Exhibit 4.10
Amended and Restated Security Agreement
This Amended and Restated Security Agreement (the "Agreement") is dated as
of May 15, 1997, by and among Everest Healthcare Services Corporation, a
Delaware corporation (the "Company"), and the other parties executing this
Agreement under the heading "Debtors" (the Company and such other parties, along
with any parties who execute and deliver to the Agent an agreement attached
hereto as Schedule D, being hereinafter referred to collectively as the
"Debtors" and individually as a "Debtor"), each with its mailing address as set
forth on its signature page hereto, and Harris Trust and Savings Bank, an
Illinois banking corporation ("Harris"), with its mailing address at 111 West
Monroe Street, P.O. Box 755, Chicago, Illinois 60690, acting as agent hereunder
for the Lenders hereinafter identified and defined (Harris acting as such agent
and any successor or successors to Harris acting in such capacity being
hereinafter referred to as the "Agent");
Preliminary Statements
A. The Company and Harris, individually and as agent, have entered into
an Amended and Restated Credit Agreement dated as of even date herewith (such
Amended and Restated Credit Agreement as the same may be amended, modified or
restated from time to time being hereinafter referred to as the "Credit
Agreement"), pursuant to which Harris and other lenders which from time to time
become party to the Credit Agreement (Harris and such other lenders which from
time to time hereafter become party to the Credit Agreement being hereinafter
referred to collectively as the "Lenders" and individually as a "Lender") have
agreed, subject to certain terms and conditions, to extend credit and make
certain other financial accommodations available to the Company.
B. The Company may from time to time enter into one or more interest rate
exchange, cap, collar, floor or other agreements with one or more of the Lenders
party to the Credit Agreement for the purpose of hedging or otherwise protecting
the Company against changes in interest rates (the liability of the Company in
respect of such agreements with such Lenders being hereinafter referred to as
the "Hedging Liability").
C. As a condition to extending credit to the Company under the Credit
Agreement, the Lenders have required, among other things, that (i) each Debtor,
other than the Company, guarantee all indebtedness, obligations and liabilities,
whether now existing or hereafter arising, of the Company under or arising out
of the Credit Agreement pursuant to that certain Amended and Restated Guaranty
Agreement dated as of even date herewith between such Debtors and the Agent, as
the same may be amended, modified, supplemented and/or restated from time to
time (the "Guaranty") and (ii) each Debtor, including the Company, grant to the
Agent a lien on and
security interest in the personal property of such Debtor described herein
subject to the terms and conditions hereof.
D. The Company owns, directly or indirectly, all or substantially all of
the equity interests in each other Debtor and the Company provides each other
Debtor with financial, management, administrative, and technical support which
enables such Debtor to conduct its business in an orderly and efficient manner
in the ordinary course.
E. Each Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Lenders to the Company.
Now, Therefore, for and in consideration of the execution and delivery by
the Lenders of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Terms defined in Credit Agreement. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement. The term "Debtor" and "Debtors" as used herein
shall mean and include the Debtors collectively and also each individually, with
all grants, representations, warranties and covenants of and by the Debtors, or
any of them, herein contained to constitute joint and several grants,
representations, warranties and covenants of and by the Debtors; provided,
however, that unless the context in which the same is used shall otherwise
require, any grant, representation, warranty or covenant contained herein
related to the Collateral shall be made by each Debtor only with respect to the
Collateral owned by it or represented by such Debtor as owned by it.
Section 2. Grant of Security Interest in the Collateral; Obligations
Secured. (a) Each Debtor hereby grants to the Agent for the benefit of itself
and the other Lenders a lien on and security interest in, and right of set-off
against, and acknowledges and agrees that the Agent has and shall continue to
have for the benefit of itself and the other Lenders a continuing lien on and
security interest in, and right of set-off against, any and all right, title and
interest of each Debtor, whether now owned or existing or hereafter created,
acquired or arising, in and to the following:
(i) Receivables. All Receivables, whether now owned or existing or
hereafter created, acquired or arising, and however evidenced or acquired,
or in which such Debtor now has or hereafter acquires any rights (the term
"Receivables" means and includes all accounts, accounts receivable,
contract rights, instruments, notes, drafts, acceptances, documents,
chattel paper, any right of such Debtor to payment for goods sold or leased
or for services rendered, whether or not earned by performance, and all
other forms of obligations owing to such Debtor, and all of such Debtor's
rights to any merchandise or
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other goods (including without limitation any returned or repossessed goods
and the right of stoppage in transit) which is represented by, arises from
or is related to any of the foregoing);
(ii) General Intangibles. All General Intangibles, whether now
owned or existing or hereafter created, acquired or arising, or in which
such Debtor now has or hereafter acquires any rights (the term "General
Intangibles" means and includes all general intangibles, all patents,
patent applications, patent licenses, trademarks, trademark registrations,
trademark licenses, trade styles, trade names, copyrights, copyright
registrations, copyright licenses and other licenses and similar
intangibles, all customer, client and supplier lists (in whatever form
maintained), all rights in leases and other agreements relating to real or
personal property, all causes of action and tax refunds of every kind and
nature, all privileges, franchises, immunities, licenses, permits and
similar intangibles, all rights to receive payments in connection with the
termination of any pension plan or employee stock ownership plan or trust
established for the benefit of employees of such Debtor and all other
personal property (including things in action) not otherwise covered by
this Agreement;
(iii) Inventory. All Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has or
hereafter acquires any rights and all documents of title at any time
evidencing or representing any part thereof (the term "Inventory" means and
includes all inventory and other goods which are held for sale or lease or
are to be furnished under contracts of service or consumed in such Debtor's
business, all goods which are raw materials, work-in-process, finished
goods, materials or supplies of every kind and nature, in each case used or
usable in connection with the acquisition, manufacture, processing, supply,
servicing, storing, packing, shipping, advertising, selling, leasing or
furnishing of such goods, and any constituents or ingredients thereof, and
all goods which are returned or repossessed goods);
(iv) Equipment. All Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has or
hereafter acquires any rights (the term "Equipment" means and includes all
equipment and other machinery, tools, fixtures, trade fixtures, furniture,
furnishings, office equipment, vehicles (including vehicles subject to a
certificate of title law) and all other goods now or hereafter used or
usable in connection with such Debtor's business, together with all parts,
accessories and attachments relating to any of the foregoing);
(v) Investment Property. All Investment Property, whether now owned
or existing or hereafter created, acquired or arising, or in which such
Debtor now has or hereafter acquires any rights (the term "Investment
Property" means and includes all
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investment property and all other securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodity
contracts, and commodity accounts, including all substitutions and
additions thereto, all dividends, distributions and sums distributable or
payable from, upon, or in respect of such property, and all rights and
privileges incident to such property);
(vi) Deposits and Property in Possession. All deposit accounts
(whether general, specific or otherwise) of such Debtor maintained with the
Agent or any of the Lenders and all sums now or hereafter on deposit
therein or payable thereon, and any and all other property and interests in
property which now is or may from time to time hereafter come into the
possession, custody or control of the Agent or any of the Lenders, or any
agent of any of them, in any way and for any purpose (whether for
safekeeping, custody, pledge, transmission, collection or otherwise);
(vii) Records. All supporting evidence and documents relating to
any of the above-described property, including, without limitation,
computer programs, disks, tapes and related electronic data processing
media, and all rights of such Debtor to retrieve the same from third
parties, written applications, credit information, account cards, payment
records, correspondence, delivery and installation certificates, invoice
copies, delivery receipts, notes and other evidences of indebtedness,
insurance certificates and the like, together with all books of account,
ledgers and cabinets in which the same are reflected or maintained, all
whether now existing or hereafter arising;
(viii) Accessions and Additions. All accessions and additions to
and substitutions and replacements of any and all of the foregoing, whether
now existing or hereafter arising; and
(ix) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof, whether
now existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral".
All terms which are used herein which are defined in the Uniform Commercial Code
of the State of Illinois ("UCC") shall have the same meanings herein as such
terms are defined in the UCC, unless this Agreement shall otherwise specifically
provide.
