquired by any Grantor or in which any
Grantor now has or hereafter may acquire any right, title or interest and
any and all additions, substitutions and
5
replacements thereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed therein or affixed
thereto, including, but not limited to, all equipment as defined in Section
9-109(2) of the Code; provided, however, that for each Grantor, "Equipment"
-------- -------
shall not include any of the foregoing acquired in the ordinary course of
business of an Acquired Business acquired after the date hereof to the
extent that the transfer, assignment or grant of a security interest in
such item is prohibited by such Grantor's Contractual Obligations with
third parties in connection with lease arrangements or Indebtedness for
borrowed money so long as such Contractual Obligations are permitted by the
Corporate Credit Agreement.
"General Intangibles" has the meaning given to it in the Code and
-------------------
includes, whether or not so included in such meaning, any franchise
agreements or rights in favor of or granted by any Grantor to know-how,
trade secrets, product or service development ideas and designs,
advertising commercials, renderings, strategies and plans, blueprints,
architectural drawings, site location, personnel and franchisee
information, proprietary information, computer and software technology and
programs, contracts with distributors, and any similar items, all interest
rate, foreign currency or similar agreements and general intangibles
attributable to the Capital Stock of each Subsidiary; provided, however,
-------- -------
that for each Grantor, "General Intangibles" shall not include any of the
foregoing acquired in the ordinary course of business of an Acquired
Business acquired after the date hereof to the extent that the transfer,
assignment or grant of a security interest in such item is prohibited by
such Grantor's Contractual Obligations with third parties in connection
with lease arrangements or Indebtedness for borrowed money so long as such
Contractual Obligations are permitted by the Corporate Credit Agreement.
"Governmental Obligor Limited Receivables" means any amount payable to
----------------------------------------
a Grantor under or in connection with any Account where the obligor on any
such Account is a Governmental Authority or a governmental program
(including, but not limited to, Medicare and Medicaid) which pursuant to
applicable law (including, but not limited to, the Federal Assignment of
Claims Act) may not be sold by any Grantor or collected directly from, or
enforced directly against, such obligor or Account holder by the holder of
a security interest therein.
"Guarantor Obligations" means all obligations and liabilities of each
---------------------
Grantor which may arise under, out of, or in connection with this
Agreement, the Synthetic Guarantee or any other Synthetic Credit Document
to which such Grantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Arranger, the Co-Arrangers, the Syndication
Agent, the Documentation Agent, the Administrative Agent, the Lenders or
the Synthetic Investors that are required to be paid by such Grantor
pursuant to the terms of any of the foregoing agreements).
6
"Investment Property" means (a) all "investment property" as such term
-------------------
is defined in Section 9-115 of the Code and (b) whether or not constituting
"investment property" as so defined, all Pledged Notes and all Pledged
Stock; provided, however, that for each Grantor, "Investment Property"
-------- -------
shall not include any of the foregoing acquired in the ordinary course of
business of an Acquired Business acquired after the date hereof to the
extent that the pledge of or grant of a security interest in such item is
prohibited by such Grantor's Contractual Obligations with third parties in
connection with lease arrangements or Indebtedness for borrowed money so
long as such Contractual Obligations are permitted by the Corporate Credit
Agreement.
"Issuers" means (a) the companies identified on Schedule IV hereto as
------- -----------
the issuers of the Pledged Notes, (b) the companies identified on Schedule
--------
V hereto as the issuers of the Pledged Stock, (c) any other Subsidiaries of
-
the Company created or acquired after the date hereof the equity of which
is required to be pledged by this Agreement or subsection 6.9(b) of the
Corporate Credit Agreement and (d) any other issuer of any Investment
Property; individually, each an "Issuer".
------
"License" means any Copyright License, Patent License or Trademark
-------
License.
"Obligations" means the Borrower Obligations and the Guarantor
-----------
Obligations.
"Patent License" means any agreement, whether written or oral,
--------------
providing for the grant by or to any Grantor of any right to manufacture,
use or sell any invention covered in whole or in part by a Patent,
including, without limitation, any thereof referred to in Schedule II
-----------
hereto; provided, however, that for each Grantor, "Patent License" shall
-------- -------
not include any of the foregoing acquired in the ordinary course of
business of an Acquired Business acquired after the date hereof to the
extent that the transfer, assignment or grant of a security interest in
such item is prohibited by such Grantor's Contractual Obligations with
third parties in connection with lease arrangements or Indebtedness for
borrowed money so long as such Contractual Obligations are permitted by the
Corporate Credit Agreement.
"Patents" means (a) all letters patent of the United States or any
-------
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule II hereto and (b) all
-----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule II
-----------
hereto; provided, however, that for each Grantor, "Patent" shall not
-------- -------
include any of the foregoing acquired in the ordinary course of business of
an Acquired Business acquired after the date hereof to the extent that the
transfer, assignment or grant of a security interest in such item is
prohibited by such Grantor's Contractual Obligations with third parties in
connection with lease arrangements or Indebtedness for borrowed money so
long as such Contractual Obligations are permitted by the Corporate Credit
Agreement.
7
"Pledged Notes" means all promissory notes listed on Schedule IV
------------- -----------
hereto, and, if requested by the Administrative Agent, any other promissory
note issued to or held by any Grantor (other than promissory notes issued
in connection with extensions of trade credit by such Grantor in the
ordinary course of business and Undelivered Notes).
"Pledged Stock" means the shares of Capital Stock listed on Schedule V
------------- ----------
hereto, together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by any Issuer to any
Grantor and that are required by this Agreement or the Corporate Credit
Agreement to be pledged hereunder while this Agreement is in effect.
"Proceeds" means "proceeds", as such term is defined in Section 9-
--------
306(1) of the Code and, to the extent not included in such definition,
shall include, without limitation, (a) any and all proceeds of any
insurance, indemnity, warranty, guaranty or letter of credit payable to any
Grantor, from time to time with respect to any of the Collateral, (b) all
payments (in any form whatsoever) paid or payable to any Grantor from time
to time in connection with any taking of all or any part of the Collateral
by any Governmental Authority or any Person acting under color of
Governmental Authority, (c) all judgments in favor of any Grantor in
respect of the Collateral, (d) all dividends or other income from the
Investment Property, collections thereon or distributions or payments with
respect thereto and (e) all other amounts from time to time paid or payable
or received or receivable under or in connection with any of the
Collateral.
"Reimbursement Obligation" means the obligation of the Company to
------------------------
reimburse the Issuing Lender pursuant to subsection 2.8 of the Corporate
Credit Agreement for amounts drawn under Letters of Credit.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Stock Issuer" means each Issuer of Pledge Stock.
