Exhibit 10.3


 


AMENDED AND RESTATED FIRST
LIEN SECURITY AGREEMENT


 


Dated as of May 6, 2010



From



The Grantors referred to herein



as Grantors



To



GE BUSINESS FINANCIAL SERVICES INC.



as Collateral Agent


 





















 


T  A  B  L
E  O  F  C  O  N  T  E  N
T  S


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 1.
  Grant of Security

  	
  2

  
	
   

  	
   

  
	
  SECTION 2.
  Security for Obligations

  	
  5

  
	
   

  	
   

  
	
  SECTION 3.
  Grantors Remain Liable

  	
  5

  
	
   

  	
   

  
	
  SECTION 4.
  Delivery and Control of Security Collateral and Chattel Paper

  	
  5

  
	
   

  	
   

  
	
  SECTION 5.
  Maintaining the Collateral Account; Pledged Accounts

  	
  6

  
	
   

  	
   

  
	
  SECTION 6.
  Investing of Amounts in the Collateral Account

  	
  6

  
	
   

  	
   

  
	
  SECTION 7.
  Release of Amounts

  	
  7

  
	
   

  	
   

  
	
  SECTION 8.
  Representations and Warranties

  	
  7

  
	
   

  	
   

  
	
  SECTION 9.
  Further Assurances

  	
  9

  
	
   

  	
   

  
	
  SECTION 10.
  As to Equipment and Inventory

  	
  10

  
	
   

  	
   

  
	
  SECTION 11.
  Insurance

  	
  10

  
	
   

  	
   

  
	
  SECTION 12.
  Post-Closing Changes

  	
  11

  
	
   

  	
   

  
	
  SECTION 13.
  As to Intellectual Property Collateral

  	
  11

  
	
   

  	
   

  
	
  SECTION 14.
  Commercial Tort Claims

  	
  12

  
	
   

  	
   

  
	
  SECTION 15.
  Transfers and Other Liens

  	
  12

  
	
   

  	
   

  
	
  SECTION 16.
  Collateral Agent Appointed Attorney in Fact

  	
  12

  
	
   

  	
   

  
	
  SECTION 17.
  Collateral Agent May Perform

  	
  13

  
	
   

  	
   

  
	
  SECTION 18.
  The Collateral Agent’s Duties

  	
  13

  
	
   

  	
   

  
	
  SECTION 19.
  As to Receivables and Security Collateral

  	
  13

  
	
   

  	
   

  
	
  SECTION 20.
  Remedies

  	
  13

  
	
   

  	
   

  
	
  SECTION 21.
  Indemnity and Expenses

  	
  15

  
	
   

  	
   

  
	
  SECTION 22.
  Amendments; Waivers; Additional Grantors; Etc.

  	
  15

  
	
   

  	
   

  
	
  SECTION 23.
  Notices, Etc.

  	
  16

  
	
   

  	
   

  
	
  SECTION 24.
  Continuing Security Interest; Assignments under the Credit Agreement

  	
  16

  



 


ii





















 


	
  SECTION 25.
  Release; Termination

  	
  16

  
	
   

  	
   

  
	
  SECTION 26.
  Execution in Counterparts

  	
  17

  
	
   

  	
   

  
	
  SECTION 27. Governing
  Law

  	
  17

  



 


	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  —

  	
  Investment
  Property

  
	
  Schedule II

  	
  —

  	
  Pledged
  Accounts

  
	
  Schedule III

  	
  —

  	
  [Intentionally
  Omitted].

  
	
  Schedule IV

  	
  —

  	
  Intellectual
  Property

  
	
  Schedule V

  	
  —

  	
  Commercial
  Tort Claims

  
	
  Schedule VI

  	
  —

  	
  Location,
  Chief Executive Office, Type of Organization, Jurisdiction of Organization
  and Organizational Identification Number

  
	
  Schedule VII

  	
  —

  	
  Changes
  in Name, Location, Etc.

  
	
  Schedule VIII

  	
  —

  	
  Locations
  of Equipment and Inventory

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  [Intentionally
  Omitted]

  
	
  Exhibit B

  	
  —

  	
  Form of
  Copyright Security Agreement

  
	
  Exhibit C

  	
  —

  	
  Form of
  Patent Security Agreement

  
	
  Exhibit D

  	
  —

  	
  Form of
  Trademark Security Agreement

  
	
  Exhibit E

  	
  —

  	
  Form of
  Security Agreement Supplement

  



 


iii





















 


AMENDED AND RESTATED FIRST
LIEN SECURITY AGREEMENT


 


AMENDED AND RESTATED FIRST LIEN SECURITY AGREEMENT
dated as of May 6, 2010 (this “Agreement”)
made by UNIVERSAL HOSPITAL SERVICES, INC., a Delaware corporation (the “Borrower”), UHS HOLDCO, INC., a Delaware
corporation (the “Parent”) and
any other Person that subsequently becomes a party hereto (together with the
Borrower, the “Grantors”),
to GE BUSINESS FINANCIAL SERVICES INC. (formerly known as Merrill Lynch
Business Financial Services Inc.), as collateral agent (together with any
successor collateral agent appointed pursuant to Article 9 of the
Credit Agreement referred to below, the “Collateral Agent”) for the Secured
Parties (as defined in the Credit Agreement referred to below).


 


PRELIMINARY STATEMENTS


 


The Borrower and the Parent, have entered into a First
Lien Security Agreement dated May 31,
2007 (the “Existing Security Agreement”)
securing the obligations of Borrower under that certain Credit Agreement dated
as of May 31, 2007 (the “Existing Credit Agreement”)
among the Borrower, the Parent, the lenders and
financial institutions from time to time party thereto, and GE Business
Financial Services, Inc., as Administrative Agent.


 


The
parties thereto have amended and restated the Existing Credit Agreement
pursuant to the Amended and Restated Credit Agreement dated as of the date
hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) among the Borrower, the Parent, the
Lenders party thereto, the Initial L/C Issuer, the Initial Swing Line Lender,
the Administrative Agent, and GE Capital Markets, Inc. and Banc of America
Securities, LLC, as Co-Lead Arrangers and as Co-Book Runners.


 


Each Grantor is the owner of
the indebtedness (the “Initial Pledged Debt”)
set forth opposite such Grantor’s name on and as otherwise described in
Schedule I hereto and issued by the obligors named therein.


 


Each Grantor is the owner of
the deposit accounts (the “Pledged Deposit Accounts”) and the securities accounts (the
“Pledged
Securities Accounts”) set forth opposite such Grantor’s name on
Schedule II hereto.