(b) This Agreement is made and given to secure, and shall secure, the
prompt payment and performance of (i) any and all indebtedness, obligations and
liabilities of the Debtors, of any of them, to the Agent and the Lenders, and
any of them, under or in connection with or evidenced by the Credit Agreement,
the Notes of the Company heretofore or hereafter
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issued under the Credit Agreement and the obligations of the Company to
reimburse the Agent and the Lenders for the amount of all drawings on all
Letters of Credit issued for the account of the Company pursuant to the Credit
Agreement, and all other obligations of the Company under any and all
applications for Letters of Credit, or under or in connection with or otherwise
evidenced by the Guaranty or any of the other Loan Documents, or under or in
connection with or otherwise evidenced by agreements with any one or more of the
Lenders with respect to Hedging Liability, in each case whether now existing or
hereafter arising (and whether arising before or after the filing of a petition
in bankruptcy), due or to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired and (ii) any and all
expenses and charges, legal or otherwise, suffered or incurred by the Agent and
the Lenders, and any of them, in collecting or enforcing any of such
indebtedness, obligations and liabilities or in realizing on or protecting or
preserving any security therefor, including, without limitation, the lien and
security interest granted hereby (all of the indebtedness, obligations,
liabilities, expenses and charges described above being hereinafter referred to
as the "Obligations"). Notwithstanding anything in this Agreement to the
contrary, the right of recovery against any Debtor (other than the Company to
which this limitation shall not apply) under this Agreement shall not exceed
$1.00 less than the amount which would render such Debtor's obligations under
this Agreement void or voidable under applicable law, including fraudulent
conveyance law.
Section 3. Covenants, Agreements, Representations and Warranties.
The Debtors hereby covenant and agree with, and represent and warrant to, the
Agent and the Lenders that:
(a) Each Debtor is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization,
is the sole and lawful owner of the Collateral granted by it hereunder and
has the power and authority to enter into this Agreement and to perform
each and all of the matters and things herein provided for. Each Debtor's
Federal tax identification number is set forth under its name under Column
1 on Schedule A.
(b) Each Debtor's respective chief executive office is at the
location listed under Column 2 on Schedule A attached hereto opposite such
Debtor's name; and such Debtor has no other executive offices or places of
business other than those listed under Column 3 on Schedule A attached
hereto opposite such Debtor's name. The Collateral owned or leased by each
Debtor is and shall remain in such Debtor's possession or control at the
locations listed under Columns 2 and 3 on Schedule A attached hereto
opposite such Debtor's name (collectively for each Debtor, the "Permitted
Collateral Locations"). If for any reason any Collateral is at any time
kept or located at a location other than a Permitted Collateral Location,
the Agent shall nevertheless have and retain a lien on and security
interest therein. No Debtor shall move its chief executive office or
maintain a place of business at a location other than those specified under
Columns 2 or 3
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on Schedule A or permit any Collateral to be located at a location other
than a Permitted Collateral Location, in each case without first providing
the Agent 30 days prior written notice of the Debtor's intent to do so;
provided that each Debtor shall at all times maintain its chief executive
office and places of business and Permitted Collateral Locations in the
United States of America and, with respect to any new chief executive
office or place of business or location of Collateral, such Debtor shall
have taken all action reasonably requested by the Agent to maintain the
lien and security interest of Agent in the Collateral at all times fully
perfected and in full force and effect.
(c) The Collateral and every part thereof is and shall be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary or
involuntary, except for the lien and security interest of the Agent therein
and other Liens permitted by Section 7.14 of the Credit Agreement (herein,
the "Permitted Encumbrances"). Each Debtor shall warrant and defend the
Collateral against any claims and demands of all persons at any time
claiming the same or any interest in the Collateral adverse to the Agent or
any Lender.
(d) Each Debtor will promptly pay when due all taxes, assessments
and governmental charges and levies upon or against it or its Collateral,
in each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings which prevent foreclosure on or other
realization upon any Collateral and preclude interference with the
operation of its business in the ordinary course and such Debtor shall have
established adequate reserves therefor.
(e) Each Debtor agrees it will not waste or destroy the Collateral
or any part thereof and will not be negligent in the care or use of any
Collateral. Each Debtor agrees it will not use, manufacture, sell or
distribute any Collateral in violation of any statute, ordinance or other
governmental requirement. Each Debtor will perform in all material
respects its obligations under any contract or other agreement constituting
part of the Collateral, it being understood and agreed that the Agent and
the Lenders have no responsibility to perform such obligations.
(f) Subject to Sections 4(b), 5(a), 6(b), 6(c), and 7(c) hereof and
the terms of the Credit Agreement (including, without limitation, Section
7.16 thereof), each Debtor agrees it will not, without the Agent's prior
written consent, sell, assign, mortgage, lease or otherwise dispose of the
Collateral or any interest therein.
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(g) Each Debtor will insure its Collateral which is insurable
against such risks and hazards as other companies similarly situated insure
against, and including in any event loss or damage by fire, theft,
burglary, pilferage, and loss in transit, in amounts and under policies
containing loss payable clauses to the Agent as its interest may appear
(and, if the Agent requests, naming the Agent and the Lenders as additional
insureds therein) by insurers reasonably acceptable to the Agent. All
premiums on such insurance shall be paid by the Debtors and the policies of
such insurance (or certificates therefor) delivered to the Agent. All
insurance required hereby shall provide that any loss shall be payable
notwithstanding any act or negligence of the relevant Debtor, shall provide
that no cancellation thereof shall be effective until at least 30 days
after receipt by the relevant Debtor and the Agent of written notice
thereof, and shall be reasonably satisfactory to the Agent in all other
respects. In case of any material loss, damage to or destruction of the
Collateral or any part thereof, the relevant Debtor shall promptly give
written notice thereof to the Agent and the Lenders generally describing
the nature and extent of such damage or destruction. In case of any loss,
damage to or destruction of the Collateral or any part thereof, the
relevant Debtor, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose,
at such Debtor's cost and expense, will promptly repair or replace the
Collateral so lost, damaged or destroyed, except to the extent such
Collateral is not necessary to the conduct of such Debtor's business in the
ordinary course and such Collateral and all other Collateral lost, damaged
or destroyed during the immediately preceding twelve (12) calendar months
had an aggregate fair market value, prior to its loss, damage or
destruction, of less than $250,000. In the event any Debtor shall receive
any proceeds of such insurance, such Debtor will immediately pay over such
proceeds to the Agent; provided that, in the absence of any continuing
Event of Default, such Debtor shall be entitled to such insurance proceeds
to the extent and in the manner provided for in this Section 3(g). Each
Debtor hereby authorizes the Agent, at the Agent's option, to adjust,
compromise and settle any losses under any insurance afforded at any time
after the occurrence and during the continuation of any Event of Default,
and such Debtor does hereby irrevocably constitute the Agent, its officers,
agents and attorneys, as such Debtor's attorneys-in-fact, with full power
and authority after the occurrence and during the continuation of any Event
of Default to effect such adjustment, compromise and/or settlement and to
endorse any drafts drawn by an insurer of the Collateral or any part
thereof and to do everything necessary to carry out such purposes and to
receive and receipt for any unearned premiums due under policies of such
insurance. Unless the Agent elects to adjust, compromise or settle losses
as aforesaid, any adjustment, compromise and/or settlement of any losses
under any insurance shall be made by the relevant Debtor subject to final
approval of the Agent (regardless of whether or not an Event of Default
shall have occurred) in the case of losses exceeding $250,000. Net
insurance proceeds received by the Agent under the provisions hereof or
under any policy
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or policies of insurance covering the Collateral or any part thereof
pursuant to the terms hereof shall be applied to the reduction of the
Obligations (whether or not then due); provided, however, that the Agent
agrees to release such insurance proceeds to the relevant Debtor for
replacement or restoration of the portion of the Collateral lost, damaged
or destroyed required by this Agreement to be so replaced or restored if,
but only if, (i) at the time of release no Event of Default exists
hereunder, (ii) written application for such release is received from such
Debtor within 30 days of receipt of, or in the event received by the Agent
notice of Agent's receipt of, such proceeds and (iii) the Agent has
received evidence reasonably satisfactory to it that the Collateral lost,
damaged or destroyed has been or will be replaced. All insurance proceeds
shall be subject to the lien and security interest of the Agent hereunder.