------------
"Synthetic Credit Documents" means (a) the Participation Agreement,
--------------------------
(b) the Lease, dated as of the date hereof, between Harborside of Dayton
Limited Partnership, as lessee, and the Synthetic Borrower, as lessor, (c)
the Synthetic Credit Agreement, (d) this Agreement, (e) the Notes (as
defined in the Participation Agreement), (f) the Synthetic Guarantee, (g)
the Security Documents (as defined in the Participation Agreement), (h) the
Agency and Intercreditor Agreement and (i) the Intercreditor Agreement.
"Trademark License" means any agreement, whether written or oral,
-----------------
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule III hereto; provided, however, that for each Grantor, "Trademark
------------ -------- -------
License" shall not include any of the foregoing acquired in the ordinary
course of business of an Acquired Business acquired after the date hereof
to the extent that the transfer, assignment or grant of a security interest
in such item is
8
prohibited by such Grantor's Contractual Obligations with third parties in
connection with lease arrangements or Indebtedness for borrowed money so
long as such Contractual Obligations are permitted by the Corporate Credit
Agreement.
"Trademarks" means (a) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any state
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule III hereto, and (b) all renewals thereof; provided, however, that
------------ -------- -------
for each Grantor, "Trademark" shall not include any of the foregoing
acquired in the ordinary course of business of an Acquired Business
acquired after the date hereof to the extent that the transfer, assignment
or grant of a security interest in such item is prohibited by such
Grantor's Contractual Obligations with third parties in connection with
lease arrangements or Indebtedness for borrowed money so long as such
Contractual Obligations are permitted by the Corporate Credit Agreement.
"Undelivered Notes" means any promissory notes issued to any Grantor
-----------------
so long as the aggregate principal amount of all Undelivered Notes shall
not exceed, at any time, $1,000,000.
"Vehicles" means all cars, trucks, trailers and other vehicles covered
--------
by a certificate of title law of any state.
2. Grant of Security Interest. As collateral security for the
--------------------------
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Grantor hereby
assigns and transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest, excluding, however, (x)
Vehicles and (y) any of such property acquired in the ordinary course of
business of an Acquired Business acquired after the date hereof to the extent
such assignment, transfer or grant is prohibited by such Grantor's Contractual
Obligations with third parties in connection with lease arrangements or
Indebtedness for borrowed money so long as such Contractual Obligations are
permitted by the Corporate Credit Agreement (collectively, the "Collateral"):
----------
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
9
(d) all Copyrights;
(e) all Copyright Licenses;
(f) all Deposit Accounts required by Section 3(d);
(g) all Documents;
(h) all Equipment;
(i) all General Intangibles;
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property;
(m) all Patents;
(n) all Patent Licenses;
(o) all Trademarks;
(p) all Trademark Licenses;
(q) all books and records pertaining to the Collateral;
(r) all other Goods and personal property of such Grantor, whether
tangible or intangible and whether now or hereafter owned by such Grantor,
and wherever located; and
(a) 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.
10
2. Rights of Administrative Agent and Secured Parties; Limitations
---------------------------------------------------------------
on Administrative Agent's and Secured Parties' Obligations.
----------------------------------------------------------
(a) Each Grantor Remains Liable under Accounts, Licenses, Contracts,
----------------------------------------------------------------
Etc. Anything herein to the contrary notwithstanding, each Grantor shall
---
remain liable under each of the Accounts, Licenses and Contracts to observe
and perform all the material conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account, License or Contract. Neither
the Administrative Agent nor any Secured Party shall have any obligation or
liability under any Account, License or Contract by reason of or arising
out of this Agreement or the receipt by the Administrative Agent or any
Secured Party of any payment relating to such Account, License or Contract
pursuant hereto, nor shall the Administrative Agent or any Secured Party be
obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any Account, License or Contract, to make any payment,
to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
under any Account, License or Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(b) Notice to Account Debtors and Contracting Parties. At any time
-------------------------------------------------
after an Event of Default has occurred and so long as such Event of Default
shall be continuing, upon the request of the Administrative Agent such
Grantor shall, and the Administrative Agent may (with concurrent notice to
such Grantor thereof), notify account debtors on the Accounts and parties
to the Contracts and Licenses that the Accounts, Contracts and Licenses
have been assigned to the Administrative Agent for the benefit of the
Secured Parties and that payments in respect thereof shall be made directly
to the Administrative Agent. At any time after an Event of Default shall
have occurred and be continuing, the Administrative Agent may in its own
name or in the name of others communicate with account debtors on the
Accounts and parties to the Contracts and Licenses to verify with them to
its satisfaction the existence, amount and terms thereof.
(c) Verification of Accounts and Inventory. The Administrative Agent
--------------------------------------
shall have the right to make test verifications of the Accounts and
Inventory forming part of the Collateral in any reasonable manner and
through any medium that it considers advisable, and each Grantor agrees to
furnish all such assistance and information as the Administrative Agent may
reasonably require in connection therewith, provided that, so long as no
--------
Event of Default shall have occurred and be continuing, (i) any such
verification shall be conducted in the name of the Company or of such other
Grantor or in such other manner as shall not disclose the Administrative
Agent's identity or interest in the Collateral and (ii) the Administrative
Agent shall conduct such verification with respect to any Grantor no more
frequently than once per year and shall give the Company reasonable advance
notice thereof. The Administrative Agent may after the occurrence and
during the continuance of an Event of Default in its own name or in the
name of
11
others communicate with account debtors in order to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Accounts and/or Inventory forming part of the Collateral.
(d) Governmental Obligor Limited Receivables. Notwithstanding the
----------------------------------------
provisions of Section 3(b) hereof, the Administrative Agent shall not
collect or enforce payment of any Governmental Obligor Limited Receivable
if and to the extent that such collection or enforcement is prohibited
under 42 U.S.C. (S)(S) 1395(g) or 1396(a) or under any comparable provision
of federal or state law. To the extent the Administrative Agent's rights
as to any Governmental Obligor Limited Receivable are limited pursuant to
this Section 3(d), upon the occurrence and during the continuance of an
Event of Default, each Grantor will (i) use its commercially reasonable
efforts to collect and enforce payment of such Governmental Obligor Limited
Receivable, (ii) promptly deposit such payment in the exact form received,
duly indorsed by such Grantor to the Administrative Agent if required, in a
Deposit Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for
the account of the Secured Parties as provided in Section 9 hereof, and
until so turned over, shall be held by such Grantor in trust for the
Administrative Agent and the Secured Parties, segregated from other funds
of such Grantor and (iii) upon written demand by the Administrative Agent
at any time and from time to time, remit (and cause the depository bank for
such Deposit Account to remit) directly to the Administrative Agent, as
Proceeds of the Collateral and for application to the payment of the
Obligations pursuant to Section 9 hereof, all finally collected funds on
deposit in such Deposit Account.
3. Representations and Warranties. Each Grantor hereby represents
------------------------------
and warrants that:
(a) Power and Authority. Each Grantor has the corporate power and
-------------------
authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the Lien on the Collateral pursuant to,
this Agreement and has taken all necessary corporate actions to authorize
its execution, delivery and performance of, and grant of the Lien on the
Collateral pursuant to, this Agreement.