 


The Borrower will be the
owner of an account to be opened at the request of the Collateral Agent (the “Collateral Account”
and, together with the Pledged Deposit Accounts and the Pledged Securities
Accounts, the “Pledged Accounts”).


 


The Grantors own the other
Collateral described below.


 


It is a condition precedent
to the effectiveness of the amendment and restatement of the Existing Credit
Agreement that the Grantors shall have amended and restated the Existing
Security Agreement and granted the security interest contemplated by this
Agreement.  Each Grantor will derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Documents.


 


Terms defined in the Credit
Agreement and not otherwise defined in this Agreement are used in this
Agreement as defined in the Credit Agreement. 
Further, unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the UCC (as defined below)
are used in this Agreement as such terms are defined in such Article 8 or
9.  “UCC” means the Uniform Commercial Code
as in effect from time to time in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of the security interest
in any Collateral is governed by the 


 





















 


Uniform Commercial Code as
in effect in a jurisdiction other than the State of New York,  “UCC” means the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or
priority.


 


NOW, THEREFORE, in consideration
of the premises and in order to induce (a) the Lenders to amend and
restate the Existing Credit Agreement and make Loans and issue Letters of
Credit under the Credit Agreement, (b) Affiliates of the Lenders to incur
Cash Management Obligations, and (c) the Hedge Banks to enter into Secured
Hedge Agreements from time to time, each Grantor hereby agrees with the
Collateral Agent for the ratable benefit of the Secured Parties as follows:


 


SECTION 1.  Grant of Security.  Each Grantor hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
such Grantor’s right, title and interest in and to the following, in each case,
as to each type of property described below, whether now owned or hereafter
acquired by such Grantor, wherever located, and whether now or hereafter
existing or arising (collectively, the “Collateral”):


 


(a)                                  all equipment
in all of its forms, including, without limitation, all machinery, tools, motor
vehicles, vessels, aircraft, furniture and fixtures, and all parts thereof and
all accessions thereto, including, without limitation, computer programs and
supporting information that constitute equipment within the meaning of the UCC
(any and all such property being the “Equipment”);


 


(b)                                 all inventory
in all of its forms, including, without limitation, (i) all raw materials,
work in process, finished goods and materials used or consumed in the
manufacture, production, preparation or shipping thereof, (ii) goods in
which such Grantor has an interest in mass or a joint or other interest or
right of any kind (including, without limitation, goods in which such Grantor
has an interest or right as consignee) and (iii) goods that are returned
to or repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents therefor, including, without
limitation, computer programs and supporting information that constitute
inventory within the meaning of the UCC (any and all such property being the “Inventory”);


 


(c)                                  all accounts
(including, without limitation, health-care-insurance receivables), chattel
paper (including, without limitation, tangible chattel paper and electronic
chattel paper), instruments (including, without limitation, promissory notes),
deposit accounts, securities accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services and whether or not
earned by performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages, Liens,
leases, letters of credit and other contracts securing or otherwise relating to
the foregoing property (any and all of such accounts, chattel paper,
instruments, deposit accounts, securities accounts, letter-of-credit rights,
general intangibles and other obligations, to the extent not referred to in
subsection (d) or (e) below, being the “Receivables,” and any and all such supporting obligations,
security agreements, mortgages, Liens, leases, letters of credit and other
contracts being the “Related Contracts”);


 


(d)                                 the following
(collectively, the “Security  Collateral”):


 


(i)                                     the Initial
Pledged Debt and the instruments, if any, evidencing the Initial Pledged Debt,
and all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Debt;


 





















 


(ii)                                  all additional
indebtedness from time to time owed to such Grantor (such indebtedness,
together with the Initial Pledged Debt, being the “Pledged Debt”) and the instruments,
if any, evidencing such indebtedness, and all interest, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such indebtedness;


 


(e)                                  Contracts;


 


(f)                                    the following
(collectively, the “Account Collateral”):


 


(i)                                     the Pledged
Deposit Accounts, the Pledged Securities Accounts, the Collateral Account and
all funds and financial assets from time to time credited thereto (including
without limitation, all Cash Equivalents), all interest, dividends, distributions,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such funds
and financial assets, and all certificates and instruments, if any, from time
to time representing or evidencing the Pledged Deposit Accounts, the Pledged
Securities Accounts or the Collateral Account;


 


(ii)                                  all promissory
notes, certificates of deposit, checks and other instruments from time to time
delivered to or otherwise possessed by the Collateral Agent for or on behalf of
such Grantor in substitution for or in addition to any or all of the then
existing Account Collateral; and


 


(iii)                               all interest,
dividends, distributions, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the then existing Account Collateral; and


 


(g)                                 the following
(collectively, the “Intellectual Property
Collateral”):


 


(i)                                     all patents,
patent applications, utility models and statutory invention registrations, all
inventions claimed or disclosed therein and all improvements thereto (“Patents”);


 


(ii)                                  all trademarks,
service marks, domain names, trade dress, logos, designs, slogans, trade names,
business names, corporate names and other source identifiers, whether
registered or unregistered (provided that no security interest shall be granted
in United States intent-to-use trademark applications to the extent that, and
solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together, in each case, with the
goodwill symbolized thereby (“Trademarks”);


 


(iii)                               all copyrights,
including, without limitation, copyrights in Computer Software (as hereinafter
defined), internet web sites and the content thereof, whether registered or
unregistered (“Copyrights”);


 


(iv)                              all computer
software, programs and databases (including, without limitation, source code,
object code and all related applications and data files), firmware and
documentation and materials relating thereto, together with any and all
maintenance rights, service rights, programming rights, hosting rights, test
rights, improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and new
versions of any of the foregoing (“Computer Software”);


 





















 


(v)                                 all
confidential and proprietary information, including, without limitation,
know-how, trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data,
including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information (collectively, “Trade Secrets”),
and all other intellectual, industrial and intangible property of any type,
including, without limitation, industrial designs and mask works;


 


(vi)                              all
registrations and applications for registration for any of the foregoing,
including, without limitation, those registrations and applications for
registration set forth in Schedule IV hereto, together with all reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations thereof;


 


(vii)                           all tangible
embodiments of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;


 


(viii)                        all agreements,
permits, consents, orders and franchises relating to the license, development,
use or disclosure of any of the foregoing to which such Grantor, now or
hereafter, is a party or a beneficiary (all of the foregoing collectively
referred to as “IP
Agreements”); and