Unless the Debtors provide the Agent with evidence of the insurance
coverage required by this Agreement, the Agent may purchase insurance at
the Debtors' expense to protect the Agent's interests in the Collateral.
This insurance may, but need not, protect any debtor's interests in the
Collateral. The coverage purchased by the Agent may not pay any claims
that any Debtor makes or any claim that is made against such Debtor in
connection with the Collateral. The Debtors may later cancel any such
insurance purchased by the Agent, but only after providing the Agent with
evidence that the Debtors have obtained insurance as required by this
Agreement. If the Agent purchases insurance for the Collateral, the
Debtors will be responsible for the costs of that insurance, including
interest and any other charges that the Agent may impose in connection with
the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance
may be added to the Obligations secured hereby. The costs of the insurance
may be more than the cost of insurance the Debtors may be able to obtain on
their own.
(h) Each Debtor will, at all times allow the Agent, any Lender, and
their respective representatives free access to and right of inspection of
the Collateral; provided, however, that in the absence of any continuing
Event of Default any such access or inspection shall only be required at
reasonable times during such Debtor's normal business hours upon prior
written notice to such Debtor and otherwise in accordance with Section 7.6
of the Credit Agreement.
(i) If any Collateral is in the possession or control of any agents
or processors of a Debtor and the Agent so requests, such Debtor agrees to
notify such agents or processors in writing of the Agent's security
interest therein and instruct them to hold all
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such Collateral for the Agent's account and subject to the Agent's
instructions. Each Debtor will, upon request of the Agent, authorize and
instruct all bailees and any other parties (except patients in possession
of Collateral consisting of supplies for such person's patient care
treatments), if any, at any time processing, labeling, packaging, holding,
storing, shipping or transferring all or any part of the Collateral to
permit the Agent, any Lender and their respective representatives to
examine and inspect any of the Collateral then in such party's possession
and to verify from such party's own books and records any information
concerning the Collateral or any part thereof which the Agent, any Lender
or their respective representatives may seek to verify. As to any premises
not owned by a Debtor wherein any of the Collateral is located, if any,
such Debtor shall, upon the Agent's request, use reasonable efforts to
cause each party having any right, title or interest in, or lien on, any of
such premises to enter into an agreement (any such agreement to contain a
legal description of such premises) whereby such party disclaims any right,
title and interest in, and lien on, the Collateral, allowing the removal of
such Collateral by the Agent or by the Lenders and otherwise in form and
substance reasonably acceptable to the Agent.
(j) Each Debtor agrees from time to time to deliver to the Agent and
any Lender such evidence of the existence, identity and location of its
Collateral and of its availability as collateral security pursuant hereto
(including, without limitation, schedules describing all Receivables
created or acquired by such Debtor, copies of customer invoices or the
equivalent and original shipping or delivery receipts for all merchandise
and other goods sold or leased or services rendered by it, together with
such Debtor's warranty of the genuineness thereof, and reports stating the
book value of its Inventory and Equipment by major category and location),
in each case as the Agent or such Lender may reasonably request. The Agent
shall have the right to verify all or any part of the Collateral in any
manner, and through any medium, which the Agent considers appropriate
(including, without limitation, the verification of Collateral by use of a
fictitious name), and each Debtor agrees to furnish all assistance and
information, and perform any acts, which the Agent may reasonably require
in connection therewith, provided that, unless an Event of Default has
occurred and is continuing, the Agent shall not contact any account debtor
with respect to any of the foregoing matters without the relevant Debtor's
prior written consent.
(k) Each Debtor will comply in all material respects with the terms
and conditions of any and all leases, easements, right-of-way agreements
and other agreements binding upon such Debtor or affecting the Collateral,
in each case which cover the premises wherein the Collateral is located,
and any orders, ordinances, laws or statutes of any city, state or other
governmental entity, department or agency having jurisdiction with respect
to such premises or the conduct of business thereon.
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(l) No Debtor has invoiced Receivables or otherwise transacted
business, and does not invoice Receivables or otherwise transact business,
under any trade names other than its name set forth on its signature page
to this Agreement or as otherwise set forth on Exhibit B hereto. Each
Debtor agrees it will not change its name or transact business under any
other trade name, in each case without first giving the Agent 30 days'
prior written notice of its intent to do so.
(m) Each Debtor agrees to execute and deliver to the Agent such
further agreements, assignments, instruments and documents, and to do all
such other things, as the Agent may reasonably deem necessary or
appropriate to assure the Agent its lien and security interest hereunder,
including without limitation, (i) executing such financing statement or
other instruments and documents as the Agent may from time to time
reasonably require to comply with the UCC and (ii) executing such patent,
trademark, and copyright agreements as the Agent may from time to time
reasonably require to comply with the filing requirements of the United
States Patent and Trademark Office and the United States Copyright Office.
Each Debtor hereby agrees that a carbon, photographic or other reproduction
of this Agreement or any such financing statement is sufficient for filing
as a financing statement by the Agent without prior notice thereof to such
Debtor wherever the Agent in its sole discretion desires to file the same
(and Agent agrees to provide the relevant Debtor notice after any such
filing is made pursuant to this provision, provided the failure to give
such notice shall not affect the validity or enforceability of the relevant
filing). In the event for any reason the law of any jurisdiction other
than Illinois becomes or is applicable to the Collateral or any part
thereof, or to any of the Obligations, each Debtor agrees to execute and
deliver all such instruments and documents and to do all such other things
as the Agent reasonably deems necessary or appropriate to preserve, protect
and enforce the security interest of the Agent under the law of such other
jurisdiction. Each Debtor agrees to mark its corporate records to reflect
the security interest of the Agent in such Debtor's Collateral.
(n) On failure of a Debtor to perform any of the covenants and
agreements herein contained, the Agent may at its option, after two
Business Days' prior notice to such Debtor (unless in the reasonable
judgment of the Agent immediate payment or performance is necessary to
protect or preserve the Collateral or the Agent's interest therein),
perform the same and in so doing may expend such sums as the Agent
reasonably deems advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any
taxes, liens and encumbrances (except to the extent the relevant Pledgor is
contesting the same in good faith in accordance with the terms of Section
7.3 of the Credit Agreement), expenditures made in defending against any
adverse claims, and all other expenditures which the Agent may be compelled
to make by operation of law or which the Agent may make by agreement or
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otherwise for the protection of the security hereof. All such sums and
amounts so expended shall be repayable by such Debtor immediately without
notice or demand, shall constitute additional Obligations secured
hereunder, and shall bear interest from the date said amounts are expended
at the rate per annum (computed on the basis of a year of 365 or 366 days,
as the case may be, for the actual number of days elapsed) determined by
adding 2% to the Domestic Rate from time to time in effect with any change
in such rate per annum as so determined by reason of a change in such
Domestic Rate to be effective on the date of such change in said Domestic
Rate (such rate per annum as so determined being hereinafter referred to as
the "Default Rate"). No such performance of any covenant or agreement by
the Agent on behalf of a Debtor, and no such advancement or expenditure
therefor, shall relieve any Debtor of any default under the terms of this
Agreement or in any way obligate the Agent or any Lender to take any
further or future action with respect thereto. The Agent in making any
payment hereby authorized may do so according to any bill, statement or
estimate procured from the appropriate public office or holder of the claim
to be discharged without inquiry into the accuracy of such bill, statement
or estimate or into the validity of any tax assessment, sale, forfeiture,
tax lien or title or claim. The Agent in performing any act hereunder
shall be the sole judge (which judgment shall be reasonably exercised) of
whether the relevant Debtor is required to perform the same under the terms
of this Agreement. The Agent is hereby authorized to charge any depository
or other account of any Debtor maintained with the Agent for the amount of
such sums and amounts so expended.