(b) Title; No Other Liens. Except for the Lien granted to the
---------------------
Administrative Agent for the benefit of the Secured Parties pursuant to
this Agreement and the other Liens permitted to exist on the Collateral
pursuant to the Corporate Credit Agreement, each Grantor owns each item of
the Collateral pledged by it hereunder free and clear of any and all Liens.
No security agreement, financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except (i) such as may have been filed in favor of the
Administrative Agent, for the benefit of the Secured Parties, pursuant to
this Agreement, or (ii) as may be permitted pursuant to the Corporate
Credit Agreement.
12
(c) Perfected Liens. The Liens granted pursuant to this Agreement
---------------
constitute perfected Liens on the Collateral in favor of the Administrative
Agent, for the benefit of the Secured Parties, to the extent that (i) such
Liens constitute Liens on General Intangibles, (ii) such Liens constitute
Liens on Equipment located in a jurisdiction listed on Schedule VI hereto,
-----------
(iii) such Liens can be perfected by filing a financing statement under the
Uniform Commercial Code, as in effect in the relevant jurisdiction, (iv)
any Grantor is required to deliver such Collateral to the Administrative
Agent pursuant to Section 5(a) hereof or (v) such Liens constitute Liens on
a Deposit Account maintained in accordance with Section 3(d) hereof, which
are prior to all other Liens on the Collateral created by such Grantor and
in existence on the date hereof, except for Liens permitted to exist on the
Collateral pursuant to the Corporate Credit Agreement, and which are
enforceable as such against all creditors of and purchasers from such
Grantor.
(d) Accounts and Records. The amount represented by each Grantor to
--------------------
the Administrative Agent from time to time as owing by each account debtor
or by all account debtors in respect of the Accounts will at such time be
the correct amount actually owing by such account debtor or debtors
thereunder in all material respects, subject to adjustments in the ordinary
course of business. No amount payable to such Grantor under or in
connection with any Account, Contract or License in excess of $1,000,000 is
evidenced by any Instrument or Chattel Paper which has not been delivered
to the Administrative Agent except for notes receivable from officers
pursuant to executive stock purchase plans. The place where each Grantor
keeps its records concerning the Accounts and the other Collateral is
located at the address listed on Schedule VII hereto.
------------
(e) Consents. Each Contract and License is in full force and effect
--------
and, to the best knowledge of each Grantor, constitutes a valid and legally
enforceable obligation of the other obligor in respect thereof or parties
thereto, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally. No consent or authorization of, filing with
or other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any of the Accounts, Licenses or Contracts by any party
thereto other than those which have been duly obtained, made or performed,
are in full force and effect and do not subject the scope of any such
Account, License or Contract to any material adverse limitation, either
specific or general in nature. No Grantor and (to the best of such
Grantor's knowledge) no other party to any Account, License or Contract is
in default in the performance or observance of any of the material terms
thereof. Each Grantor has fully performed all its material obligations
under each License and Contract to the extent such obligations are required
to be performed on or prior to the date hereof. The right, title and
interest of such Grantor in, to and under each Account, License and
Contract are not subject to any defense, offset, counterclaim or claim
which would materially adversely affect the value of such Account, License
or Contract as Collateral, nor have any of the foregoing been asserted or
alleged against such Grantor as to any of the foregoing.
13
(f) Inventory. The Inventory forming part of the Collateral is kept
---------
at the locations listed on Schedule VI hereto, as amended or supplemented
-----------
from time to time pursuant to Section 5(p) hereof.
(g) Equipment. The Equipment is kept at the locations listed on
---------
Schedule VI hereto, as amended or supplemented from time to time pursuant
-----------
to Section 5(p) hereof.
(h) Chief Executive Office. Each Grantor's chief executive office
----------------------
and chief place of business is located at the address listed on Schedule
--------
VII hereto.
---
(i) Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
(j) Investment Property. The shares of Pledged Stock pledged by such
-------------------
Grantor hereunder constitute all the issued and outstanding shares or
interests of all classes of the Capital Stock of each domestic Stock Issuer
owned by such Grantor and 65% of the total outstanding voting Capital Stock
of each foreign Stock Issuer owned by such Grantor. All the shares of the
Pledged Stock have been duly and validly issued and are fully paid and
nonassessable. To the best knowledge of such Grantor, each of the Pledged
Notes pledged by such Grantor hereunder constitutes a valid and legally
enforceable obligation of the other obligor in respect thereof or parties
thereto, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally. Such
Grantor is the record and beneficial owner of, and has good and marketable
title to, the Investment Property pledged by it hereunder, free of any and
all Liens or options in favor of, or claims of, any other Person, except
for the Lien created by this Agreement and Permitted Liens.
(k) Patents, Trademarks and Copyrights. Schedule II hereto includes
---------------------------------- -----------
all material Patents and Patent Licenses owned by each Grantor in its own
name as of the date hereof. Schedule III hereto includes all material
------------
Trademarks and Trademark Licenses owned by each Grantor in its own name as
of the date hereof. Schedule I hereto includes all material Copyrights in
----------
which each Grantor has any colorable claim of ownership as of the date
hereof. Except as set forth on Schedule II or Schedule III, each Patent
----------- ------------
and Trademark is valid, subsisting, unexpired and enforceable and has not
been abandoned. Except as set forth on Schedule II or Schedule III, none
----------- ------------
of such Patents and Trademarks is the subject of any licensing or franchise
agreement. All licenses of each Grantor's Trademarks are in force and, to
the best knowledge of such Grantor, not in default. No holding, decision
or judgment has been rendered by any Governmental Authority with respect to
any Patent or Trademark which would limit, cancel or question the validity
of any Patent or Trademark. Except as set forth on Schedule II or Schedule
----------- --------
III, no action or proceeding is pending or, to the knowledge of such
---
Grantor, threatened (i) seeking to limit, cancel or question the validity
of any material Patent or
14
Trademark or such Grantor's ownership thereof, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any
material Patent or Trademark.
(l) No Litigation. No litigation, investigation or proceeding of or
-------------
before any arbitrator or Governmental Authority is pending or, to the
knowledge of any Grantor, threatened by or against such Grantor or against
any of its properties or revenues with respect to this Agreement or any of
the transactions contemplated hereby which would have a material adverse
effect upon any material portion of the Collateral or the granting of the
security interests hereby.
5. Covenants. Each Grantor covenants and agrees with the
---------
Administrative Agent and the Secured Parties that, from and after the date of
this Agreement until the Obligations are paid in full, the Commitments are
terminated and either no Letters of Credit are outstanding or each outstanding
Letter of Credit has been cash collateralized so that it is fully secured to the
satisfaction of the Administrative Agent:
(a) Further Documentation; Pledge of Instruments and Chattel Paper.