 


(ix)                                any and all
claims for damages and injunctive relief for past, present and future
infringement, dilution, misappropriation, violation, misuse or breach with
respect to any of the foregoing, with the right, but not the obligation, to sue
for and collect, or otherwise recover, such damages;


 


(h)                                 the commercial
tort claims described in Schedule V hereto (together with any commercial tort
claims as to which the Grantors have complied with the requirements of Section 14,
the “Commercial Tort Claims Collateral”);


 


(i)                                     all books and
records (including, without limitation, customer lists, credit files, printouts
and other computer output materials and records) of such Grantor pertaining to
any of the Collateral; and


 


(j)                                     all proceeds
of, collateral for, income, royalties and other payments now or hereafter due
and payable with respect to, and supporting obligations relating to, any and
all of the Collateral (including, without limitation, proceeds, collateral and
supporting obligations that constitute property of the types described in
subsections (a) through (i) of this Section 1) and, to
the extent not otherwise included, all (A) payments under insurance
(whether or not the Collateral Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral, and (B) cash.


 


Notwithstanding anything
herein to the contrary, this Agreement shall not constitute a grant of security
interest in (and the term “Collateral” shall be deemed not to include) (A) any
lease, license, contract, property rights or agreement to which any Grantor is
a party or any of its rights or interests thereunder, to the extent that and
for so long as (but only for so long as), the grant of such security interest
shall (1) constitute or result in the abandonment, invalidation or
unenforceability under applicable law of any right, title or interest of any
Grantor therein or (2) constitute or result in a material breach or
termination pursuant to the terms of, or a material default, under, any such
lease, license, contract, property rights or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or 


 





















 


provisions)); (B) any
Equipment owned by any Grantor that is subject to a purchase money Lien or a
Capitalized Lease (as defined in the Credit Agreement) permitted pursuant to
the Credit Agreement if the contract or other agreement in which such Lien is
granted (or in the documentation providing for such Capitalized Lease)
prohibits the creation of any other Lien on such Equipment, but only, in each
case, to the extent and for so long as (but only for so long as), the
Indebtedness (as defined in the Credit Agreement) secured by the applicable
Lien or the applicable Capitalized Lease has not been repaid in full or the
applicable prohibition has not otherwise been removed or terminated; provided that any proceeds, substitutions or replacements of any
property included in subclauses (A) and (B) above shall not be
excluded (unless such proceeds, substitutions or replacements would itself
constitute property excluded under subclause (A) or (B)); (C) any
Equity Interests or investment property in any subsidiary or joint venture; or (D) motor
vehicles and other assets subject to certificates of title and letter of credit
rights, and assets requiring perfection through control agreements (other than
deposit accounts and securities accounts (excluding any payroll, trust, petty
cash, zero balance and tax withholding accounts).


 


SECTION 2.  Security for Obligations.  This Agreement secures, in the case of each
Grantor, the payment of all Obligations of such Grantor now or hereafter
existing under the Loan Documents and all Cash Management Obligations and
Secured Hedge Obligations of such Grantor, whether direct or indirect, absolute
or contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums, penalties, indemnifications, contract causes of action, costs,
expenses or otherwise (all such Obligations being the “Secured Obligations”). 
Without limiting the generality of the foregoing, this Agreement
secures, as to each Grantor, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Grantor to any Secured Party
under the Loan Documents, but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.


 


SECTION 3.  Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts
and agreements included in such Grantor’s Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.


 


SECTION 4.  Delivery and Control of Security
Collateral and Chattel Paper. 
(a)  All instruments representing or evidencing Security Collateral
in excess of $500,000 in principal amount individually shall be delivered to
and held by or on behalf of the Collateral Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Collateral Agent.  Upon the occurrence and during the
continuance of (x) an Event of Default, the Collateral Agent shall have
the right, at any time, to (i) transfer to or to register in the name of
the Collateral Agent or any of its nominees any or all of the Security
Collateral and (ii) exchange instruments representing or evidencing
Security Collateral for instruments of smaller or larger denominations; provided that the Collateral Agent provides written notice
to the applicable Grantor.  If any
Grantor has possession of any Chattel Paper representing monetary obligations
in excess of $500,000, such Chattel Paper shall be marked with the following
legend: “This writing and the obligations evidenced or secured thereby are
subject to the security interest of Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services Inc., as Collateral Agent, for the
benefit of the Collateral Agent and certain Lenders”.  If any Grantor has possession of any electronic
chattel paper representing monetary obligations in excess of $500,000, each
Grantor shall take all steps necessary to grant the Collateral Agent control of
all such electronic chattel paper in accordance


 





















 


with the UCC and all “transferable records” as
defined in each of the Uniform Electronic Transactions Act and the Electronic
Signatures in Global and National Commerce Act.


 


(b)                                 Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the right to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Security Collateral.


 


(c)                                  Upon the
request of the Collateral Agent upon the occurrence and during the continuance
of an Event of Default, each Grantor will notify each issuer of Security
Collateral granted by it hereunder that such Security Collateral is subject to
the security interest granted hereunder.


 


SECTION 5.  Maintaining the Collateral Account;
Pledged Accounts.  So long as any
Loan or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid (other than contingent indemnification obligations not yet
accrued and payable and which by their terms survive termination of the Loan
Document), any Letter of Credit shall be outstanding, or any Lender shall have
any Commitment (provided that Letters of Credit
shall be deemed no longer outstanding hereunder in accordance with the Cash
Collateralization or back-to-back letter of credit provisions set forth in Section 2.03(g) of
the Credit Agreement):


 


(a)                                  Each Grantor
will maintain the Pledged Accounts only with the financial institution acting
as Collateral Agent hereunder or with a bank or other institution (a “Pledged Account Bank”) that has agreed with
such Grantor and the Collateral Agent to comply, upon the occurrence and during
the continuance of an Event of Default, and upon a receipt of notice of
exclusive control, to comply with instructions originated by the Collateral
Agent directing the disposition of funds in such deposit account without the
further consent of such Grantor, such agreement to be in form and substance
reasonably satisfactory to the Collateral Agent (a “Control Agreement”); provided,
however, that this Section 5(a) shall not apply (i) to
deposit accounts to the extent the average daily balance, measurable over a
trailing 30 day period, on deposit in each such deposit account does not exceed
$50,000 at any time or operated solely as a payroll account, zero balance
account or tax withholding account, (ii) to securities accounts to the
extent that the average daily value, measurable over a 30 day trailing period,
of financial assets credited to each such securities account does not exceed
$50,000 at any time, and (iii) as expressly limited by clause (c) below.  Each Grantor agrees that at no time shall the
sum of (x) the average daily balance, measurable over a trailing 30 day
period, of amounts on deposit in all deposit accounts for which there is not in
effect a Control Agreement and (y) the average daily value, measurable
over a trailing 30 day period, of financial assets credited to all securities
accounts for which there is not in effect a Control Agreement, exceed in the
aggregate $250,000.