Section 4. Special Provisions Re: Receivables. (a) As of the time
any Receivable becomes subject to the security interest provided for hereby and
at all times thereafter, each Debtor shall be deemed to have warranted as to
each and all of its Receivables that all warranties of such Debtor set forth in
this Agreement are true and correct with respect to each such Receivable; that
each of its Receivable and all papers and documents relating thereto are genuine
and in all respects what they purport to be; that each of its Receivable is
valid and existing and, if such Receivable is an account, arises out of a bona
fide sale of goods sold and delivered by such Debtor to, or in the process of
being delivered to, or out of and for services theretofore actually rendered by
such Debtor to, the account debtor named therein; that no such Receivable is
evidenced by any instrument or chattel paper unless such instrument or chattel
paper has theretofore been endorsed by such Debtor and delivered to the Agent
(except to the extent the aggregate unpaid amount of such instruments and
chattel paper not so endorsed and delivered is less than $100,000 at any one
time outstanding); that no surety bond was required or given in connection with
such Receivable or the contracts or purchase orders out of which the same arose;
and that if said Receivable is scheduled, listed or referred to on any
certificate evidencing the Borrowing Base or is otherwise a Receivable which
such Debtor wants the Lenders to consider an Eligible Account, that said
Receivable qualifies as an Eligible Account. If any Receivable arises out of a
contract with the United States of America or any of its departments, agencies
or
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instrumentalities, after the occurrence and during the continuance of any
Event of Default, the relevant Debtor agrees to notify the Agent and, at the
request of the Agent or the Required Lenders, execute whatever instruments and
documents are required by the Agent in order that such Receivable shall be
assigned to the Agent and that proper notice of such assignment shall be given
under the federal Assignment of Claims Act (or any successor statute) or any
similar statute relating to the assignment of such Receivables.
(b) Unless and until an Event of Default hereunder occurs and is
continuing, any merchandise or other goods which are returned by a customer or
account debtor or otherwise recovered may be resold by the relevant Debtor in
the ordinary course of its business as presently conducted in accordance with
Section 6(b) hereof; upon the occurrence and during the continuation of any
Event of Default hereunder, such merchandise and other goods shall be set aside
at the request of the Agent and held by such Debtor as trustee for the Agent and
the Lenders and shall remain part of the Collateral. Unless and until an Event
of Default hereunder occurs and is continuing, the relevant Debtor may settle
and adjust disputes and claims with its customers and account debtors, handle
returns and recoveries and grant discounts, credits and allowances in the
ordinary course of its business as presently conducted for amounts and on terms
which such Debtor in good faith considers advisable. Upon the occurrence and
during the continuation of any Event of Default hereunder, unless the Agent
requests otherwise, each Debtor shall notify the Agent promptly of all returns
and recoveries and, on the Agent's request, deliver any such merchandise or
other goods to the Agent. Upon the occurrence and during the continuation of
any Event of Default hereunder, unless the Agent requests otherwise, each Debtor
shall also notify the Agent promptly of all disputes and claims and settle or
adjust them at no expense to the Agent or the Lenders hereunder, but no
discount, credit or allowance other than on normal trade terms in the ordinary
course of business as presently conducted shall be granted to any customer or
account debtor and no returns of merchandise or other goods shall be accepted by
any Debtor without the Agent's consent. The Agent may, at all times upon the
occurrence and during the continuation of any Event of Default hereunder, settle
or adjust disputes and claims directly with customers or account debtors for
amounts and upon terms which the Agent considers advisable.
Section 5. Collection of Receivables. (a) Except as otherwise
provided in this Agreement, each Debtor shall make collection of all of its
Receivables and may use the same to carry on its business in accordance with
sound business practice and otherwise subject to the terms hereof.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, whether or not the Agent has exercised any or all of its
rights under other provisions of this Section 5, in the event the Agent requests
any Debtor to do so:
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(i) all instruments and chattel paper at any time constituting part
of the Receivables (including any postdated checks) shall, upon receipt by
such Debtor, be immediately endorsed to and deposited with Agent; and/or
(ii) such Debtor shall instruct all of its customers and account
debtors to remit all payments in respect of its Receivables to a lockbox or
lockboxes under the sole custody and control of Agent and which are
maintained at post offices selected by the Agent.
(c) Upon the occurrence and during the continuation of any Event of
Default hereunder, whether or not the Agent has exercised any or all of its
rights under other provisions of this Section 5, the Agent or its designee may
notify the relevant Debtor's customers and account debtors at any time that
Receivables have been assigned to the Agent or of the Agent's security interest
therein, and either in its own name, or such Debtor's name, or both, demand,
collect (including, without limitation, through a lockbox analogous to that
described in Section 5(b)(ii) hereof), receive, receipt for, sue for, compound
and give acquittance for any or all amounts due or to become due on Receivables,
and in the Agent's discretion file any claim or take any other action or
proceeding which the Agent may deem reasonably necessary or appropriate to
protect and realize upon the security interest of the Agent in the Receivables.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Agent pursuant to any of the provisions of Sections
5(b) or 5(c) hereof may be handled and administered by the Agent in and through
a remittance account or accounts maintained at the Agent or by the Agent at a
commercial bank or banks selected by the Agent (collectively the "Depositary
Banks" and individually a "Depositary Bank"), and each Debtor acknowledges that
the maintenance of such remittance accounts by the Agent is solely for the
Agent's convenience and that the Debtors do not have any right, title or
interest in such remittance accounts or any amounts at any time standing to the
credit thereof. The Agent may apply all or any part of any proceeds of
Receivables or other Collateral received by it from any source to the payment of
the Obligations (whether or not then due and payable), such applications to be
made in such amounts, in such manner and order and at such intervals as the
Agent may from time to time in its discretion determine, but not less often than
once each week. The Agent need not apply or give credit for any item included
in proceeds of Receivables or other Collateral until the Depositary Bank has
received final payment therefor at its office in cash or final solvent credits
current at the site of deposit acceptable to the Agent and the Depositary Bank
as such. However, if the Agent does permit credit to be given for any item
prior to a Depositary Bank receiving final payment therefor and such Depositary
Bank fails to receive such final payment or an item is charged back to the Agent
or any Depositary Bank for any reason, the Agent may at its election in either
instance charge the amount of such item back against any such remittance
accounts or any depository account of any Debtor maintained with the Agent,
together
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with interest thereon at the Default Rate. Concurrently with each transmission
of any proceeds of Receivables or other Collateral to any remittance account,
the relevant Debtor shall furnish the Agent with a report in such form as Agent
shall reasonably require identifying the particular Receivable or such other
Collateral from which the same arises or relates. Each Debtor hereby indemnifies
the Agent and the Lenders from and against all liabilities, damages, losses,
actions, claims, judgments, and all reasonable costs, expenses, charges and
attorneys' fees suffered or incurred by the Agent or any Lender because of the
maintenance of the foregoing arrangements; provided, however, that no Debtor
shall be required to indemnify the Agent or any Lender for any of the foregoing
to the extent they arise solely from the gross negligence or willful misconduct
of the person seeking to be indemnified. The Agent and the Lenders shall have no
liability or responsibility to any Debtor for the Agent or any other Depositary
Bank accepting any check, draft or other order for payment of money bearing the
legend "payment in full" or words of similar import or any other restrictive
legend or endorsement whatsoever or be responsible for determining the
correctness of any remittance.
Section 6. Special Provisions Re: Inventory and Equipment. (a) Each
Debtor shall at its own cost and expense maintain, keep and preserve its
Inventory in good and merchantable condition and keep and preserve its Equipment
in good repair, working order and condition, ordinary wear and tear excepted,
and, without limiting the foregoing, make all necessary and proper repairs,
replacements and additions to its Equipment so that the efficiency thereof shall
be fully preserved and maintained, except to the extent that, in the reasonable
business judgment of such Debtor, any of such Equipment is no longer necessary
or useful to the conduct of its business in the ordinary course.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, use, consume
and sell the Inventory in the ordinary course of its business, but a sale in the
ordinary course of business shall not under any circumstance include any
transfer or sale in satisfaction, partial or complete, of a debt owing by such
Debtor.
(c) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell (x)
obsolete, worn out or unusable Equipment which is concurrently replaced with
similar Equipment at least equal in quality and condition to that sold and owned
by such Debtor free of any lien, charge or encumbrance other than the security
interest granted hereby and (y) Equipment to the extent permitted by Section
7.16 of the Credit Agreement.
(d) As of the time any Inventory or Equipment of a Debtor becomes subject
to the security interest provided for hereby and at all times thereafter, such
Debtor shall be deemed to have warranted as to any and all of such Inventory and
Equipment that all warranties of such
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Debtor set forth in this Agreement are true and correct with respect to such
Inventory and Equipment; that all of such Inventory and Equipment is located at
a location set forth pursuant to Section 3(b) hereof. Each Debtor warrants and
agrees that none of its Inventory is or will be consigned to any other person or
entity without the Agent's prior written consent.