--------------------------------------------------------------
(i) At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of such Grantor,
any Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further action as the
Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, (A)
the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect to
the Liens created hereby and (B) in the case of Investment Property,
any Deposit Account referred to in Section 3(d) and any other relevant
Collateral, taking actions necessary to enable the Administrative
Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto. Each Grantor also
hereby authorizes the Administrative Agent to file (after written
notice to the Company) any such financing or continuation statement
without the signature of such Grantor to the extent permitted by
applicable law, provided that any failure to give any such notice
--------
shall not affect the validity or effectiveness of any such filing. A
carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
(ii) If any amounts payable under or in connection with any of
the Collateral having a face value in excess of $1,000,000 in the
aggregate at any one time outstanding shall be or become evidenced by
any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement. So long as no Default or Event
of Default has occurred and is
15
continuing, upon request by any Grantor, the Administrative Agent
shall make available any pledged Collateral to such Grantor, or its
designee, that such Grantor specifies is required for the purpose of
ultimate sale, exchange, presentation, collection, renewal,
registration or transfer thereof, provided that in each case
--------
arrangements reasonably satisfactory to the Administrative Agent shall
be made for the return of such pledged Collateral within 21 days from
the time of delivery by the Administrative Agent, except for pledged
Collateral that has been fully repaid, satisfied, or transferred as
permitted hereunder.
(iii) Notwithstanding anything set forth in this Agreement to
the contrary, so long as no Default or Event of Default has occurred
and is continuing, no Grantor shall be required to deliver to the
Administrative Agent any Instrument, Certificated Security or Chattel
Paper to be held by the Administrative Agent as Collateral pursuant to
this Agreement so long as the aggregate amount evidenced by all such
Instruments, Certificated Securities and Chattel Paper does not exceed
$1,000,000 at any one time outstanding.
(b) Indemnification. Each Grantor agrees to pay, and to save the
---------------
Administrative Agent and the Secured Parties harmless from, any and all
liabilities, costs and expenses (including, without limitation, reasonable
legal fees and expenses) (i) with respect to, or resulting from, any delay
in paying, any and all excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral, (ii) with
respect to, or resulting from, any delay by such Grantor in complying with
any Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Agreement;
provided that no Grantor shall be liable for the payment of any portion of
--------
such liabilities, costs or expenses resulting from the gross negligence or
willful misconduct of the Administrative Agent or any of the Secured
Parties. Without limiting the preceding sentence, each Grantor will
indemnify and save and keep harmless the Administrative Agent and each
Secured Party from and against all expense, loss or damage suffered by
reason of any counterclaim of the account debtor or obligor thereunder,
arising out of a breach by such Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or obligor or its successors
from such Grantor.
(c) Maintenance of Records. Each Grantor will keep and maintain at
----------------------
its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts, Contracts
and Licenses. Each Grantor will ▇▇▇▇ its internal books and records
pertaining to the Collateral to evidence this Agreement and the security
interests granted hereby. For the Administrative Agent's and the Secured
Parties' further security, the Administrative Agent, for the benefit of the
Secured Parties, shall have a security interest in each Grantor's books and
records pertaining to the Collateral, and each Grantor shall make available
for review any such books and records to the Administrative Agent or to its
representatives during normal business hours at the reasonable request of
the
16
Administrative Agent. Each Grantor shall permit representatives of the
Administrative Agent, upon reasonable notice to the Company (but no more
frequently than monthly unless a Default or Event of Default shall have
occurred and be continuing), to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be requested upon reasonable
notice, and to discuss the business, operations, assets and financial and
other condition of such Grantor with officers and employees thereof and
with their independent certified public accountants.
(d) Right of Inspection. The Administrative Agent and the
-------------------
representatives of any Secured Party shall upon reasonable notice (made
through the Administration Agent and no more frequently than quarterly
unless a Default or Event of Default shall have occurred and be continuing)
have full and free reasonable access to visit and inspect any of its
properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be requested upon
reasonable notice, and to discuss the business, operations, assets and
financial and other condition of the Company and its Subsidiaries with
officers and employees thereof and with their independent certified public
accountants with prior reasonable notice to, and coordination with, the
chief financial officer or the treasurer of the Company, and the Company
agrees to render to the Administrative Agent at the Company's cost and
expense, and to the Secured Parties, such clerical and other assistance as
may be reasonably requested with regard thereto. The Administrative Agent
and the Secured Parties shall keep such information thereby obtained
confidential to the extent set forth in subsection 9.6(f) of the Corporate
Credit Agreement.
(e) Compliance with Laws, etc. Each Grantor will comply in all
--------------------------
material respects with all Requirements of Law applicable to the Collateral
or any part thereof or to the operation of such Grantor's business;
provided that such Grantor may contest any Requirement of Law in any
--------
reasonable manner which shall not, in the reasonable opinion of the
Administrative Agent, adversely affect the Administrative Agent's or the
Secured Parties' rights or the priority of their Liens on the Collateral.
(f) Compliance with Terms of Contracts, etc. Each Grantor will
---------------------------------------
perform and comply in all material respects with all its obligations under
the Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) Payment of Obligations. Each Grantor will pay promptly when due
----------------------
all material taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of its income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if (i) the validity thereof is
being contested in good faith by appropriate proceedings, (ii) such
proceedings do not involve any material danger of the sale, forfeiture or
loss of any of the Collateral or any
17
interest therein and (iii) such charge is adequately reserved against on
such Grantor's books in accordance with GAAP.
(h) Maintenance of Insurance. All insurance maintained by such
------------------------
Grantor pursuant to subsection 6.5(b) of the Corporate Credit Agreement
shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least 30
days after receipt by the Administrative Agent of written notice thereof,
(ii) name the Administrative Agent as insured party or loss payee, and
(iii) be reasonably satisfactory in all other respects to the
Administrative Agent.
(i) Limitation on Liens on Collateral. No Grantor will create, incur
---------------------------------
or permit to exist, and each Grantor will take all commercially reasonable
actions to defend the Collateral against, and will take such other
commercially reasonable action as is necessary to remove, any Lien or claim
on or to the Collateral, other than the Liens created hereby and other than
as permitted pursuant to the Corporate Credit Agreement, and will take all
commercially reasonable actions to defend the right, title and interest of
the Administrative Agent and the Secured Parties in and to any of the
Collateral against the claims and demands of all Persons whomsoever.