 


(b)                                 If an Event of
Default shall have occurred or be continuing, the Collateral Agent may, at any
time and without notice to, or consent from, the Grantor, transfer, or direct
the transfer of funds from the Pledged Accounts to satisfy the Grantor’s
Obligations under the Loan Documents.


 


(c)                                  Anything in
clause (a) above to the contrary notwithstanding, the Grantors shall not
be required to deliver fully-executed Control Agreements with respect to the
Pledged Securities Accounts until June 21, 2010.  At the request of the Grantors, such date may
be extended in the reasonable discretion of the Collateral Agent.


 


SECTION 6.  Investing of Amounts in the Collateral
Account.  During periods when the
Collateral Agent exercises sole control over the Collateral Account, the
Collateral Agent shall, subject to the provisions of Sections 5, 7
and 20:  (a) from time
to time, invest, or direct the applicable Pledged Account Bank to invest,
amounts received with respect to the Collateral Account in such Cash
Equivalents credited to the Collateral Account as the Borrower may select,
(b) from time to time, invest


 





















 


interest paid on the Cash Equivalents referred to in
subsection (a) above and reinvest other proceeds of any such Cash
Equivalents that may mature or be sold, in each case in such Cash Equivalents
credited in the same manner, (c) deposit interest and proceeds that are
not invested or reinvested in Cash Equivalents as provided above in the
Collateral Account and (d) have the right to exchange, or direct the
applicable Pledged Account Bank to exchange, such Cash Equivalents for similar
Cash Equivalents of smaller or larger determinations, or for other Cash
Equivalents, credited to the Collateral Account.


 


SECTION 7.  Release of Amounts.  To the extent that (a) any proceeds were
deposited in a Pledged Account during the continuance of an Event of Default
and (b) there are remaining proceeds in such Pledged Account upon the
termination of such Event of Default, so long as no Event of Default shall have
occurred and be continuing, the Collateral Agent will pay and release, or
direct the applicable Pledged Account Bank to pay and release, to the
applicable Grantor or at its order or, at the request of such Grantor, to the
Collateral Agent to be applied to the Obligations of the Grantors under the
Loan Documents, such amount, if any, as is then on deposit in such Pledged
Account, in each case to the extent permitted to be released under the terms of
the Credit Agreement.


 


SECTION 8.  Representations and Warranties.  Each Grantor represents and warrants as
follows:


 


(a)                                  Such Grantor’s
exact legal name, as defined in Section 9-503(a) of the UCC, is
correctly set forth in Schedule VI hereto. 
Such Grantor’s location, chief executive office, type of organization,
jurisdiction of organization and organizational identification number, if any,
is set forth in Schedule VI hereto and is accurate in all material
respects.  Within the five years
preceding the date hereof, such Grantor has not changed its legal name,
location (as defined in the UCC), chief executive office, type of organization,
jurisdiction of organization or organizational identification number, if any,
from those set forth in Schedule VI hereto except as set forth in
Schedule VII hereto.


 


(b)                                 Such Grantor is
the legal and beneficial owner of, or with respect to Intellectual Property has
the right to use, the Collateral for which a security interest is granted or
purported to be granted by it under this Agreement free and clear of any Lien,
claim, option or right of others, except for the security interest created
under this Agreement or otherwise permitted under the Credit Agreement.  No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral or
listing such Grantor as debtor is on file in any relevant recording office,
except such as may have been filed in favor of the Collateral Agent relating to
the Loan Documents or as otherwise permitted under the Credit Agreement.


 


(c)                                  All of the
Equipment and Inventory (other than Equipment and Inventory that is (i) located
at customer or supplier locations in the normal course of business or (ii) in
transit or out for repair or further process) of such Grantor are located at
the places specified therefor in Schedule VIII hereto or at another owned or
leased location as to which such Grantor has complied (or will comply within
the period set forth therein) with the requirements of Section 10
or otherwise has an aggregate book value of no more than $250,000.


 


(d)                                 None of the
Receivables or Agreement Collateral is evidenced by a promissory note or other instrument
in excess of (i) $250,000 individually and (ii) $1,000,000 in the
aggregate, that has not been delivered to the Collateral Agent.


 


(e)                                  If such Grantor
is an issuer of Security Collateral, such Grantor confirms that it has received
notice of the security interest granted hereunder.


 


(f)                                    The Pledged
Debt pledged by such Grantor hereunder has been duly authorized, authenticated
or issued and delivered, is the legal, valid and binding obligation of the
issuers thereof, is


 





















 


not in default and, to the extent applicable,
is evidenced by one or more promissory notes (which promissory notes have been
delivered to the Collateral Agent).


 


(g)                                 The Initial
Pledged Debt constitutes all of the outstanding indebtedness in excess of (i) $100,000
individually and (ii) $500,000 in the aggregate, owed to such Grantor by
the issuers thereof evidenced by a note or other instrument and is outstanding
in the principal amount indicated on Schedule I hereto.


 


(h)                                 Such Grantor
has (i) no deposit accounts to the extent that the average daily balance,
measurable over a 30 day trailing period, on deposit in each such deposit
account is in excess of $50,000 other than the Collateral Account, or Pledged
Deposit Accounts listed on Schedule II hereto or operated solely as a payroll
account, zero balance account or tax withholding account and additional Pledged
Deposit Accounts as to which such Grantor has complied with the applicable
requirements of Section 5, and (ii) no securities accounts to
the extent that the average daily value, measurable over a 30 day trailing
period, of financial assets credited to each such securities account is in
excess of $50,000 other than the Pledged Securities Accounts listed on Schedule
II hereto and additional Pledged Securities Accounts as to which such Grantor
has complied with the applicable requirements of Section 5.