(e) Upon the Agent's or the Required Lenders' request, each Debtor shall
at its own cost and expense cause the lien of the Agent in and to any portion of
its Collateral subject to a certificate of title law to be duly noted on such
certificate of title or to be otherwise filed in such manner as is prescribed by
law in order to perfect such lien and will cause all such certificates of title
and evidences of lien to be deposited with the Agent.
(f) Except for Equipment consisting of water treatment systems and other
leasehold improvements, and except for Equipment from time to time located on
the real estate described on Schedule C attached hereto or as otherwise
hereafter disclosed to the Agent and the Lenders in writing, none of the
Equipment is or will be attached to real estate in such a manner that the same
may become a fixture.
(g) If any of the Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the relevant Debtor to the
Agent.
Section 7. Special Provisions Re: Investment Property. (a) Unless
and until an Event of Default has occurred and is continuing and thereafter
until notified to the contrary by the Agent pursuant to Section 9(d) hereof:
(i) Each Debtor shall be entitled to exercise all voting and/or
consensual powers pertaining to its Investment Property or any part
thereof, for all purposes not inconsistent with the terms of this
Agreement, the Credit Agreement or any other document evidencing or
otherwise relating to any Obligations; and
(ii) Each Debtor shall be entitled to receive and retain all cash
dividends paid upon or in respect of its Investment Property.
(b) Certificates for all securities now or at any time constituting
Investment Property and part of the Collateral hereunder shall be promptly
delivered by the relevant Debtor to the Agent duly endorsed in blank for
transfer or accompanied by an appropriate assignment or assignments or an
appropriate undated stock power or powers, in every case sufficient to transfer
title thereto, including, without limitation, all stock received in respect of a
stock dividend or resulting from a split-up, revision or reclassification of the
Investment Property or any part thereof or received in addition to, in
substitution of or in exchange for the Investment Property or any part thereof
as a result of a merger, consolidation or otherwise. With respect to any
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Investment Property held by a securities intermediary, commodity intermediary,
or other financial intermediary of any kind, the relevant Debtor shall execute
and deliver, and shall cause any such intermediary to execute and deliver, an
agreement among such Debtor, the Agent, and such intermediary in form and
substance satisfactory to the Agent which provides, among other things, for the
intermediary's agreement that it will comply with such entitlement orders, and
apply any value distributed on account of any Investment Property maintained in
an account with such intermediary, as directed by the Agent without further
consent by such Debtor at any time after the occurrence and during the
continuation of any Event of Default. The Agent may at any time after the
occurrence and during the continuation of an Event of Default cause to be
transferred into its name or the name of its nominee or nominees any and all of
the Investment Property hereunder.
(c) Unless and until an Event of Default has occurred and is continuing,
each Debtor may sell or otherwise dispose of any of its Investment Property to
the extent permitted by the Credit Agreement, provided that (i) except to the
extent permitted by Section 7.17 of the Credit Agreement, no Debtor shall sell
or otherwise dispose of any capital stock or other equity interest in any direct
or indirect Subsidiary without the prior written consent of the Agent and (ii)
no Debtor shall sell or otherwise dispose of any of its Investment Property
subject to the terms of a separate security agreement in favor of the Agent
unless permitted by the terms of such separate agreement. During the existence
of any Event of Default, no Debtor shall sell all or any part of the Investment
Property without the prior written consent of the Agent.
(d) Each Debtor represents that on the date of this Agreement, none of
its Investment Property consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except to
the extent such Debtor has delivered to the Agent a duly executed and completed
Form U-1 with respect to such stock. If at any time the Investment Property or
any part thereof consists of margin stock, the relevant Debtor shall promptly so
notify the Agent and deliver to the Agent a duly executed and completed Form U-1
and such other instruments and documents reasonably requested by the Agent in
form and substance satisfactory to the Agent.
Section 8. Power of Attorney. In addition to any other powers of
attorney contained herein, each Debtor hereby appoints the Agent, its nominee,
or any other person whom the Agent may designate as such Debtor's attorney-in-
fact, with full power to sign such Debtor's name on verifications of accounts
and other Collateral; to send requests for verification of Collateral to such
Debtor's customers, account debtors and other obligors; to endorse such Debtor's
name on any checks, notes, acceptances, money orders, drafts and any other forms
of payment or security that may come into the Agent's possession; to endorse the
Collateral in blank or to the order of the Agent or its nominee; to sign such
Debtor's name on any invoice or bill of lading relating to any Collateral, on
claims to enforce collection of any Collateral, on
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notices to and drafts against customers and account debtors and other obligors,
on schedules and assignments of Collateral, on notices of assignment and on
public records; to notify the post office authorities to change the address for
delivery of such Debtor's mail to an address designated by the Agent; to
receive, open and dispose of all mail addressed to such Debtor; and to do all
things necessary to carry out this Agreement. Each Debtor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Agent nor any
such attorney will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law other than such person's gross negligence or
willful misconduct. The Agent may file one or more financing statements
disclosing its security interest in any or all of the Collateral without any
Debtor's signature appearing thereon, and each Debtor also hereby grants the
Agent a power of attorney to execute any such financing statements, or
amendments and supplements to financing statements, on behalf of such Debtor
without notice thereof to any Debtor (and Agent agrees to provide the relevant
Debtor notice after any such filing is made pursuant to this provision, provided
the failure to give such notice shall not affect the validity or enforceability
of the relevant filing). The foregoing powers of attorney, being coupled with an
interest, are irrevocable until the Obligations have been fully paid and
satisfied and the commitments of the Lenders to extend credit to or for the
account of the Company have expired or otherwise been terminated; provided,
however, that the Agent agrees, as a personal covenant to the relevant Debtor,
not to exercise the powers of attorney set forth in this Section unless an Event
of Default has occurred and is continuing.
Section 9. Defaults and Remedies. (a) The occurrence of any event or
the existence of any condition which is specified as an "Event of Default" under
the Credit Agreement shall constitute an "Event of Default" hereunder.
(b) Upon the occurrence and during the continuation of any Event of
Default, the Agent shall have, in addition to all other rights provided herein
or by law, the rights and remedies of a secured party under the UCC (regardless
of whether the UCC is the law of the jurisdiction where the rights or remedies
are asserted and regardless of whether the UCC applies to the affected
Collateral), and further the Agent may, without demand and without
advertisement, notice, hearing or process of law, all of which each Debtor
hereby waives to the extent permitted by applicable law, at any time or times,
sell and deliver any or all Collateral held by or for it at public or private
sale, for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion. In the exercise of any such
remedies, the Agent may sell the Collateral as a unit even though the sales
price thereof may be in excess of the amount remaining unpaid on the
Obligations. Also, if less than all the Collateral is sold, the Agent shall
have no duty to marshal or apportion the part of the Collateral so sold as
between the Debtors, or any of them, but may sell and deliver any or all of the
Collateral without regard to which of the Debtors are the owners thereof. In
addition to all other sums due the Agent or any Lender hereunder, each Debtor
shall pay the Agent and the Lenders all reasonable costs and
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expenses incurred by the Agent and such Lenders, including reasonable attorneys'
fees and court costs, in obtaining, liquidating or enforcing payment of
Collateral or the Obligations or in the prosecution or defense of any action or
proceeding by or against the Agent, the Lenders or any Debtor concerning any
matter arising out of or connected with this Agreement or the Collateral or the
Obligations, including, without limitation, any of the foregoing arising in,
arising under or related to a case under the United States Bankruptcy Code (or
any successor statute). Any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to the Debtors
in accordance with Section 13(b) hereof at least 10 days before the time of sale
or other event giving rise to the requirement of such notice; provided, however,
no notification need be given to a Debtor if such Debtor has signed, after an
Event of Default hereunder has occurred, a statement renouncing any right to
notification of sale or other intended disposition. The Agent shall not be
obligated to make any sale or other disposition of the Collateral regardless of
notice having been given. The Agent or any Lender may be the purchaser at any
such sale. Each Debtor hereby waives all of its rights of redemption from any
such sale. Subject to the provisions of applicable law, the Agent may postpone
or cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, be made at the time and place to which the sale was postponed or
the Agent may further postpone such sale by announcement made at such time and
place. In the event any of the Collateral shall constitute restricted securities
within the meaning of any applicable securities laws, any disposition thereof in
compliance with such laws shall not render the disposition commercially
unreasonable.