(j) Limitations on Dispositions of Collateral. No Grantor will sell,
-----------------------------------------
transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except for sales of assets permitted by the
Corporate Credit Agreement. Concurrently with any such permitted
disposition, the property acquired by a transferee in such disposition
shall automatically be released from the security interest created by this
Agreement (the "Security Interest"). It is acknowledged and agreed that
-----------------
notwithstanding any release of property from the Security Interest in
accordance with the foregoing provisions of this Section, the Security
Interest shall in any event continue in the Proceeds of Collateral. The
Administrative Agent shall promptly execute and deliver (and, when
appropriate, shall cause any separate agent, co-agent or trustee to execute
and deliver) any releases, instruments or documents reasonably requested by
any Grantor to accomplish or confirm the release of Collateral provided by
this Section. Any such release of Collateral provided by the
Administrative Agent shall specifically describe that portion of the
Collateral to be released, shall be expressed to be unconditional and shall
be without recourse or warranty (other than a warranty that the
Administrative Agent has not assigned its rights and interests to any other
Person). Such Grantor shall pay all of the Administrative Agent's
reasonable expenses in connection with any release of Collateral.
(k) Limitations on Modifications, Waivers, Extensions of Agreements
---------------------------------------------------------------
Giving Rise to Accounts. No Grantor will (i) amend, modify, terminate or
-----------------------
waive any provision of any Contract, agreement or lease giving rise to an
Account or License in any manner which could reasonably be expected to
materially adversely affect the value of such Contract, Account or License
as Collateral, except in a manner consistent with the ordinary and
customary conduct of its business, (ii) fail to exercise promptly and
18
diligently each and every material right which it may have under each
material Contract, agreement or lease giving rise to an Account or License
(other than any right of termination), except in a manner consistent with
the ordinary and customary conduct of its business or (iii) fail to deliver
to the Administrative Agent upon its reasonable request a copy of each
material demand, notice or document received by it relating in any way to
any material Contract, agreement or lease giving rise to an Account or
License.
(l) Limitations on Discounts, Compromises, Extensions of Accounts.
-------------------------------------------------------------
Other than in the ordinary course of business as generally conducted by
each Grantor over a period of time, no Grantor will grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon.
(m) Maintenance of Equipment. Each Grantor will maintain each item of
------------------------
Equipment in good operating condition, ordinary wear and tear and
immaterial impairments of value and damage by the elements excepted, and
will provide all maintenance, service and repairs necessary for such
purpose.
(n) Further Identification of Collateral. Each Grantor will furnish
------------------------------------
to the Administrative Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(o) Notices. Each Grantor will advise the Administrative Agent and
-------
the Secured Parties promptly, in reasonable detail, at their respective
addresses set forth in the Corporate Credit Agreement, (i) of any Lien
(other than Liens created hereby or permitted under the Corporate Credit
Agreement) on, or claim asserted against, any of the Collateral and (ii) of
the occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the Collateral or
on the Liens created hereunder.
(p) Changes in Locations, Name, etc. No Grantor will (i) change the
--------------------------------
location of its chief executive office/chief place of business from that
specified on Schedule VII hereto or remove its books and records from the
------------
location specified on Schedule VII hereto, (ii) remove any material amount
------------
of the Inventory forming part of the Collateral or Equipment to, or keep
any material amount of such Inventory or Equipment at, a location other
than those listed on Schedule VI hereto, or (iii) change its name
-----------
(including the adoption of any new trade name), identity or corporate
structure to such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would become
seriously misleading, unless it shall have provided at least 15 days' prior
written notice to the Administrative Agent of any such event and provide
the Administrative Agent with the new location of its chief executive
office/chief place of business and its books and records, the location of
such Inventory and Equipment and the
19
change in any Grantor's name, as the case may be. Any notice given pursuant
to this Section 5(p) shall be deemed to amend Schedule VI hereto or
-----------
Schedule VII hereto, as the case may be. In connection with any actions
------------
permitted pursuant to clause (i) of this Section 5(p), the Administrative
Agent shall be entitled to receive any legal opinions it reasonably
requests as to the continued perfection of the security interest granted
hereby in the Collateral, which opinions shall be deemed satisfactory to
the Administrative Agent if substantially similar to the perfection
opinions given by ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ on the Closing Date.
(q) Copyrights. Each Grantor (i) will employ the Copyright for each
----------
material published work with such notice of copyright as may be required by
law to secure copyright protection and (ii) will not do any act or
knowingly omit to do any act whereby any material Copyright may become
invalidated and:
(A) will not do any act, or omit to do any act, whereby any
material Copyright may become injected into the public domain;
(B) shall notify the Administrative Agent immediately if it
knows, or has reason to know, that any material Copyright may become
injected into the public domain or of any adverse determination or
development (including, without limitation, the institution of, or any
such determination or development in, any court or tribunal in the
United States or any other country) regarding such Grantor's ownership
of any such Copyright or its validity;
(C) will take all necessary steps as it shall deem appropriate
under the circumstances, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration
of each material Copyright owned by such Grantor including, without
limitation, filing of applications for renewal, where necessary; and
(D) will promptly notify the Administrative Agent of any
material infringement of any material Copyright of such Grantor of
which it becomes aware and will take such actions as it shall
reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover any and
all damages for such infringement.
20
(r) Patents and Trademarks.
----------------------
(i) Each Grantor (either itself or through licensees) will,
except with respect to any Trademark that such Grantor shall
reasonably determine is of immaterial economic value to it or
otherwise reasonably determines not to do so, (A) continue to use each
Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under such Trademark, (C) use
reasonable efforts to employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any ▇▇▇▇ which is
confusingly similar or a colorable imitation of such Trademark unless
within 45 days after such use or adoption the Administrative Agent,
for the benefit of the Secured Parties, shall obtain a perfected
security interest in such ▇▇▇▇ pursuant to this Agreement, and (E) not
(and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may become
invalidated.
(ii) No Grantor will, except with respect to any Patent that
such Grantor shall reasonably determine is of immaterial economic
value to it or otherwise reasonably determines so to do, do any act,
or omit to do any act, whereby any Patent may become abandoned or
dedicated.
(iii) Each Grantor will notify the Administrative Agent
immediately if it knows, or has reason to know, that any application
relating to any Patent, or any application or registration relating to
any Trademark may become abandoned or dedicated, or of any adverse
determination or material development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any
court or tribunal in any country) regarding such Grantor's ownership
of any Patent or Trademark or its right to register the same or to
keep and maintain the same.
(iv) Whenever any Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for
any Patent or for the registration of any Trademark with the United
States Patent and Trademark Office or any similar office or agency in
any other country or any political subdivision thereof, such Grantor
shall report such filing to the Administrative Agent within five
Business Days after the last day of the fiscal quarter in which such
filing occurs. Upon request of the Administrative Agent, such Grantor
shall execute and deliver any and all agreements, instruments,
documents, and papers as the Administrative Agent may request to
evidence the Administrative Agent's security interest in any Patent or
Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby, and each Grantor hereby
appoints and constitutes the Administrative Agent its attorney-in-fact
to execute
21
and file all such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed; such power being
coupled with an interest and is irrevocable until the Obligations are
paid in full, the Commitments are terminated and no Letters of Credit
are outstanding.