 


(i)                                     This Agreement
creates in favor of the Collateral Agent for the benefit of the Secured Parties
a valid first priority security interest, except as otherwise provided for
under the Loan Documents, in the Collateral granted by such Grantor, securing
the payment of the Secured Obligations. 
Each Grantor has authorized the Collateral Agent to file financing and
continuation statements under the UCC and record Intellectual Property Security
Agreements referred to in Section 13(c) with the U.S. Patent
and Trademark Office and the U.S. Copyright Office necessary to perfect a first
priority security interest in the respective Collateral, as applicable, subject
to certain exceptions contained herein and in the Credit Agreement.


 


(j)                                     No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required (other than as
otherwise provided for under the Credit Agreement or this Agreement) for (i) the
grant by such Grantor of the security interest granted hereunder or for the
execution, delivery or performance of this Agreement by such Grantor, (ii) the
perfection (to the extent required hereunder and excluding any security interest
in cash) or maintenance of the security interest created hereunder (including
the first priority nature of such security interest), except for the filing of
financing and continuation statements under the UCC, which, upon filing of the
financing statements delivered pursuant to Section 4.01(a)(iv)(B) of
the Credit Agreement, have been duly filed and are in full force and effect,
upon the recordation of the Intellectual Property Security Agreements referred
to in Section 13(d) with the U.S. Patent and Trademark Office
and the U.S. Copyright Office, any filings outside the United States required
to perfect a security interest in Intellectual Property Collateral, and the
actions described in Section 4 with respect to the Security
Collateral, which actions, upon filing of the Intellectual Property Security
Agreement executed by the Loan Parties on the Closing Date, have been taken and
are in full force and effect, or (iii) the exercise by the Collateral
Agent of its voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with the disposition of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally.


 


(k)                                  As to itself
and its Intellectual Property Collateral:


 


(i)                                     Except as could
not be reasonably expected to have a Material Adverse Effect, the operation of
such Grantor’s business as currently conducted and the use of the Material
Intellectual Property Collateral (as defined below) in connection therewith
does not infringe,


 





















 


misappropriate,
dilute, misuse or otherwise violate the intellectual property rights of any
third party.


 


(ii)                                  Such Grantor is
the exclusive owner or joint owner of all right, title and interest in and to
the Material Intellectual Property Collateral, or is entitled to use the
Material Intellectual Property Collateral subject only to the terms of the
related IP Agreements.


 


(iii)                               The
Intellectual Property Collateral set forth on Schedule IV hereto includes all
patents, patent applications, domain names, trademark registrations and
applications, copyright registrations and applications that are owned by and
material to the business of such Grantor in each case which are reasonably necessary
to the operation of such Grantor’s respective business.


 


(iv)                              The Material
Intellectual Property Collateral owned by such Grantor is subsisting and has
not been adjudged invalid or unenforceable in whole or part, and is valid and
enforceable.


 


(v)                                 Except as set
forth on Schedule IV hereto, such Grantor has not granted any material license,
release, covenant not to sue, non-assertion assurance, or other material right
to any Person with respect to any part of the Material Intellectual Property
Collateral (other than (A) licenses granted to such Grantor’s customers in
the ordinary course of business), the effect of which would create a material
impairment of such Grantor’s use of such Material Intellectual Property
Collateral as intended in the operation of its respective business. The
consummation of the transactions contemplated by the Transaction Documents will
not result in the termination or impairment of any of the Material Intellectual
Property Collateral.


 


(vi)                              With respect to
each material IP Agreement, except as could not be reasonably expected to have
a Material Adverse Effect:  (A) such
IP Agreement is valid and binding and in full force and effect with respect to
such Grantor, and to the knowledge of any Specified Officer of such Grantor, with
respect to any other party thereto, and represents the entire agreement between
the respective parties thereto with respect to the subject matter thereof; (B) such
IP Agreement will not cease to be valid and binding and in full force and
effect on terms identical to those currently in effect as a result of the
rights and interest granted herein, nor will the grant of such rights and
interest constitute a material breach or default under such IP Agreement or
otherwise give any party thereto a right to terminate such IP Agreement; (C) such
Grantor has not received any written notice of termination or cancellation
under such IP Agreement; (D) such Grantor has not received any notice of a
breach or default under such IP Agreement, which breach or default has not been
cured; and (E) neither such Grantor nor, to the knowledge of any Specified
Officer of such Grantor, is any other party to such IP Agreement is in breach
or default thereof in any material respect, and, to the knowledge of any
Specified Officer of such Grantor no event has occurred that, with notice or
lapse of time or both, would constitute such a breach or default or permit
termination, modification or acceleration under such IP Agreement.


 


(l)                                     Such Grantor
has no commercial tort claims in excess of $2,500,000 other than those listed
in Schedule V hereto and additional commercial tort claims as to which such
Grantor has complied with the requirements of Section 14.


 


SECTION 9.  Further Assurances.  (a)  Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further commercially reasonable action that is necessary, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
pledge or security interest granted or purported to be granted by such Grantor
hereunder or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral of such Grantor.  Each


 





















 


Grantor further agrees that it shall, at the expense
of such Grantor, take any and all commercially reasonable actions necessary to
defend title to the Collateral against all Persons and to defend the security
interest created hereunder and the priority thereof against any Lien prohibited
under the Credit Agreement.


 


(b)                                 Each Grantor
hereby authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, including, without limitation,
one or more financing statements indicating that such financing statements
cover all assets or all personal property (or words of similar effect) of such
Grantor, regardless of whether any particular asset described in such financing
statements falls within the scope of the UCC or the granting clause of this
Agreement.  A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law.


 


(c)                                  Each Grantor
will furnish to the Collateral Agent from time to time statements and schedules
further identifying and describing the Collateral of such Grantor and such
other reports in connection with such Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.


 


(d)                                 Notwithstanding
anything to the contrary in this Agreement or any other Collateral Document,
this Agreement shall be subject to the provisions of Section 6.12
of the Credit Agreement.


 


SECTION 10.  As to Equipment and Inventory.  Each Grantor will keep its Equipment (other
than Equipment that is located at a customer or supplier location or is
intransit in the ordinary course of business or sold in accordance with the
Credit Agreement) and Inventory (other than Inventory on consignment or sold in
the ordinary course of business) at the places therefor specified in Section 8(c) or
at such other places identified by UHS concurrently with the delivery of the
financial statements pursuant to Section 6.01(b) of the Credit
Agreement.


 


(a)                                  Each Grantor
will cause its Equipment to be maintained and preserved in accordance with Section 6.06
of the Credit Agreement.


 


(b)                                 Each Grantor
will pay promptly when due all property and other material taxes, assessments
and governmental charges or levies imposed upon, and all claims (including,
without limitation, claims for labor, materials and supplies) against, its
Equipment and Inventory, except to the extent payment thereof is not required
by Section 6.04 of the Credit Agreement.