(c) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default hereunder, the Agent shall have
the right, in addition to all other rights provided herein or by law, to take
physical possession of any and all of the Collateral and anything found therein,
the right for that purpose to enter without legal process any premises where the
Collateral may be found (provided such entry be done lawfully), and the right to
maintain such possession on the relevant Debtor's premises (each Debtor hereby
agreeing, to the extent it may lawfully do so, to lease such premises without
cost or expense to the Agent or its designee if the Agent so requests) or to
remove the Collateral or any part thereof to such other places as the Agent may
desire. Upon the occurrence and during the continuation of any Event of Default
hereunder, the Agent shall have the right to exercise any and all rights with
respect to deposit accounts of each Debtor maintained with the Agent or any
Lender, including, without limitation, the right to collect, withdraw and
receive all amounts due or to become due or payable under each such deposit
account. Upon the occurrence and during the continuation of any Event of
Default hereunder, each Debtor shall, upon the Agent's demand, assemble the
Collateral and make it available to the Agent at a place designated by the
Agent. If the Agent exercises its right to take possession of the Collateral,
each Debtor shall also at its expense perform any and all other steps requested
by the Agent to preserve and protect the security interest hereby granted in
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the Collateral, such as placing and maintaining signs indicating the security
interest of the Agent, appointing overseers for the Collateral and maintaining
Collateral records.
(d) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default, all rights of a Debtor to
exercise the voting and/or consensual powers which it is entitled to exercise
pursuant to Section 7(a)(i) hereof and/or to receive and retain the
distributions which it is entitled to receive and retain pursuant to Section
7(a)(ii) hereof, shall, at the option of the Agent, cease and thereupon become
vested in the Agent, which, in addition to all other rights provided herein or
by law, shall then be entitled solely and exclusively to exercise all voting and
other consensual powers pertaining to the Investment Property and/or to receive
and retain the distributions which such Debtor would otherwise have been
authorized to retain pursuant to Section 7(a)(ii) hereof and shall then be
entitled solely and exclusively to exercise any and all rights of conversion,
exchange or subscription or any other rights, privileges or options pertaining
to any Investment Property as if the Agent were the absolute owner thereof
including, without limitation, the rights to exchange, at its discretion, any
and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Agent of
any right, privilege or option pertaining to any Investment Property and, in
connection therewith, 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 Agent may determine.
(e) Without in any way limiting the foregoing, each Debtor hereby grants
to the Agent and the Lenders a royalty-free irrevocable license and right to use
all of such Debtor's patents, patent applications, patent licenses, trademarks,
trademark registrations, trademark licenses, trade names, trade styles, and
similar intangibles in connection with any foreclosure or other realization by
the Agent or the Lenders on all or any part of the Collateral to the extent
permitted by law. The license and right granted the Agent and the Lenders
hereby shall be without any royalty or fee or charge whatsoever.
(f) Failure by the Agent to exercise any right, remedy or option under
this Agreement or any other agreement between any Debtor and the Agent or
provided by law, or delay by the Agent in exercising the same, shall not operate
as a waiver; and no waiver shall be effective unless it is in writing, signed by
the party against whom such waiver is sought to be enforced and then only to the
extent specifically stated. Neither the Agent, nor any Lender, nor any party
acting as attorney for the Agent or any Lender, shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct. The rights and
remedies of the Agent and the Lenders under this Agreement shall be cumulative
and not exclusive of any other right or remedy which the Agent or the Lenders
may have. For purposes of this Agreement, an Event of Default shall be
construed as continuing
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after its occurrence until the same is waived in writing by the Lenders or the
Required Lenders, as the case may be, in accordance with the Credit Agreement.
Section 10. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default shall, when received by the Agent in cash
or its equivalent, be applied by the Agent in reduction of, or held as
collateral security for, the Obligations in accordance with the terms of the
Credit Agreement. The Debtors shall remain liable to the Agent and the Lenders
for any deficiency. Any surplus remaining after the full payment and
satisfaction of the Obligations shall be returned to the Company, as agent for
the Debtors, or to whomsoever the Agent reasonably determines is lawfully
entitled thereto.
Section 11. Continuing Agreement. This Agreement shall be a
continuing agreement in every respect and shall remain in full force and effect
until all of the Obligations, both for principal and interest, have been fully
paid and satisfied and the commitments of the Lenders to extend credit to or for
the account of the Company under the Credit Agreement have expired or otherwise
terminated. Upon such termination of this Agreement, the Agent shall, upon the
request and at the expense of the Debtors, forthwith release its security
interest hereunder.
Section 12. The Agent. In acting under or by virtue of this
Agreement, the Agent shall be entitled to all the rights, authority, privileges
and immunities provided in Section 10 of the Credit Agreement, all of which
provisions of said Section 10 are incorporated by reference herein with the same
force and effect as if set forth herein in their entirety. The Agent hereby
disclaims any representation or warranty to the Lenders or any other holders of
the Obligations concerning the perfection of the liens and security interests
granted hereunder or in the value of any of the Collateral.
Section 13. Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. This Agreement shall create a continuing lien on and
security interest in the Collateral and shall be binding upon each Debtor, its
successors and assigns and shall inure, together with the rights and remedies of
the Agent and the Lenders hereunder, to the benefit of the Agent, the Lenders
and their successors and permitted assigns; provided, however, that no Debtor
may assign its rights or delegate its duties hereunder without the Agent's prior
written consent (except for such assignments and assumptions arising as a matter
of law as a result of a merger permitted by Section 7.16(c) of the Credit
Agreement). Without limiting the generality of the foregoing, and subject to
the provisions of the Credit Agreement, any Lender may assign or otherwise
transfer any indebtedness held by it secured by this Agreement to any other
person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.
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(b) All communications provided for herein shall be in writing, except as
otherwise specifically provided for hereinabove, and shall be deemed to have
been given or made, if to any Debtor when given to the Company in accordance
with Section 11.9 of the Credit Agreement, or if to the Agent or any Lender,
when given to such party in accordance with Section 11.9 of the Credit
Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure or other realization upon any
Collateral subject to this Agreement or for the execution of any trust or power
hereof or for the appointment of a receiver, or for the enforcement of any other
remedy under or upon this Agreement; it being understood and intended that no
one or more of the Lenders shall have any right in any manner whatsoever to
affect, disturb or prejudice the lien and security interest of this Agreement by
its or their action or to enforce any right hereunder, and that all proceedings
at law or in equity shall be instituted, had and maintained by the Agent in the
manner herein provided for the benefit of the Lenders.
(d) In the event that any provision hereof shall be deemed to be invalid
or unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision, but only as to such jurisdictions where such law
or interpretation is operative, and the invalidity or unenforceability of such
provision shall not affect the validity of any remaining provisions hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect. Without limiting the generality of the
foregoing, in the event that this Agreement shall be deemed to be valid or
otherwise unenforceable with respect to any Debtor, such invalidity or
unenforceability shall not affect the validity of this Agreement with respect to
the other Debtors.
(e) The lien and security interest herein created and provided for stand
as direct and primary security for the Obligations of the Company arising under
or otherwise relating to the Credit Agreement as well as for any of the other
Obligations secured hereby. No application of any sums received by the Lenders
in respect of the Collateral or any disposition thereof to the reduction of the
Obligations or any part thereof shall in any manner entitle any Debtor to any
right, title or interest in or to the Obligations or any collateral or security
therefor, whether by subrogation or otherwise, unless and until all Obligations
have been fully paid and satisfied and all agreements of the Lenders to extend
credit to or for the account of each Debtor and to or for the account of the
Company have expired or otherwise have been terminated. Each Debtor
acknowledges that the lien and security interest hereby created and provided are
absolute and unconditional and shall not in any manner be affected or impaired
by any acts of omissions whatsoever of the Agent, any Lender or any other holder
of any Obligations, and without limiting the generality of the foregoing, the
lien and security interest hereof shall not be impaired by any acceptance by the
Lenders or any other holder of any Obligations of any other security for
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or guarantors upon any of the Obligations or by any failure, neglect or omission
on the part of the Agent, any Lender or any other holder of any Obligations to
realize upon or protect any of the Obligations or any collateral or security
therefor. The lien and security interest hereof shall not in any manner be
impaired or affected by (and the Agent and the Lenders, without notice to
anyone, are hereby authorized to make from time to time) any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any of the Obligations or of any collateral or security therefor, or of any
guaranty thereof, or of any instrument or agreement setting forth the terms and
conditions pertaining to any of the foregoing. The Lenders may at their
discretion at any time grant credit to the Company without notice to the other
Debtors in such amounts and on such terms as the Lenders may elect (all of such
to constitute additional Obligations hereby secured) without in any manner
impairing the lien and security interest created and provided for herein. In
order to realize hereon and to exercise the rights granted the Agent and the
Lenders hereunder and under applicable law, there shall be no obligation on the
part of the Agent, any Lender or any other holder of any Obligations at any time
to first resort for payment to the Company or to any other Debtor or to any
guaranty of the Obligations or any portion thereof or to resort to any other
collateral, security, property, liens or any other rights or remedies
whatsoever, and the Agent and the Lenders shall have the right to enforce this
Agreement against any Debtor or any of its Collateral irrespective of whether or
not other proceedings or steps seeking resort to or realization upon or from any
of the foregoing are pending.
(f) Upon the execution and delivery of this Agreement by the Debtors
hereunder, this Agreement shall as of such date supersede all provisions of the
various Security Agreements executed by the Debtors prior to the date hereof
(the "Prior Security Agreements"). The Debtors hereby agree that,
notwithstanding the execution and delivery of this Agreement, the liens and
security interests created and provided for under the Prior Security Agreements
continue in effect under and pursuant to the terms of this Agreement for the
benefit of all of the Obligations secured hereby. Nothing herein contained
shall in any manner affect or impair the priority of the liens and security
interests created and provided for by the Prior Security Agreements as to the
indebtedness and obligations which would otherwise be secured thereby prior to
giving effect to this Agreement.
(g) In the event the Agent and the Lenders shall at any time in their
discretion permit a substitution of Debtors hereunder or a party shall wish to
become a Debtor hereunder, such substituted or additional Debtor shall, upon
executing an agreement in the form attached hereto as Schedule D, become a party
hereto and be bound by all the terms and conditions hereof to the same extent as
though such Debtor had originally executed this Agreement and, in the case of a
substitution, in lieu of the Debtor being replaced. No such substitution shall
be effective absent the written consent of Agent nor shall it in any manner
affect the obligations of the other Debtors hereunder.
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(h) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(i) Each Debtor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. Each Debtor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient form. Each Debtor, the Agent, and
each Lender hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement, any other Loan
Document or the transactions contemplated hereby or thereby.
(j) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement.
[Signature Pages to Follow]
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In Witness Whereof, each Debtor has caused this Agreement to be duly
executed and delivered in Chicago, Illinois as of the date first above written.
"Debtors"
Everest Healthcare Services Corporation
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
WSKC Dialysis Services, Inc.
/s/ John B. Bourke
By_______________________________________
Asst. Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Ohio Valley Dialysis Center, Inc.
/s/ John B. Bourke
By_______________________________________
Secretary/Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
-24-
Northwest Indiana Dialysis, Inc.
/s/ John B. Bourke
By_______________________________________
Asst. Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
New York Dialysis Management, Inc.
/s/ John B. Bourke
By_______________________________________
Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Mercy Dialysis Center, Inc.
/s/ John B. Bourke
By_______________________________________
Asst. Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
DuPage Dialysis, Ltd.
/s/ John B. Bourke
By_______________________________________
Asst. Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
-25-
Lake Avenue Dialysis Center, Inc.
/s/ John B. Bourke
By_______________________________________
Asst. Treasurer
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Home Dialysis of America, Inc.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Amarillo Acute Dialysis Specialists,
L.L.C.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Dialysis Specialists of Corpus Christi,
L.L.C.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
-26-
Home Dialysis of Eastagate, Inc.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Dialysis Services of Cincinnati, Inc.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Dialysis Specialists of Marietta, Ltd.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
Saint Margaret Mercy Dialysis
Centers, L.L.C.
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
-27-
Everest Management, Inc.
By: Everest Management, Inc., as Manager
/s/ John B. Bourke
By_______________________________________
CFO
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
The Extracorporeal Alliance, L.L.C.
/s/ John B. Bourke
By_______________________________________
Secretary
Its____________________________________
Address:
101 North Scoville
Oak Park, Illinois 60302
Attention: Mr. John B. Bourke
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Accepted and agreed to in Chicago, Illinois as of the date first above
written.
Harris Trust and Savings Bank,
as Agent as aforesaid for the Lenders
/s/ Michael W. Lewis
By_______________________________________
Senior Vice President
Its____________________________________
Address:
111 West Monroe Street, 4E
P.O. Box 755
Chicago, Illinois 60690
Attention: Ms. Gloria Compean
-29-
Schedule A
Locations
Column 1 Column 2 Column 3
Name of Debtor Chief
(and Federal Tax Executive Additional Places
I.D. Number) Office of Business
Everest Healthcare Services 101 North Scoville 1. 1201 South Main Street
Corporation Oak Park, IL 60302 Crown Point, IN 46307
Tax ID #36-4045521 2. 8701 Broadway Avenue
Merrillville, IN 46410
COLUMN 1 COLUMN 2 COLUMN 3
NAME OF DEBTOR CHIEF
(AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER) OFFICE OF BUSINESS
WSKC Dialysis Services, Inc. 101 North Scoville 1. 516 South Lincoln
Tax ID #36-2668594 Oak Park, IL 60302 Aurora, IL 60505
2. 2310 York Street
Blue Island, IL 60406
3. 0N025 Winfield Road
Winfield, IL 60190
4. 640 West Washington
Chicago, IL 60606
5. 3825 Highland, No. 102
Downers Grove, IL 60515
6. 820 Biesterfield, #220
Elk Grove Village, IL 60007
7. 4248 Commercial Way
Glenview, IL 60025
8. 3501 West North Avenue
Chicago, IL 60647
9. 7531 South Stony Island
Chicago, IL 60649
10. 100 Spalding Drive, No. 108
Naperville, IL 60566
11. 733 Madison Street
Oak Park, IL 60302
12. 7721 South Western Avenue
Chicago, IL 60620
13. Erie at Austin
Oak Park, IL 60302
14. 7718 South Claremont
Chicago, IL
15. 2701 West Washington
Bellwood, IL 60104
Ohio Valley Dialysis Center, Inc. 101 North Scoville 230 Bellemeade Avenue
Tax ID #36-3575844 Oak Park, IL 60302 Evansville, IN 47713
-2-
COLUMN 1 COLUMN 2 COLUMN 3
NAME OF DEBTOR CHIEF
[AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER) OFFICE OF BUSINESS
Northwest Indiana Dialysis, Inc. 101 North Scoville 569 Tyler Street
Tax ID #36-3372131 Oak Park, IL 60302 Gary, IN 46402
New York Dialysis Management, Inc. 101 North Scoville 1. 1325 Morris Park Avenue
Tax ID #36-3702390 Oak Park, IL 60302 Bronx, NY 10461
2. 3547 Webster
Bronx, NY 10467
Mercy Dialysis Center, Inc. 101 North Scoville 1000 Mineral Point Road
Tax ID #39-1589773 Oak Park, IL 60302 Janesville, WI 53545
DuPage Dialysis, Ltd. 101 North Scoville 1325 Memorial Drive
Tax ID #36-3029873 Oak Park, IL 60302 LaGrange, IL 60525
Lake Avenue Dialysis Center, Inc. 101 North Scoville 1. 3525 Lake Avenue, No. 4
Tax ID #36-3490713 Oak Park, IL 60302 Ft. Wayne, IN 46805
2. 7017 South Anthony Blvd.
Ft. Wayne, IN 46816
Home Dialysis of America, Inc. 101 North Scoville 6300 East El Dorado Plaza,
Tax ID #86-0711476 Oak Park, IL 60302 Suite 100
Tucson, AZ 85715
Amarillo Acute Dialysis 101 North Scoville 7205 I-40 West
Specialists, L.L.C. Oak Park, IL 60302 Suites A, B, and C
Tax ID #75-2600377 Amarillo, TX 79106
Dialysis Specialists of Corpus 101 North Scoville Raintree Plaza Shopping Center
Christi, L.L.C. Oak Park, IL 60302 Corpus Christi, TX 78411
Tax ID #74-2749663
Home Dialysis of Eastgate, Inc. 101 North Scoville 4578 East Tech Drive
Tax ID #31-1417271 Oak Park, IL 60302 Cincinnati, OH 45245
Dialysis Services of Cincinnati, Inc. 101 North Scoville 2925 Vernon Place, Suite 302
Tax ID #31-1374389 Oak Park, IL 60302 Cincinnati, OH 45243
-3-
Column 1 Column 2 Column 3
Name of Debtor Chief
(and Federal Tax) Executive Additional Places
I.D. Number) Office of Business
Dialysis Specialists of Marietta, Ltd. 101 North Scoville 1. 2906 Washington Blvd.
Tax ID #31-1484219 Oak Park, IL 60302 Belpre, OH 45714
2. Washington Shopping Center
Marietta, OH
Saint Margaret Mercy Dialysis 101 North Scoville 1. 8701 Broadway
Centers, L.L.C. Oak Park, IL 60302 Merrillville, IN 46410
Tax ID #36-4104201
2. 1201 South Main Street
Crown Point, IN 46307
Everest Management, Inc. 101 North Scoville None
Tax ID #36-4045521 Oak Park, IL 60302
The Extracorporeal Alliance, L.L.C. 101 North Scoville 1. Oakwood Medical Building
Tax ID #36-4122087 Oak Park, IL 60302 18181 Oakwood Blvd.
Suite 203
Dearborn, MI 48124
2. 736 Jenks Avenue
Panama City, FL 32401
-4-
Schedule B
Trade Names
Trade Names of
Name of Debtor Such Debtor
Everest Healthcare Services Corporation None
WSKC Dialysis Services, Inc. Aurora Dialysis Center
Blue Island Dialysis Center
Central DuPage Dialysis
Chicago Dialysis Center
Chicago Kidney Center
Downers Grove Dialysis Center
Elk Grove Dialysis Center
Glenview Dialysis Center
Humboldt Park Dialysis Center
Jackson Park Dialysis Center
Naperville Dialysis Center
Oak Park Community Dialysis
Oak Park Dialysis Center
South Side Dialysis Center
South Chicago Dialysis
West Suburban Dialysis Center
WSKC Dialysis Services
Ohio Valley Dialysis Center, Inc. None
Northwest Indiana Dialysis, Inc. None
New York Dialysis Management, Inc. None
Mercy Dialysis Center, Inc. None
DuPage Dialysis, Ltd. LaGrange Dialysis Center
Lake Avenue Dialysis Center, Inc. South Anthony Dialysis Center
Trade Names of
Name of Debtor Such Debtor
Home Dialysis of America, Inc. Home Dialysis of America
Home Dialysis Specialists of America
Amarillo Acute Dialysis Specialists, L.L.C. None
Dialysis Specialists of Corpus Christi, L.L.C. None
Home Dialysis of Eastgate, Inc. None
Dialysis Services of Cincinnati, Inc. None
Dialysis Specialists of Marrietta, Ltd. Dialysis Specialists of Belpre
Saint Margaret Mercy Dialysis Centers, L.L.C. Saint Margaret Mercy Dialysis Centers
Everest Management, Inc. Everest Management
The Extracorporeal Alliance, L.L.C. None
-2-
Schedule C
Real Estate Legal Descriptions
None
Schedule D
Assumption and Supplemental Security Agreement
This Agreement dated as of this _____ day of ______________, 199___ from
[new debtor], a __________ corporation (the "New Debtor"), to Harris Trust and
Savings Bank ("Harris"), as agent for the Lenders (defined in the Security
Agreement hereinafter identified and defined) (Harris acting as such agent and
any successor or successors to Harris in such capacity being hereinafter
referred to as the "Agent");
Witnesseth that:
Whereas, Everest Healthcare Services Corporation (the "Company") and
certain other parties have executed and delivered to the Agent that certain
Amended and Restated Security Agreement dated as of May 15, 1997 (such Amended
and Restated Security Agreement, as the same may from time to time be modified
or amended, including supplements thereto which add additional parties as
Debtors thereunder, being hereinafter referred to as the "Security Agreement")
pursuant to which such parties (the "Existing Debtors") have granted to the
Agent for the benefit of the Lenders a lien on and security interest in each
such Existing Debtor's Collateral (as such term is defined in the Security
Agreement) to secure the Obligations (as such term is defined in the Security
Agreement) of the Company owing to the Agent and the Lenders arising out of or
related to the Credit Agreement referred to therein; and
Whereas, the Company provides the New Debtor with substantial financial,
managerial, administrative, technical and design support and the New Debtor will
directly and substantially benefit from credit and other financial
accommodations extended and to be extended by the Lenders to the Company;
Now, therefore, for value received, and in consideration of advances made
or to be made, or credit accommodations given or to be given, to the Company by
the Lenders from time to time, the New Debtor hereby agrees as follows:
1. The New Debtor acknowledges and agrees that it shall become a "Debtor"
party to the Security Agreement effective upon the date the New Debtor's
execution of this Agreement and the delivery of this Agreement to the Agent, and
that upon such execution and delivery, all references in the Security Agreement
to the terms "Debtor" or "Debtors" shall be deemed to include the New Debtor.
Without limiting the generality of the foregoing, the New Debtor hereby repeats
and reaffirms all grants (including the grant of a lien and security interest),
covenants, agreements, representations and warranties contained in the Security
Agreement as
amended hereby, each and all of which are and shall remain applicable to the
Collateral from time to time owned by the New Debtor or in which the New Debtor
from time to time has any rights. Without limiting the foregoing, in order to
secure payment of the Obligations, whether now existing or hereafter arising,
the New Debtor does hereby grant to the Agent for the benefit of itself and the
other Lenders, and hereby agrees that the Agent has and shall continue to have
for the benefit of itself and the other Lenders a continuing lien on and
security interest in, among other things, all of the New Debtor's Collateral (as
such term is defined in the Security Agreement), including, without limitation,
all of the New Debtor's Receivables, General Intangibles, Inventory, Equipment,
Investment Property, and all of the other Collateral described in Section 2 of
the Security Agreement, each and all of such granting clauses being incorporated
herein by reference with the same force and effect as if set forth in their
entirety except that all references in such clauses to the Existing Debtors or
any of them shall be deemed to include references to the New Debtor. Nothing
contained herein shall in any manner impair the priority of the liens and
security interests heretofore granted in favor of the Agent under the Security
Agreement.
2. The New Debtor hereby acknowledges and agrees that the Obligations are
secured by all of the Collateral according to, and otherwise on and subject to,
the terms and conditions of the Security Agreement to the same extent and with
the same force and effect as if the New Debtor had originally been one of the
Existing Debtors under the Security Agreement and had originally executed the
same as such an Existing Debtor.
3. All capitalized terms used in this Agreement without definition shall
have the same meaning herein as such terms have in the Security Agreement,
except that any reference to the term "Debtor" or "Debtors" and any provision of
the Security Agreement providing meaning to such term shall be deemed a
reference to the Existing Debtors and the New Debtor. Except as specifically
modified hereby, all of the terms and conditions of the Security Agreement shall
stand and remain unchanged and in full force and effect.
4. The New Debtor agrees to execute and deliver such further instruments
and documents and do such further acts and things as the Agent may reasonably
deem necessary or proper to carry out more effectively the purposes of this
Agreement.
5. No reference to this Agreement need be made in the Security Agreement
or in any other document or instrument making reference to the Security
Agreement, any reference to the Security Agreement in any of such to be deemed a
reference to the Security Agreement as modified hereby.
-2-
6. This Agreement shall be governed by and construed in accordance with
the State of Illinois (without regard to principles of conflicts of law).
[New Debtor]
By
Its____________________________________
Address:
__________________________________________
__________________________________________
Attention:________________________________
Accepted and agreed to as of the date first above written.
Harris Trust and Savings Bank,
as Agent
By
Its____________________________________
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