(v) Each Grantor, except with respect to any Patent or Trademark
such Grantor shall reasonably determine is of immaterial economic
value to it or it otherwise reasonably determines not to so do and
except with respect to any Trademark that is not registrable, will
take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration or Patent) and to
maintain each Patent and each registration of Trademarks, including,
without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability when appropriate.
(vi) In the event that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party,
such Grantor shall promptly notify the Administrative Agent after it
learns thereof and shall, unless such Grantor shall reasonably
determine that such Patent or Trademark is of immaterial economic
value to such Grantor, which determination such Grantor shall promptly
report to the Administrative Agent, promptly ▇▇▇ for infringement,
misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as such
Grantor shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
(s) Investment Property.
-------------------
(i) If such Grantor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of
the Pledged Stock, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Administrative Agent and the
Secured Parties, hold the same in trust for the Administrative Agent
and the Secured Parties and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such
Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank
by such Grantor and with, if the Administrative Agent so requests,
signature guaranteed, to be held by the
22
Administrative Agent, subject to the terms hereof, as additional
collateral security for the Obligations.
(ii) Without the prior written consent of the Administrative
Agent, such Grantor will not (A) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the
Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Corporate Credit Agreement) or
(B) create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the
Lien provided for by this Agreement and Permitted Liens.
(iii) In the case of each Grantor which is an Issuer, such Issuer
agrees that (A) it will be bound by the terms of this Agreement
relating to the Investment Property issued by it and will comply with
such terms insofar as such terms are applicable to it, (B) it will
notify the Administrative Agent promptly in writing of the occurrence
of any of the events described in Section 5(s)(i) hereof with respect
to the Investment Property issued by it and (C) the terms of Sections
7(c) and 10 hereof shall apply to it, mutatis mutandis, with respect
------- --------
to all actions that may be required of it pursuant to Section 7(c) or
10 with respect to the Investment Property issued by it.
3. Administrative Agent's Appointment as Attorney-in-Fact.
------------------------------------------------------
(a) Powers. Each Grantor hereby irrevocably constitutes and appoints
------
the Administrative Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, from time to time after the
occurrence, and during the continuation, of an Event of Default in the
Administrative Agent's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do the following:
(i) in the name of such Grantor or its own name, or otherwise,
to take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any Account, Instrument forming part of the Collateral, License
or General Intangible or with respect to any other Collateral and to
file any claim or to take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by the Administrative
Agent for the purpose of collecting any and all such moneys due
23
under any such Account, Instrument, License or General Intangible or
with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, provided that if such taxes are
--------
being contested in good faith and by appropriate proceedings, the
Administrative Agent will consult with such Grantor before making any
such payment; and
(iii) (A) to direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (B) to ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges
or releases as the Administrative Agent may deem appropriate; (G) to
assign any Patent or Trademark (along with the goodwill of the
business to which any such Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and to do, at the Administrative Agent's
option and such Grantor's expense, at any time, or from time to time,
all acts and things which the Administrative Agent reasonably deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Secured Parties' Liens thereon and to
effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) Other Powers. (i) Each Grantor also authorizes the Administrative
------------
Agent, at any time and from time to time, to execute, in connection with
the sale provided for in Section 9 or 10 hereof, any indorsement,
assignments or other instruments of conveyance or transfer with respect to
the Collateral and (ii) pursuant to Section 9-402 of the Code,
24
each Grantor authorizes the Administrative Agent to file financing
statements with respect to the Collateral without the signature of such
Grantor in such form and in such filing offices as the Administrative Agent
reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement
for filing in any jurisdiction.
(c) No Duty on Administrative Agent's or Secured Parties' Part. The
----------------------------------------------------------
powers conferred on the Administrative Agent and the Secured Parties
hereunder are solely to protect the Administrative Agent's and the Secured
Parties' interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Secured Party to exercise any such powers. The
Administrative Agent and the Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct or
failure to comply with mandatory provisions of applicable law.
7. Investment Property.
-------------------
(a) Unless an Event of Default shall have occurred and be continuing,
each Grantor shall be permitted to receive all cash dividends paid by the
relevant Issuer to the extent permitted in the Corporate Credit Agreement
in respect of the Pledged Stock, and all payments made in respect of the
Pledged Notes, and to exercise all voting and corporate rights with respect
to the Investment Property; provided, however, that each Grantor agrees
-------- -------
that it shall not vote in any way that would be inconsistent with or result
in any violation of any provision of the Corporate Credit Agreement, the
Notes, the Security Documents, any of the other Corporate Credit Documents
or any of the other Synthetic Credit Documents. The Administrative Agent
shall, at the Company's sole cost and expense, execute and deliver (or
cause to be executed and delivered) to the Company all proxies and other
instruments as the Company may reasonably request for the purpose of
enabling any Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to this Section.
(b) If an Event of Default shall occur and be continuing, (i) the
Administrative Agent shall have the right to receive any and all cash
dividends, payments or other Proceeds paid in respect of the Investment
Property and make application thereof to the Obligations in such order as
the Administrative Agent may determine in accordance with the Agency and
Intercreditor Agreement, and (ii) any or all of the Investment Property may
be registered in the name of the Administrative Agent or its nominee, and,
subject to the terms of this Agreement, the Administrative Agent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such Investment Property at any meeting of shareholders of
the relevant Issuer or Issuers or otherwise and (B) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
25
options pertaining to such Investment Property as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Investment Property upon the merger,
consolidation, reorganization, recapitalization or other fundamental change
in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option
pertaining to such Investment Property, and in connection therewith, the
right to deposit and deliver any and all of the Investment Property with
any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it, and except for its gross negligence or willful misconduct
or failure to comply with the provisions of Section 13 hereof, but the
Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to comply with any
instruction received by it from the Administrative Agent in writing that
(i) states that an Event of Default has occurred and is continuing and (ii)
is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from such Grantor, and each Grantor agrees
that each Issuer shall be fully protected in so complying.
(d) The rights of the Administrative Agent and the Secured Parties
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Secured Party of any right or remedy against
any other Person which may be or become liable in respect of all or any
part of the Obligations or against any collateral security therefor,
guarantee therefor or right of offset with respect thereto. Neither the
Administrative Agent nor any Secured Party shall be liable for any failure
to demand, collect or realize upon all or any part of the Collateral or for
any delay in doing so, nor shall the Administrative Agent be under any
obligation to sell or otherwise dispose of any Collateral upon the request
of any Grantor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof. The Administrative
Agent agrees to release promptly to the Company any dividends, cash,
securities, instruments and other property paid, payable or otherwise
distributed in respect of the Collateral which it may receive under Section
7(b) hereof if, prior to the occurrence of an acceleration of any of the
Obligations, all Defaults and Events of Default have been waived or are no
longer continuing.