 


(c)                                  Each Grantor,
at its own expense, shall deliver to the Collateral Agent the results of each
physical verification, if any, which such Grantor may in its discretion have
made, or caused any other Person to make on its behalf, of all or a portion of
its Inventory.


 


SECTION 11.  Insurance.  Each Grantor will, at its
own expense, maintain insurance as required by the terms of the Credit
Agreement.  Each casualty, property and
liability (excluding business interruption) policy shall in addition
(a) name the Collateral Agent as loss payee or additional insured party, as
applicable, thereunder (without any representation or warranty by or obligation
upon the Collateral Agent) or other language satisfactory to the Collateral
Agent, (b) provide that there shall be no recourse against the Collateral
Agent for payment of premiums or other amounts with respect thereto and
(c) provide that at least 10 days’ prior written notice of cancellation or
of lapse shall be given to the Collateral Agent by the insurer or other
language satisfactory to the Collateral Agent. 
Each Grantor will, if so reasonably requested by the Collateral Agent,
deliver to the Collateral Agent original or duplicate policies of such
insurance.  Reimbursement under any
liability insurance maintained by any Grantor


 





















 


pursuant to this Section 11 may
be paid directly to the Person who shall have incurred liability covered by
such insurance.


 


SECTION 12.  Post-Closing Changes.  Each Grantor agrees to promptly notify the
Collateral Agent in writing of any change to its legal name, type of
organization, jurisdiction of organization or organizational identification
number (if any) and shall take all action reasonably required by the Collateral
Agent for the purposes of perfecting or protecting the security interest
granted by this Agreement.  Each Grantor
will hold and preserve its records relating to the Collateral, including,
without limitation and the Related Contracts, and will permit representatives
of the Collateral Agent at any reasonable time during normal business hours to
inspect and make abstracts from such records and other documents, upon
reasonable advance notice to such Grantor; provided that,
excluding any such visits and inspections during the continuance of an Event of
Default, only the Collateral Agent may exercise rights under this Section 12
and the Collateral Agent shall not exercise such rights more often than one
(1) time during any calendar year absent the existence of an Event of
Default; provided further that, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent or any Lender (or any respective representative or independent
contractor) may do any of the foregoing at the reasonable expense of such
Grantor at any time during normal business hours and upon reasonable advance
notice. If any Grantor does not have an organizational identification number
and later obtains one, within thirty (30) days, it will notify the Collateral
Agent of such organizational identification number.


 


SECTION 13.  As to Intellectual Property Collateral.  (a)  With respect to each item of its
Intellectual Property Collateral that is material to the business of any
Grantor (any such item of Intellectual Property Collateral being “Material Intellectual Property Collateral”), except to the
extent failure to act could not reasonably be expected to have a Material
Adverse Effect, with respect to each item of Material Intellectual Property
Collateral owned by such Grantor, each Grantor agrees to take, at its expense,
commercially reasonable actions that it determines are necessary in accordance
with the exercise of its business discretion, including, without limitation, in
the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authority, to (i) maintain the validity and enforceability of
such Material Intellectual Property Collateral and maintain such Material
Intellectual Property Collateral in full force and effect, and (ii) pursue
the registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in such Material
Intellectual Property Collateral of such Grantor, including, without
limitation, the payment of required fees and taxes, the filing of responses to
office actions issued by the U.S. Patent and Trademark Office, the U.S.
Copyright Office or other governmental authorities, the filing of applications
for renewal or extension, the filing of affidavits under Sections 8 and 15 of
the U.S. Trademark Act, the filing of divisional, continuation,
continuation-in-part, reissue and renewal applications or extensions, the
payment of maintenance fees and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings.


 


(b)                                 Except as could
not be reasonably expected to have a Material Adverse Effect, no Grantor shall
do or permit any act or knowingly omit to do any act whereby any of its
Material Intellectual Property Collateral may lapse, be terminated or become
invalid or unenforceable or placed in the public domain (or, in case of a trade
secret, lose its competitive value) other than the expiration of patents at the
end of their statutory term.


 


(c)                                  Except when
failure to do so could not reasonably be expected to cause a Material Adverse
Effect, each Grantor shall take commercially reasonable actions that it
determines are necessary in accordance with the exercise of its business
discretion to preserve and protect each item of its Material Intellectual
Property Collateral.


 
















 


(d)           With
respect to its Material Intellectual Property, on the Closing Date or such
later date as provided under the terms of the Credit Agreement or which the
Collateral Agent consents to in writing, each Grantor agrees to execute and
deliver to the Collateral Agent, with respect to all Material Intellectual
Property that is registered or with respect to which registration is pending
(i) an agreement, in substantially the form set forth in Exhibit B
hereto or otherwise in form and substance reasonably satisfactory to the
Collateral Agent (a “Copyright Security
Agreement”), (ii) an agreement, in substantially the form set
forth in Exhibit C hereto or otherwise in form and substance reasonably
satisfactory to the Collateral Agent (a “Patent
Security Agreement”) and (iii) an agreement, in substantially
the form set forth in Exhibit D hereto or otherwise in form and substance
reasonably satisfactory to the Collateral Agent (a “Trademark Security Agreement” and, together with each
Copyright Security Agreement and each Patent Security Agreement, the “Intellectual Property Security Agreements”),
in each case for recording the security interest granted hereunder to the
Collateral Agent in such Intellectual Property Collateral with the U.S. Patent
and Trademark Office or the U.S. Copyright Office, as applicable.


 


(e)           Each
Grantor agrees that should it obtain an ownership interest in any item of the
type set forth in Section 1(g) that is not on the date hereof
a part of the Intellectual Property Collateral (“After-Acquired Intellectual Property”) (i) the provisions
of this Agreement shall automatically apply thereto, and (ii) any such
After-Acquired Material Intellectual Property and, in the case of trademarks,
the goodwill symbolized thereby, shall automatically become part of the
Intellectual Property Collateral subject to the terms and conditions of this
Agreement with respect thereto.  After
the end of each fiscal quarter of the Borrower, as set forth in Section 6.14(b) of
the Credit Agreement, each Grantor shall provide written notice to the
Collateral Agent identifying the After-Acquired Intellectual Property
consisting of material patents, patent applications, trademark registrations,
trademark applications, copyright registrations, and copyright applications acquired
during such fiscal quarter, and such Grantor shall execute and deliver to the
Collateral Agent with such written notice, or otherwise authenticate, an
agreement in form and substance reasonably satisfactory to the Collateral Agent
(an “IP Security Agreement Supplement”)
covering such After-Acquired Intellectual Property, which IP Security Agreement
Supplement shall be recorded with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect (subject to the exceptions contained herein and in the Credit
Agreement) the security interest hereunder in such After-Acquired Intellectual
Property in the United States.


 


SECTION 14. 
Commercial Tort Claims. 
Each Grantor will promptly after the end of each fiscal quarter give
notice to the Collateral Agent of any commercial tort claim individually in
excess of $2,500,000 that may arise after the date hereof and will immediately
execute or otherwise authenticate a supplement to this Agreement, and otherwise
take all necessary action, to subject such commercial tort claim to the first
priority security interest created under this Agreement.


 


SECTION 15. 
Transfers and Other Liens. 
(a)  Each Grantor agrees that it will not (i) sell, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, other than sales, assignments and other dispositions of Collateral
and options relating to Collateral permitted under the terms of the Credit
Agreement or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral of such Grantor except for the pledge, assignment and
security interest created under this Agreement and Liens permitted under the
Loan Documents.


 


SECTION 16. 
Collateral Agent Appointed Attorney in Fact.  Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney in fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time, upon the occurrence and during the continuance of an Event
of Default, in the Collateral Agent’s reasonable discretion, to take any 


 

















 


action and to execute any instrument that the Collateral Agent may deem
necessary or advisable to effect the provisions of this Agreement, including, without
limitation:


 


(a)           to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 11,


 


(b)           to ask for, demand, collect, sue for,
recover, compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral,


 


(c)           to receive, indorse and collect any
drafts or other instruments, documents and chattel paper, in connection with
subsection (a) or (b) above, and


 


(d)           to file any claims or take any action
or institute any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or the rights of the
Collateral Agent with respect to any of the Collateral.


 


SECTION 17. 
Collateral Agent May Perform.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may, but without any obligation to do
so, with notice (or upon the occurrence and during the continuance of an Event
of Default, without notice), itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 21.


 


SECTION 18. 
The Collateral Agent’s Duties. 
The powers conferred on the Collateral Agent hereunder are solely to
protect the Secured Parties’ interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. 
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty (other than as imposed by law, this Agreement or any other
Loan Document) as to any Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not any Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.  The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property or as required by
law and will not be liable or responsible for any loss or damage to any
Collateral, or for any diminution in the value thereof, by reason of any act or
omission of any sub-agent or bailee selected by the Collateral Agent in good
faith, except to the extent that such liability arises from the Collateral
Agent’s gross negligence, bad faith or willful misconduct.


 


SECTION 19. 
As to Receivables and Security Collateral.  The Collateral Agent may at any time in the
Collateral Agent’s own name, in the name of a nominee of the Collateral Agent
or in the name of any Grantor communicate (by mail, telephone, facsimile or
otherwise) with Account Debtors and obligors in respect of any Security
Collateral to verify with such Persons, to the Collateral Agent’s satisfaction,
the existence, the amount, the terms of, and any other matter relating to
Receivables, payment intangibles, Security Collateral or Chattel Paper.


 


SECTION 20. 
Remedies.  Subject to Section 8.02
of the Credit Agreement, if any Event of Default shall have occurred and be
continuing:


 


(a)           The
Collateral Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a 


 

















 


secured party upon default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may:  (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as directed
by the Collateral Agent and make it available to the Collateral Agent at a
place and time to be designated by the Collateral Agent that is reasonably
convenient to both parties; (ii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent’s offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Collateral
Agent may deem commercially reasonable; (iii) occupy any premises owned
or, to the extent lawful and permitted, leased by any of the Grantors where the
Collateral or any part thereof is assembled or located for a reasonable period
in order to effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and
(iv) exercise any and all rights and remedies of any of the Grantors under
or in connection with the Collateral, or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Receivables, the Related Contracts and the
other Collateral, (B) withdraw, or cause or direct the withdrawal, of all
funds with respect to the Account Collateral and (C) exercise all other
rights and remedies with respect to the Receivables, the Related Contracts and
the other Collateral, including, without limitation, those set forth in
Section 9-607 of the UCC.  Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days’ notice to such Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given.  The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.


 


(b)           Any
cash held by or on behalf of the Collateral Agent and all cash proceeds
received by or on behalf of the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, or at any time thereafter applied (after payment of any
amounts payable to the Collateral Agent pursuant to Section 21) in
whole or in part by the Collateral Agent for the ratable benefit of the Secured
Parties against, all or any part of the Secured Obligations, as set forth in Section 8.03
of the Credit Agreement.


 


(c)           [Intentionally
omitted].


 


(d)           The
Collateral Agent may, without notice to any Grantor except as required by law
and at any time or from time to time, charge, set off and otherwise apply all
or any part of the Secured Obligations against any funds held with respect to
the Account Collateral or in any other deposit account or securities account.


 


(e)           The
Collateral Agent may send to each bank party to any Control Agreement a “Notice
of Exclusive Control” (or similar term) as defined in and under such Agreement.


 


(f)            In
the event of any sale or other disposition of any of the Intellectual Property
Collateral of any Grantor, the goodwill symbolized by any Trademarks subject to
such sale or other disposition shall be included therein, and such Grantor
shall supply to the Collateral Agent or its designee such Grantor’s know-how
and expertise, and documents and things relating to any Intellectual Property
Collateral subject to such sale or other disposition, and such Grantor’s
customer lists and other records and documents relating to such Intellectual
Property Collateral and to the manufacture, distribution, advertising and sale
of products and services of such Grantor.


 

















 


(g)           If
the Collateral Agent shall determine to exercise its right to sell all or any
of the Security Collateral of any Grantor pursuant to this Section 20,
each Grantor agrees that, upon request of the Collateral Agent, such Grantor
will, at its own reasonable expense, do or cause to be done all such other
commercially reasonable acts and things as may be reasonably necessary to make
such sale of such Security Collateral or any part thereof valid and binding and
in compliance with applicable law.


 


(h)           Notwithstanding
anything to the contrary in this Agreement, the exercise of remedies by the
Collateral Agent under this Agreement upon the occurrence and during the
continuance of an Event of Default shall be subject to Section 8.02
of the Credit Agreement.