5. Performance by Administrative Agent of Any Grantor's Obligations.
----------------------------------------------------------------
If any Grantor fails to perform or comply with any of its agreements contained
herein and the Administrative Agent, as provided for by the terms of this
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of the Administrative Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to 2% plus the Alternate Base Rate,
shall be payable by such Grantor to the Administrative Agent on demand and shall
constitute Obligations
26
secured hereby; provided that the Administrative Agent shall in any event first
--------
have given such Grantor written notice of its intent to do the same and such
Grantor shall not have, within 30 days of such notice (or such shorter period as
the Administrative Agent may reasonably determine is necessary in order to
preserve the benefits of this Agreement with respect to any material portion of
the Collateral), paid such claim or obtained to the Administrative Agent's
satisfaction the release of the claim or Lien to which such notice relates.
6. Remedies. If an Event of Default shall occur and be continuing,
--------
the Administrative Agent on behalf of the Secured Parties may, except with
respect to the Pledged Stock, exercise, in addition to all other rights and
remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. With respect to the Pledged Stock,
in the event that any portion of the Obligations has been declared or becomes
due and payable in accordance with the terms of the Corporate Credit Agreement,
the Administrative Agent on behalf of the Secured Parties may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give an option or
options to purchase, or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Administrative Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released. The Administrative Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Administrative Agent
may elect in accordance with the Agency and Intercreditor Agreement, and only
after such application and after the payment by the Administrative Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Administrative Agent account for the
surplus, if any, to such Grantor. To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Party arising out of the exercise by them of
any rights hereunder, except to the extent arising from the gross negligence or
willful
27
misconduct of the Administrative Agent or such Secured Party. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition. Such Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Secured Party to collect
such deficiency.
7. Registration Rights.
-------------------
(a) If the Administrative Agent shall determine to exercise its right
to sell any or all of the Pledged Stock pursuant to Section 9 hereof, and
if in the opinion of the Administrative Agent it is necessary or advisable
to have the Pledged Stock, or that portion thereof to be sold, registered
under the provisions of the Securities Act, the relevant Grantor will cause
the Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Administrative Agent, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of
the Securities Act, (ii) use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for
a period of 90 days from the date of the first public offering of the
Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus that, in the opinion of
the Administrative Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto. Each Grantor
agrees to cause such Issuer to comply with the provisions of the securities
or "Blue Sky" laws of any and all jurisdictions which the Administrative
Agent shall reasonably designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason
of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise, and may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers that will
be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale conducted in a manner that the Administrative Agent in
good faith believes to be commercially reasonable under the circumstances
shall be deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of
the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register
28
such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(c) Each Grantor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Pledged Stock pursuant to this
Section 10 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Grantor further agrees that a breach
of any of the covenants contained in this Section 10 will cause irreparable
injury to the Administrative Agent and the Secured Parties, that the
Administrative Agent and the Secured Parties have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 10 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants.
8. No Subrogation. Notwithstanding any payment or payments made by
--------------
any Grantor hereunder or any set-off or application of funds of any Grantor by
any Secured Party, or the receipt of any amounts by the Administrative Agent or
any Secured Party with respect to any of the Collateral, no Grantor shall be
entitled to be subrogated to any of the rights of the Administrative Agent or
any Secured Party against the Company or any other Grantor or any collateral
security or guarantee or right of offset held by the Administrative Agent or any
Secured Party for the payment of the Obligations, nor shall any Grantor seek any
reimbursement from the Company or any other Grantor in respect of payments made
by such Grantor hereunder, or amounts realized by the Administrative Agent or
any Secured Party in connection with the Collateral, and any such rights of
subrogation and reimbursement of the Grantors are hereby waived until all
amounts owing to the Administrative Agent and the Secured Parties by the
Grantors on account of the Obligations are paid in full, the Commitments are
terminated and either no Letters of Credit are outstanding or each outstanding
Letter of Credit has been cash collateralized so that it is fully secured to the
satisfaction of the Administrative Agent.
9. Amendments, etc. with Respect to the Obligations. Each Grantor
------------------------------------------------
shall remain obligated hereunder, and the Collateral shall remain subject to the
Lien granted hereby notwithstanding that, without any reservation of rights
against any Grantor, and without notice to or further assent by such Grantor,
any demand for payment of any of the Obligations made by the Administrative
Agent or any Secured Party may be rescinded by the Administrative Agent or any
Secured Party, and any of the Obligations continued, and the Obligations, or the
liability of each Grantor or any other Person upon or for any part thereof, or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered, or released by
the Administrative Agent or any Secured Party, and the Corporate Credit
Agreement, the Notes, the other Corporate Credit Documents, the other Synthetic
Credit Documents, any Interest Rate Agreements and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or part, as the Administrative Agent or any Secured Party
may deem advisable from time to time, and any guarantee, right of offset or
other collateral security at any time held by the Administrative Agent
29
or any Secured Party for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any
Secured Party shall have any obligation to protect, secure, perfect or insure
this or any other Lien at any time held by it as security for the Obligations or
any property subject thereto. Each Grantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Obligations and notice of
or proof of reliance by the Administrative Agent or any Secured Party upon this
Agreement; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred in reliance upon this Agreement; and
all dealings between any Grantor and the Administrative Agent or any Secured
Party, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Agreement. Each Grantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon such
Grantor with respect to the Obligations.
10. Limitation on Duties Regarding Preservation of Collateral. The
---------------------------------------------------------
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any Secured Party, nor any of their respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise.
11. Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care, except as otherwise provided in subsection 5.3 of the Agency and
Intercreditor Agreement or Section 13 hereof.
12. Powers Coupled with an Interest. All authorizations and agencies
-------------------------------
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
13. Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. Section Headings. The section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
30
15. No Waiver; Cumulative Remedies. Neither the Administrative
------------------------------
Agent nor any Secured Party shall by any act (except by a written instrument
pursuant to Section 19 hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or such Secured Party would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
16. Integration; Waivers and Amendments; Successors and Assigns;
------------------------------------------------------------
Governing Law. This Agreement, the other Corporate Credit Documents and the
-------------
other Synthetic Credit Documents represent the entire agreement of each Grantor
with respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Secured Party relative to the
subject matter hereof not reflected herein, in the other Corporate Credit
Documents or in the other Synthetic Credit Documents. None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Company, each other
Grantor, and the Administrative Agent, provided that any provision of this
--------
Agreement may be waived by the Administrative Agent in a written letter or
agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Administrative Agent and the Secured Parties and their respective
successors and assigns. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon each
-------
Grantor or the Administrative Agent or any Secured Party to be effective shall
be in writing and unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of mail,
three days after deposit in the postal system, first class postage prepaid, or,
in the case of telecopy notice, when sent, or, in the case of telex notice, when
sent, answerback received, addressed to a party at the address provided for such
party (including any addresses for copies) in subsection 9.2 of the Corporate
Credit Agreement.
18. Counterparts. This Agreement may be executed by one or more of
------------
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
19. Authority of Administrative Agent. Each Grantor acknowledges
---------------------------------
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any
31
action taken by the Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement shall,
as between the Administrative Agent and the Secured Parties, be governed by the
Corporate Credit Agreement or the Synthetic Credit Agreement (as the case may
be) and by the Agency and Intercreditor Agreement, and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Administrative Agent and each Grantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and such Grantor shall not
be under any obligation, or entitlement, to make any inquiry respecting such
authority.
20. Additional Grantors. Each Subsidiary of the Company that is
-------------------
required to become a party to this Agreement pursuant to subsection 6.9(b) of
the Corporate Credit Agreement shall become a Grantor for all purposes of this
Agreement, a Borrower for all purposes of the Corporate Credit Agreement, a
Guarantor for all purposes of the Synthetic Guarantee, and a party to the Agency
and Intercreditor Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
-------
21. Releases. The Administrative Agent and the Secured Parties agree
--------
to cooperate with each Grantor with respect to any sale permitted by subsection
7.5 of the Corporate Credit Agreement and promptly take such action and execute
and deliver such instruments and documents necessary to release the Liens and
security interests created hereby relating to any of the assets or property
affected by any sale permitted by subsection 7.5 of the Corporate Credit
Agreement including, without limitation, any necessary Uniform Commercial Code
amendment, termination or partial termination statement.
32
22. Termination. This Agreement (other than with respect to any cash
-----------
collateral securing any outstanding Letter of Credit) shall terminate when all
the Obligations have been paid in full, the Commitments have been terminated and
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized so that it is fully secured to the satisfaction of
the Administrative Agent. Upon such termination, the Administrative Agent shall
reassign and redeliver (or cause to be reassigned and redelivered) to each
Grantor, or to such person or persons as such Grantor shall designate, or to
whomever may be lawfully entitled to receive such surplus, against receipt, such
of the Collateral (if any) (other than with respect to any cash collateral
securing any outstanding Letter of Credit) as shall not have been sold or
otherwise applied by the Administrative Agent pursuant to the terms hereof and
shall still be held by it hereunder, together with appropriate instruments or
reassignment and release. Any such reassignment and release shall be without
recourse upon or warranty by the Administrative Agent (other than a warranty
that the Administrative Agent has not assigned its rights and interests
hereunder to any Person) and at the expense of each Grantor.
23. Excluded Items. Notwithstanding anything to the contrary in this
--------------
Agreement, the terms "Accounts", "Chattel Paper", "Contracts", "Copyrights",
"Copyright Licenses", "Documents", "Equipment", "General Intangibles",
"Instruments", "Inventory", "Investment Property", "Patents", "Patent Licenses",
"Trademarks", "Trademark Licenses" and "Collateral" shall not include (a) for
the Grantors specified on Schedule VIII hereto, any item as to which the
-------------
granting of a security interest is prohibited by the arrangements specified for
such Grantor on Schedule VIII and (b) for each Grantor, any items as to which
-------------
the granting of a security interest is prohibited by the terms of such Grantor's
Contractual Obligations with third parties in connection with Indebtedness for
borrowed money assumed in connection with Purchase Option Acquisitions permitted
by the Corporate Credit Agreement.
24. Meditrust. The grant of security interests in Section 2 of this
---------
Agreement by any Grantor that is a Meditrust Entity, and the other terms and
provisions of this Agreement as they relate to Collateral of any Meditrust
Entity, shall be subordinate to any and all security interests in such
Collateral granted by any Meditrust Entity to Meditrust, except as may otherwise
be specifically provided in the Intercreditor Agreement.
33
IN WITNESS WHEREOF, each Grantor and the Administrative Agent have
caused this Agreement to be duly executed and delivered as of the date first
above written.
HARBORSIDE HEALTHCARE CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:______________________________
Title: President and
Chief Executive Officer
BAY TREE NURSING CENTER CORP.
BELMONT NURSING CENTER CORP.
COUNTRYSIDE CARE CENTER CORP.
HARBORSIDE HEALTH I CORPORATION
HARBORSIDE TOLEDO CORP.
KHI CORP.
MARYLAND HARBORSIDE CORP.
NEW JERSEY HARBORSIDE CORP.
OAKHURST MANOR NURSING CENTER
CORP.
ORCHARD RIDGE NURSING CENTER CORP.
SAILORS, INC.
SUNSET POINT NURSING CENTER CORP.
WEST BAY NURSING CENTER CORP.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:______________________________
Title: President and
Chief Executive Officer
34
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IV
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP V
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VI
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VII
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VIII
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IX
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP X
HARBORSIDE ATLANTRIX LIMITED
PARTNERSHIP
HARBORSIDE CONNECTICUT LIMITED
PARTNERSHIP
HARBORSIDE HEALTHCARE BALTIMORE
LIMITED PARTNERSHIP
HARBORSIDE HEALTHCARE NETWORK
LIMITED PARTNERSHIP
HARBORSIDE MASSACHUSETTS LIMITED
PARTNERSHIP
HARBORSIDE NORTH TOLEDO LIMITED
PARTNERSHIP
HARBORSIDE OF CLEVELAND LIMITED
PARTNERSHIP
HARBORSIDE OF DAYTON LIMITED
PARTNERSHIP
HARBORSIDE OF OHIO LIMITED
PARTNERSHIP
HARBORSIDE REHABILITATION LIMITED
PARTNERSHIP
HARBORSIDE RHODE ISLAND LIMITED
PARTNERSHIP
By: HARBORSIDE HEALTH I CORPORATION,
as General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_______________________________
Title: President and
Chief Executive Officer
35
HARBORSIDE FUNDING LIMITED
PARTNERSHIP
By: HARBORSIDE HEALTHCARE LIMITED
PARTNERSHIP, as General Partner
By: KHI CORP., as General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_________________________________
Title: President and
Chief Executive Officer
BRIDGEWATER ASSISTED LIVING LIMITED
PARTNERSHIP
By: NEW JERSEY HARBORSIDE CORP., as
General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_________________________________
Title: President and
Chief Executive Officer
HARBORSIDE NEW HAMPSHIRE LIMITED
PARTNERSHIP
HARBORSIDE TOLEDO LIMITED
PARTNERSHIP
HHCI LIMITED PARTNERSHIP
By: HARBORSIDE TOLEDO CORP., as General
Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_________________________________
Title: President and
Chief Executive Officer
36
HARBORSIDE HEALTHCARE ADVISORS
LIMITED PARTNERSHIP
HARBORSIDE HEALTHCARE LIMITED
PARTNERSHIP
HARBORSIDE HOMECARE LIMITED
PARTNERSHIP
By: KHI CORP., as General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_________________________________
Title: President and
Chief Executive Officer
HARBORSIDE PROPERTIES TRUST I
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:__________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his capacity as
trustee and not individually
THE CHASE MANHATTAN BANK, as
Administrative Agent
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:_________________________________
Title: Vice President