 


SECTION 21. 
Indemnity and Expenses. 
(a)  Each Grantor agrees to indemnify, defend and save and hold
harmless each Secured Party and each Representative Party (as defined below) of
any of the foregoing Persons (each, an “Indemnified Party”) from and against,
and shall pay on demand, any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel (which shall be limited to one (1) counsel to the Collateral Agent
and the Lenders (exclusive of one local counsel to the Collateral Agent and the
Lenders in each appropriate jurisdiction), unless (x) the interests of the
Collateral Agent and the Lenders are sufficiently divergent, in which case one
(1) additional counsel may be appointed and (y) if the interests of
any Lender or group of Lenders (other than all of the Lenders) are distinctly
or disproportionately affected, one (1) additional counsel for such Lender
or group of Lenders))) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final judgment to have resulted from the
gross negligence, bad faith or willful misconduct of such Indemnitee or such
Indemnitee’s Representative Parties or (y) result from a claim brought by
any Grantor against an Indemnitee for breach of such Indemnitee’s obligations
under this Agreement, if such Grantor has obtained a final judgment in its
favor on such claim as determined by a court of competent jurisdiction.  For purposes of this Section 21(a),
“Representative Parties” means, as to
any Person, (i) such Person’s officers, directors and employees and
(ii) such Person’s Affiliates, agents, advisers and other representatives,
in each case to the extent acting at the direction of such Person.


 


(b)           Each
Grantor will within 30 days of written demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and reasonable out-of-pocket expenses of its counsel and of any
experts and agents, that the Collateral Agent may incur in connection with
(i) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor, (ii) the exercise or enforcement of any of the rights of the Collateral
Agent or the other Secured Parties hereunder or (iii) the failure by such
Grantor to perform or observe any of the provisions hereof.


 


SECTION 22. 
Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent and the Grantors, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.  No failure on
the part of the Collateral Agent or any other Secured Party to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.


 


(b)           Upon
the execution and delivery by any Person of a security agreement supplement in
substantially the form of Exhibit E hereto (each a “Security Agreement Supplement”), 


 

















 


such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor
hereunder, and each reference in this Agreement and the other Loan Documents to
“Grantor” shall also mean and be a reference to such Additional Grantor, each
reference in this Agreement and the other Loan Documents to the “Collateral” shall also mean and be a
reference to the Collateral granted by such Additional Grantor and each
reference in this Agreement to a Schedule shall also mean and be a reference to
the schedules attached to such Security Agreement Supplement.


 


SECTION 23. 
Notices, Etc.  All notices
and other communications provided for hereunder shall be either (a) in
writing (including telegraphic, telecopier or telex communication) and mailed,
telegraphed, telecopied, telexed or otherwise delivered or (b) by
electronic mail (if electronic mail addresses are designated as provided below)
confirmed immediately in writing, in the case of the Borrower or the Collateral
Agent (as provided for the Administrative Agent thereunder), addressed to it at
its address specified in the Credit Agreement and, in the case of each Grantor
other than the Borrower, addressed to it at its address set forth opposite such
Grantor’s name on the signature pages hereto or on the signature
page to the Security Agreement Supplement pursuant to which it became a
party hereto; or, as to any party, at such other address as shall be designated
by such party in a written notice to the other parties.  All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of
(a) actual receipt by the relevant party hereto and (b) (i) if
delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (ii) if delivered by mail, four (4) Business Days after
deposit in the mails, postage prepaid; (iii) if delivered by facsimile,
when sent and receipt has been confirmed; and (iv) if delivered by
electronic mail, when delivered.  Delivery by telecopier of “pdf” of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or of any Security Agreement Supplement or Schedule hereto shall be
effective as delivery of an original executed counterpart thereof.


 


SECTION 24. 
Continuing Security Interest; Assignments under the Credit Agreement.  This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of the Secured
Obligations (other than (x) obligations with respect to Secured Hedge
Agreements, (y) Cash Management Obligations not yet due and payable and
(z) the contingent obligations not yet accrued and payable under the Loan
Documents), (ii) the Maturity Date for the Revolving Credit Facility,
(iii) the Maturity Date for the Term Loan Facility and (iv) the
termination or expiration of all Letters of Credit, (b) be binding upon
each Grantor, its permitted successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Parties and their respective permitted successors, transferees
and assigns.  Without limiting the
generality of the foregoing subsection (c), any Lender may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes, if any, held by it)
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,
in each case as provided in Section 10.07 of the Credit Agreement.


 


SECTION 25.  Release;
Termination.  (a)  Upon any
sale, lease, transfer or other disposition of any item of Collateral of any
Grantor in accordance with the terms of the Loan Documents (other than sales of
Inventory in the ordinary course of business), the Collateral Agent will, at
such Grantor’s expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted hereby; provided, however,
that (i) such Grantor shall have delivered to the Collateral Agent a
written request for release describing the item of Collateral and the terms of
the sale, lease, 


 

















 


transfer or other disposition in reasonable detail, together with a
form of release for execution by the Collateral Agent and a certificate of such
Grantor to the effect that the transaction is in compliance with the Loan
Documents and as to such other matters as the Collateral Agent may reasonably
request, and (ii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with Section 2.05(b) of the Credit
Agreement shall, to the extent so required, be paid or made to, or in
accordance with the instructions of, the Collateral Agent when and as required
under Section 2.05(b) of the Credit Agreement.


 


(b)           Upon
the latest of (i) the payment in full in cash of the Secured Obligations
(other than (x) obligations with respect to Secured Hedge Agreements,
(y) Cash Management Obligations not yet due and payable and
(z) contingent indemnification obligations not yet accrued and payable
under the Loan Documents), (ii) the Maturity Date for the Revolving Credit
Facility, (iii) the Maturity Date for the Term Loan Facility and
(iv) the cash collateralization, back-stop (on terms reasonably
satisfactory to the Collateral Agent), termination or expiration of all Letters
of Credit, the pledge and security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral
Agent will, at the applicable Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.


 


SECTION 26. 
Execution in Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as
delivery of an original executed counterpart of this Agreement.


 


SECTION 27. 
Governing Law.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.


 


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IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.


 


 


	
   

  	
  UHS
  HOLDCO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rex T. Clevenger

  
	
   

  	
   

  	
  Name: Rex T. Clevenger

  
	
   

  	
   

  	
  Title: CFO &
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
   

  



 

















 


	
   

  	
  UNIVERSAL HOSPITAL SERVICES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rex T. Clevenger

  
	
   

  	
   

  	
  Name: Rex T. Clevenger

  
	
   

  	
   

  	
  Title: CFO &
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices: