Document:

Exhibit 10.33

 

EXECUTION COPY

 

 

FIRST LIEN COLLATERAL AGREEMENT

 

dated as of August 8, 2007

 

by and among

 

PROSPECT MEDICAL HOLDINGS, INC.

PROSPECT MEDICAL GROUP, INC.,

and certain of their Subsidiaries,

as Grantors,

 

in favor of

 

BANK OF AMERICA, N.A.,

as Administrative Agent

 

 

 

Table of
Contents

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINED TERMS

  	
  1

  
	
   

  	
  SECTION 1.1

  	
  Terms Defined in the Uniform
  Commercial Code

  	
  1

  
	
   

  	
  SECTION 1.2

  	
  Definitions

  	
  2

  
	
   

  	
  SECTION 1.3

  	
  Other Interpretive Provisions

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II SECURITY INTEREST

  	
  7

  
	
   

  	
  SECTION 2.1

  	
  Grant of Security Interest

  	
  7

  
	
   

  	
  SECTION 2.2

  	
  Grantors Remain Liable

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES

  	
  9

  
	
   

  	
  SECTION 3.1

  	
  Existence, Qualification and
  Power; Compliance with Laws

  	
  9

  
	
   

  	
  SECTION 3.2

  	
  Authorization; No Contravention;
  Binding Effect

  	
  9

  
	
   

  	
  SECTION 3.3

  	
  Consents

  	
  9

  
	
   

  	
  SECTION 3.4

  	
  Perfected First Priority Liens

  	
  10

  
	
   

  	
  SECTION 3.5

  	
  Title, No Other Liens

  	
  10

  
	
   

  	
  SECTION 3.6

  	
  State of Organization; Location
  of Inventory, Equipment and Fixtures; other Information

  	
  10

  
	
   

  	
  SECTION 3.7

  	
  Accounts

  	
  11

  
	
   

  	
  SECTION 3.8

  	
  Chattel Paper

  	
  11

  
	
   

  	
  SECTION 3.9

  	
  Commercial Tort Claims

  	
  11

  
	
   

  	
  SECTION 3.10

  	
  Deposit Accounts

  	
  11

  
	
   

  	
  SECTION 3.11

  	
  Intellectual Property

  	
  12

  
	
   

  	
  SECTION 3.12

  	
  Inventory

  	
  12

  
	
   

  	
  SECTION 3.13

  	
  Investment Property;
  Partnership/LLC Interests

  	
  12

  
	
   

  	
  SECTION 3.14

  	
  Instruments

  	
  13

  
	
   

  	
  SECTION 3.15

  	
  Farm Products

  	
  13

  
	
   

  	
  SECTION 3.16

  	
  Government Contracts

  	
  13

  
	
   

  	
  SECTION 3.17

  	
  Aircraft

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS

  	
  13

  
	
   

  	
  SECTION 4.1

  	
  Maintenance of Perfected
  Security Interest; Further Information

  	
  13

  
	
   

  	
  SECTION 4.2

  	
  Maintenance of Insurance

  	
  13

  
	
   

  	
  SECTION 4.3

  	
  Changes in Locations; Changes in
  Name or Structure

  	
  14

  
	
   

  	
  SECTION 4.4

  	
  Required Notifications

  	
  14

  
	
   

  	
  SECTION 4.5

  	
  Delivery Covenants

  	
  15

  
	
   

  	
  SECTION 4.6

  	
  Control Covenants; Certain
  Excluded Deposit Accounts

  	
  15

  
	
   

  	
  SECTION 4.7

  	
  Filing Covenants

  	
  16

  
	
   

  	
  SECTION 4.8

  	
  Accounts

  	
  16

  
	
   

  	
  SECTION 4.9

  	
  Intellectual Property

  	
  17

  
	
   

  	
  SECTION 4.10

  	
  Investment Property;
  Partnership/LLC Interests.

  	
  18

  
	
   

  	
  SECTION 4.11

  	
  Equipment

  	
  19

  
	
   

  	
  SECTION 4.12

  	
  Vehicles

  	
  19

  
	
   

  	
  SECTION 4.13

  	
  Government Contracts

  	
  19

  

 

i

 

	
   

  	
  SECTION 4.14

  	
  Further Assurances

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIAL PROVISIONS

  	
  19

  
	
   

  	
  SECTION 5.1

  	
  General Remedies

  	
  19

  
	
   

  	
  SECTION 5.2

  	
  Specific Remedies

  	
  20

  
	
   

  	
  SECTION 5.3

  	
  Registration Rights

  	
  22

  
	
   

  	
  SECTION 5.4

  	
  Application of Proceeds

  	
  23

  
	
   

  	
  SECTION 5.5

  	
  Waiver, Deficiency

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI THE ADMINISTRATIVE
  AGENT

  	
  24

  
	
   

  	
  SECTION 6.1

  	
  Administrative Agent’s
  Appointment as Attorney-In-Fact

  	
  24

  
	
   

  	
  SECTION 6.2

  	
  Duty of Administrative Agent

  	
  26

  
	
   

  	
  SECTION 6.3

  	
  Authority of Administrative
  Agent

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  26

  
	
   

  	
  SECTION 7.1

  	
  Amendments, Waivers and Consents

  	
  26

  
	
   

  	
  SECTION 7.2

  	
  Notices

  	
  26

  
	
   

  	
  SECTION 7.3

  	
  No Waiver, Cumulative Remedies

  	
  26

  
	
   

  	
  SECTION 7.4

  	
  Expenses, Indemnification,
  Waiver of Consequential Damages, etc.

  	
  27

  
	
   

  	
  SECTION 7.5

  	
  Successors and Assigns

  	
  27

  
	
   

  	
  SECTION 7.6

  	
  Survival of
  Indemnities

  	
  28

  
	
   

  	
  SECTION 7.7

  	
  Right of Setoff

  	
  28

  
	
   

  	
  SECTION 7.8

  	
  Counterparts; Integration;
  Effectiveness

  	
  28

  
	
   

  	
  SECTION 7.9

  	
  Severability

  	
  28

  
	
   

  	
  SECTION 7.10

  	
  Governing Law; Jurisdiction;
  Service of Process

  	
  29

  
	
   

  	
  SECTION 7.11

  	
  Waiver of Jury
  Trial; California Judicial Reference

  	
  29

  
	
   

  	
  SECTION 7.12

  	
  Injunctive Relief.

  	
  30

  
	
   

  	
  SECTION 7.13

  	
  Acknowledgements

  	
  30

  
	
   

  	
  SECTION 7.14

  	
  Releases

  	
  31

  
	
   

  	
  SECTION 7.15

  	
  Additional Grantors

  	
  31

  
	
   

  	
  SECTION 7.16

  	
  All Powers Coupled with Interest

  	
  31

  

 

ii

 

	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 3.6

  	
  Exact Legal Name; Jurisdiction of Organization; Taxpayer
  Identification Number; Registered Organization Number; Mailing Address; Chief
  Executive Office and other Locations

  	
   

  
	
  Schedule 3.9

  	
  Commercial Tort Claims

  	
   

  
	
  Schedule
  3.10

  	
  Deposit Accounts

  	
   

  
	
  Schedule
  3.11

  	
  Intellectual Property

  	
   

  
	
  Schedule
  3.13

  	
  Investment Property and Partnership/LLC Interests

  	
   

  
	
  Schedule
  3.14

  	
  Instruments

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Governmental Receivables Account Agreement

  	
   

  

 

iii

 

FIRST LIEN
COLLATERAL AGREEMENT (this “Agreement”), dated as of August 8, 2007 by and
among PROSPECT MEDICAL HOLDINGS, INC., a
Delaware corporation (“Holdings”), PROSPECT MEDICAL GROUP,
INC., a California professional corporation (together with Holdings,
the “Borrowers”), each of the Guarantors (as defined in the Credit
Agreement referred to below) and identified on the signature pages hereto
and any Additional Grantor (as defined below) who may become party to this
Agreement (such Guarantors and Additional Grantors, collectively, with the
Borrowers, the “Grantors”), in favor of BANK OF
AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative
Agent”) for the ratable benefit of the Secured Parties.

 

STATEMENT OF PURPOSE

 

Pursuant to
the First Lien Credit Agreement, dated as of even date herewith by and among
the Borrowers, the banks and other financial institutions from time to time
party thereto (the “Lenders”) and the Administrative Agent (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), the Lenders have agreed to make Credit Extensions to the
Borrowers upon the terms and subject to the conditions set forth therein.

 

Pursuant to
the terms of a First Lien Guaranty of even date herewith, the Guarantors who
are parties hereto have guaranteed the payment and performance of the
Obligations.

 

It is a
condition precedent to the obligation of the Lenders to make their respective
Credit Extensions to the Borrowers under the Credit Agreement that the Grantors
shall have executed and delivered this Agreement to the Administrative Agent,
for the ratable benefit of the Secured Parties.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Credit Extensions to the Borrowers
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Secured Parties, as follows:

 

ARTICLE I

 

DEFINED TERMS

 

SECTION 1.1                 Terms Defined
in the Uniform Commercial Code.

 

(a)           The
following terms when used in this Agreement shall have the meanings assigned to
them in the UCC (as defined below) as in effect from time to time:  “Account”, “Account Debtor”, “Authenticate”,
“Certificated Security”, “Chattel Paper”; “Commercial Tort
Claim”, “Deposit Account”, “Documents”, “Electronic
Chattel Paper”, “Equipment”, “Farm Products” “Fixture”,
“General Intangible”, “Goods”, “Health-Care-Insurance
Receivables”, “Instrument”, “Inventory”, “Investment
Company Security”, “Investment Property”, “Letter of Credit
Rights”, “Payment Intangibles”, “Proceeds”, “Record”, “Registered
Organization”, “Security”, “Securities Entitlement”, “Securities
Intermediary”, “Securities Account”, “Security”, “Supporting
Obligation”, “Tangible Chattel Paper”, and “Uncertificated
Security”.

 

 

(b)           Terms
defined in the UCC and not otherwise defined herein or in the Credit Agreement
shall have the meaning assigned in the UCC as in effect from time to time.

 

SECTION 1.2                 Definitions.  The following terms when used in this
Agreement shall have the meanings assigned to them below:

 

“Additional
Grantor” means each Subsidiary of the Borrowers which hereafter becomes a
Grantor pursuant to Section 7.15 (as required pursuant to Section 6.12
of the Credit Agreement).

 

“Agreement”
means this Collateral Agreement, as amended, restated, supplemented or
otherwise modified from time to time.

 

“Applicable
Insolvency Laws” means all applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550
and other “avoidance” provisions of Title 11 of the United States Code).

 

“Assignment
of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15,
31 U.S.C.  Section 3737, and 31
U.S.C. Section 3727), including all amendments thereto and regulations
promulgated thereunder.

 

“Brotman
Shares” means the shares of common stock owned as of the date hereof issued
by Brotman Medical Center, Inc., a California corporation, to Prospect
Hospital Advisory Services, Inc.

 

“Capitated
Contract Rights” means, collectively, all of the Loan Parties’ contracts
whether presently existing or hereafter executed between Loan Parties and various
health maintenance organizations and all proceeds therefrom.

 

“Collateral”
has the meaning assigned thereto in Section 2.1.

 

“Collateral
Account” means any collateral account established by the Administrative
Agent as provided in Section 5.2.

 

“Collections”
means all funds received from or on behalf of Obligors in payment of any amount
owed with respect to Receivables.

 

“Control”
means the manner in which “control” is achieved under the UCC with respect to
any Collateral for which the UCC specifies a method of achieving “control”.

 

“Controlled
Depository” has the meaning assigned thereto in Section 4.6.

 

“Controlled
Intermediary” has the meaning assigned thereto in Section 4.6.

 

“Copyrights”
means collectively, all of the following of any Grantor: (a) all
copyrights, rights and interests in copyrights, works protectable by copyright,
copyright registrations and copyright applications anywhere in the world,
including, without limitation, those listed on Schedule 3.11 hereto, (b) all
extensions, and renewals of any of the foregoing, (c) all income, 

 

2

 

royalties,
damages and payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present or future infringements of
any of the foregoing, (d) the right to sue for past, present or future
infringements of any of the foregoing and (e) all rights corresponding to
any of the foregoing throughout the world.

 

“Copyright
Licenses” means any written agreement naming any Grantor as licensor or
licensee, including, without limitation, those listed in Schedule 3.11,
granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

 

“Effective
Endorsement and Assignment” means, with respect to any specific type of
Collateral, all such endorsements, assignments and other instruments of
transfer reasonably requested by the Administrative Agent with respect to the
Security Interest granted in such Collateral, and in each case, in form and
substance satisfactory to the Administrative Agent.

 

“Excess
Collateral” has the meaning assigned thereto in Section 4.6(c).

 

“Excluded
Deposit Account” means, collectively, (a) Deposit Accounts established
solely for the purpose of funding payroll and other compensation and benefits
to employees and (b) all Deposit Accounts into which Governmental
Receivables are initially deposited.

 

“Fee-for-Service
Receivables” means Receivables other than Capitated Contract Rights.

 

“Government
Contract” means a contract between any Grantor and an agency, department or
instrumentality of the United States or any state, municipal or local
Governmental Authority located in the United States or all obligations of any
such Governmental Authority arising under any Account now or hereafter owing by
any such Governmental Authority, as account debtor, to any Grantor; provided,
however, that such definition shall exclude all Government Reimbursement
Programs.

 

“Governmental
Receivable” means any Account that is payable pursuant to any Government
Reimbursement Program.

 

“Government
Reimbursement Program” means any program (a) relating to Medicare, (b) Medicaid,
or (c) any other state or federal programs as payor or program
administrated by the Centers for Medicare and Medicaid Services or any agent,
administrator, intermediary or carrier for any of the foregoing.

 

“Grantors”
has the meaning set forth in the Preamble of this Agreement.

 

“Intellectual
Property” means collectively, all of the following of any Grantor: (a) 
all systems software, applications software and internet rights, including,
without limitation, screen displays and formats, internet domain names, web
sites (including web links), program structures, sequence and organization, all
documentation for such software, including, without limitation, user manuals,
flowcharts, programmer’s notes, functional specifications, and operations manuals,
all formulas, processes, ideas and know-how embodied in any of the foregoing,
and all program materials, flowcharts, notes and outlines created in connection
with 

 

3

 

any of the
foregoing, whether or not patentable or copyrightable, (b) concepts,
discoveries, inventions, improvements and ideas, (c) any useful
information relating to the items described in clause (a) or (b),
including know-how, technology, engineering drawings, reports, design information,
trade secrets, practices, laboratory notebooks, specifications, test
procedures, maintenance manuals, research, development, manufacturing,
marketing, merchandising, selling, purchasing and accounting, (d) Patents
and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and
Trademark Licenses, and (e) other licenses to use any of the items
described in the foregoing clauses (a), (b), (c) and (d) or any other
similar items of such Grantor necessary for the conduct of its business.

 

“Issuer”
means any issuer of any Investment Property or Partnership/LLC Interests
(including, without limitation, any Issuer as defined in the UCC).

 

“Obligations”
means with respect to the Borrowers, the meaning assigned thereto in the Credit
Agreement, and with respect to each Guarantor, the obligations of such
Guarantor under the Guaranty executed by such Guarantor and with respect to all
Grantors, all liabilities and obligations of the Grantors hereunder and all
liabilities and obligations of the Grantors with respect to overdrafts,
returned items and related liabilities and all indemnification obligations
under the Loan Documents now or hereafter owing by any Grantor to Bank of
America, N.A., any Affiliate thereof or the Administrative Agent arising from
or in connection with treasury, depositary or cash management services or in
connection with any automated clearinghouse transfer of funds for the benefit
of such Grantor.

 

“Obligors”
means any person that is obligated  to
make payment with respect to any Capitated Contract or other Receivables.

 

“Partnership/LLC
Interests” means, with respect to any Grantor, the entire partnership,
membership interest or limited liability company interest, as applicable, of
such Grantor in each partnership, limited partnership or limited liability
company owned thereby, including, without limitation, such Grantor’s capital
account, its interest as a partner or member, as applicable, in the net cash
flow, net profit and net loss, and items of income, gain, loss, deduction and
credit of any such partnership, limited partnership or limited liability
company, as applicable, such Grantor’s interest in all distributions made or to
be made by any such partnership, limited partnership or limited liability
company, as applicable, to such Grantor and all of the other economic rights,
titles and interests of such Grantor as a partner or member, as applicable, of
any such partnership, limited partnership or limited liability company, as
applicable, whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership or limited
liability company, as applicable, by separate agreement or otherwise.

 

“Patents”
means collectively, all of the following of any Grantor: (a) all patents,
rights and interests in patents, patent disclosures, patentable inventions and
patent applications anywhere in the world, including, without limitation, those
listed on Schedule 3.11 hereto, (b) all improvements thereto,
reissues, continuations (in whole or in part), divisionals, reexaminations and
renewals and extensions of any of the foregoing, (c) all income,
royalties, damages or payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without limitation,
damages or payments for past, present or future infringements of any of the
foregoing, (d) the right to sue for past, present or future 

 

4

 

infringements
of any of the foregoing and (e) all rights corresponding to any of the
foregoing throughout the world.

 

“Patent
License” means all agreements now or hereafter in existence, whether
written, implied or oral, providing for the grant by or to any Grantor of any
right to manufacture, use or sell any invention covered in whole or in part by
a Patent, including, without limitation, any of the foregoing referred to in Schedule
3.11 hereto.

 

“Patient
Lists” means all records, documents, lists, electronic media or any other
method of recordation that shows in any way any Person to whom Loan Parties
supply medical services, medication, medical supplies, or professional
services, the name and mailing address of such Person, a complete and accurate
description of the medical services, medication, medical supply item or
professional service that is supplied to such Person, the physician at whose
direction such medical services, medication, medical supply or professional
service is delivered, and all other information Loan Parties used in the course
of Loan Parties’ ordinary course of business to supply such Person with medical
services, medication, medical supplies or professional service.

 

“Permitted
Liens” means the Liens permitted by Section 7.01(a)-(i) and
(k) of the Credit Agreement.

 

 “Receivables” means any right to
payment, whether constituting an account, chattel paper, instrument, general
intangible, payment intangible or health-care insurance receivable, Capitated
Contract Rights, Fee-for-Service Receivable, Governmental Receivable or
otherwise, arising from the sale, rental or lease of healthcare goods or
equipment, or the provision of services and any ancillary sales, including all
rights and remedies to payment relating thereto, together with any and all
proceeds in any way derived, directly or indirectly therefrom.  The term “Receivables” shall include amounts
due under capitation and similar agreements, amounts due any Loan Party for
cost adjustments or undercharges for prior services, amounts due as any part of
a disproportionate share or risk share payment, workmen’s compensation claims,
and any other claims to payment held by any Loan Party.

 

“Restricted
Securities Collateral” has the meaning assigned thereto in Section 5.3.

 

“Securities
Act” means the Securities Act of 1933, including all amendments thereto and
regulations promulgated thereunder.

 

“Security
Interests” means the security interests granted pursuant to Article II,
as well as all other security interests created or assigned as additional
security for the Obligations pursuant to the provisions of the Credit
Agreement.

 

“Trademarks”
means collectively all of the following of any Grantor: (a) all
trademarks, rights and interests in trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, service marks, logos, other business identifiers, together with
translations, adaptations, derivations and combinations thereof, prints and
labels on which any of the foregoing have appeared or appear, whether
registered or unregistered, all registrations and recordings thereof, and all
applications in connection therewith (other than each application to register
any trademark or service mark prior to the filing under applicable Law of a
verified statement of use for such trademark or service mark) anywhere in 

 

5

 

the world,
including, without limitation, those listed on Schedule 3.11 hereto, (b) all
extensions and renewals of any of the foregoing, (c) all income,
royalties, damages and payments now or hereafter due and/or payable under any
of the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present or future infringements of
any of the foregoing, (d) the right to sue for past, present or future
infringements of any of the foregoing and (e) all rights corresponding to
any of the foregoing (including the goodwill) throughout the world.

 

“Trademark
License” means any agreement now or hereafter in existence, whether written
or oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to in Schedule
3.11.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York, as
amended or modified from time to time.

 

“Vehicles”
means all cars, trucks, trailers, construction and earth moving equipment and
other vehicles covered by a certificate of title under the laws of any state,
all tires and all other appurtenances to any of the foregoing.

 

SECTION 1.3                 Other
Interpretive Provisions.  Terms
defined in the Credit Agreement and not otherwise defined herein shall have the
meanings assigned thereto in the Credit Agreement.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:  (a) the definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined, (b) whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms, (c) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (d) the word “will” shall be construed to have the same
meaning and effect as the word “shall”, (e) any definition of or reference
to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document, as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (f) any
reference herein to any Person shall be construed to include such Person’s
permitted successors and assigns, (g) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (h) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (i) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights, (j) the term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form, (k) in the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including;” the words “to” and “until” each mean “to but excluding;” and the
word “through” means “to and including”, (l) Section headings herein
and in the other Loan Documents are included for convenience of reference only
and shall not affect the interpretation of this Agreement or any other Loan
Document and (k) where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor’s Collateral or the relevant part thereof.  To the extent that a direct conflict between
the provisions

 

6

 

of this Agreement and the provisions of the Credit Agreement (other
than with respect to any provision of this Agreement relating to the grant,
pledge and assignment of the Security Interest in the Collateral or the
exercise of remedies with respect thereto), the Credit Agreement shall govern.

 

SECTION 1.4
Intercreditor Agreement. 
Notwithstanding anything contained herein to the contrary, the liens and
security interests granted to the Administrative Agent, for the benefit of the
Secured Parties, pursuant to this Agreement, and the exercise of any right or
remedy by the Administrative Agent, for the benefit of the Secured Parties,
under this Agreement, are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and control.

 

ARTICLE II

 

SECURITY INTEREST

 

SECTION 2.1                 Grant of
Security Interest.  Each Grantor
hereby grants, pledges and collaterally assigns to the Administrative Agent,
for the ratable benefit of the Secured Parties, a security interest in, all of
such Grantor’s right, title and interest in the following property, now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest, and
wherever located or deemed located (collectively, the “Collateral”), as
collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations:

 

(a)           all
Accounts including, without limitation, all “Health Care Insurance Receivables”,
all Receivables (including all Capitated Contract Rights) and all Collections
and other payments and proceeds with regard thereto;

 

(b)           all
cash and currency;

 

(c)           all
Chattel Paper;

 

(d)           all
Commercial Tort Claims identified on Schedule 3.9;

 

(e)           all
Deposit Accounts;

 

(f)            all
Documents;

 

(g)           all
Equipment;

 

(h)           all
Fixtures;

 

(i)            all
General Intangibles, including all Payment Intangibles, any disproportionate
share settlements, risk share settlements, cost report settlements, capitation

 

7

 

settlement payments or other
distributions to any Loan Party related to the Collateral or any portion
thereof or the related contracts;

 

(j)            all
Instruments;

 

(k)           all
Intellectual Property;

 

(l)            all
Inventory;

 

(m)          all
Investment Property (other than the Brotman Shares);

 

(n)           all
Letter of Credit Rights;

 

(o)           all
licenses, Permits and governmental authorizations, including all operating and
medical licenses and permits, including any certificates of need, provider
contracts, general certifications and other similar type authorizations;

 

(p)           all
Vehicles;

 

(q)           all
Goods and all other personal property not otherwise described above;

 

(r)            to
the extent not prohibited by applicable Health Care Laws all books and records
pertaining to the Collateral and all customer lists and Patient Lists;

 

(s)           to
the extent not otherwise included, all Proceeds, insurance claims and products
of any and all of the foregoing and all collateral security and Supporting
Obligations (as now or hereafter defined in the UCC) and other rights to
payment not otherwise included in the foregoing given by any Person with
respect to any of the foregoing.

 

provided, that (i) any Security Interest
on any Equity Interests issued by any Foreign Subsidiary shall be limited to
66% of all issued and outstanding shares of all classes of Equity Interests of
first tier Foreign Subsidiaries, (ii) the Security Interests granted herein
shall not extend to, and the term “Collateral” shall not include, any rights
under any lease, contract or agreement (including, without limitation, any
license for Intellectual Property) to the extent that the granting of a
security interest therein is specifically prohibited in writing by, or would
constitute an event of default under or would grant a party a termination right
under any agreement governing such right unless such prohibition is not
enforceable or is otherwise ineffective under applicable Law.  Notwithstanding any of the foregoing, such
proviso shall not affect, limit, restrict or impair the grant by any Grantor of
a Security Interest in any Account or any money or other amounts due and
payable to any Grantor or to become due and payable to any Grantor under such
lease, contract or agreement.

 

Notwithstanding
the foregoing, the payment and performance of the Obligations shall not be
secured by any Swap Contract between any Grantor and any Secured Party.

 

SECTION 2.2                 Grantors
Remain Liable. Anything herein to the contrary notwithstanding: (a) each
Grantor shall remain liable to perform all of its duties and obligations under
the contracts and agreements included in the Collateral to the same extent as
if this Agreement had not been executed, (b) the exercise by
Administrative Agent of any of the

 

8

 

rights hereunder shall not release any Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral, (c) neither
the Administrative Agent nor any other Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Administrative Agent or any other
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, and (d) neither the Administrative Agent nor
any other Secured Party shall have any liability in contract or tort for any
Grantor’s acts or omissions.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Credit Extensions to the Borrowers
thereunder, each Grantor hereby represents and warrants to the Administrative
Agent and each other Secured Party that:

 

SECTION 3.1                 Existence,
Qualification and Power; Compliance with Laws.  Each Grantor (a) is a corporation, partnership
or limited liability company duly organized or formed, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental permits, licenses, authorizations, consents and approvals to (i) own
or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents and Related Documents to
which it is a party, and (c) is duly qualified and is licensed, and in
good standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clauses (b)(i) or
(c), to the extent the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

SECTION 3.2                 Authorization;
No Contravention; Binding Effect. 
The execution, delivery and performance by each Grantor of each Loan
Document and Related Document to which such Person is or is to be a party, have
been duly authorized by all necessary corporate or other organizational action,
and do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any Contractual Obligation to which such Person is a
party or affecting such Person or the properties of such Person or any of its Subsidiaries
or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law. 
This Agreement constitutes, and each other Loan Document and Related Document
when so delivered will constitute, a legal, valid and binding obligation of the
Grantors enforceable in accordance with its terms.

 

SECTION 3.3                 Consents.  No approval, consent, exemption,
authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against any Grantor or any Issuer of this Agreement, except (a) as may be
required by laws affecting the offering and sale of securities generally, (b) filings
with the United

 

9

 

States Copyright Office and/or the United States Patent and Trademark
Office, (c) filings under the UCC and/or the Assignment of Claims Act and (d) as
may be required with respect to Vehicles represented by a certificate of title.

 

SECTION 3.4                 Perfected
First Priority Liens.  Each financing
statement naming any Grantor as a debtor is in appropriate form for filing in
the appropriate filing offices specified on Schedule 3.6.  The Security Interests granted pursuant to
this Agreement (a) constitute valid security interests in all of the
Collateral in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, as collateral security for the Obligations, and (b):  (i) when UCC financing statements (or
foreign equivalents) containing an adequate description of the Collateral shall
have been filed in the offices specified in Schedule 3.6, will
constitute perfected security interests in all right, title and interest of
such Grantor in the Collateral to the extent that a security interest therein
may be perfected by filing pursuant to the UCC, prior to all other Liens and
rights of others therein except for Permitted Liens; (ii) when each
Copyright security agreement has been filed with the United States Copyright
Office, will constitute perfected security interests in all right, title and
interest of such Grantor in the Intellectual Property therein described, prior
to all other Liens and rights of others therein except for Permitted Liens; and
(iii) when each control agreement has been executed and delivered to the
Administrative Agent, will constitute perfected security interests in all
right, title and interest of the Grantors in the Deposit Accounts and
Securities Accounts, as applicable, subject thereto, prior to all other Liens
and rights of others therein and subject to no adverse claims except for
Permitted Liens.

 

SECTION 3.5                 Title, No
Other Liens.  Except for the Security
Interests, each Grantor owns each item of the Collateral free and clear of any
and all Liens or claims other than Permitted Encumbrances and the other Liens
permitted under the Loan Documents.  No
financing statement under the UCC of any state (or any foreign equivalent)
which names a Grantor as debtor or other public notice with respect to all or
any part of the Collateral is on file or of record in any public office, except
such as have been filed in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, pursuant to this Agreement or in connection
with Permitted Encumbrances and the other Liens permitted under the Loan
Documents.  No Collateral is in the
possession or Control of any Person asserting any claim thereto or security
interest therein, except that (a) the Administrative Agent or its designee
may have possession or Control of Collateral as contemplated hereby, (b) a
depositary bank may have Control of a Deposit Account owned by a Grantor at
such depositary bank and a Securities Intermediary may have Control over a
Securities Account owned by a Grantor at such Securities Intermediary, in each
case subject to the terms of any Deposit Account control agreement or
Securities Account control agreement, as applicable, and to the extent required
by Section 4, in favor of the Administrative Agent, and (c) a bailee,
consignee or other Person may have possession of the Collateral as contemplated
by, and so long as, the applicable Grantors have complied to the satisfaction
of the Administrative Agent with the applicable provisions of Section 4.6(c).

 

SECTION 3.6                 State of
Organization; Location of Inventory, Equipment and Fixtures; other Information.

 

(a)           The
exact legal name of each Grantor is set forth on Schedule 3.6.

 

10

 

(b)           Each
Grantor is a Registered Organization organized under the laws of the state
identified on Schedule 3.6 under such Grantor’s name.  The taxpayer identification number and
Registered Organization number of each Grantor is set forth on Schedule 3.6
under such Grantor’s name.

 

(c)           All
Collateral consisting of Inventory, Equipment and Fixtures (whether now owned
or hereafter acquired) is (or will be) located at the locations specified on Schedule
3.6, except as otherwise permitted hereunder.

 

(d)           The
mailing address, chief place of business, chief executive office and office
where each Grantor keeps its books and records relating to the Accounts,
Documents, General Intangibles, Instruments and Investment Property in which it
has any interest is located at the locations specified on Schedule 3.6
under such Grantor’s name.  No Grantor
has any other places of business except those separately set forth on Schedule
3.6 under such Grantor’s name.  No
Grantor does business nor has done business during the past five years under
any trade name or fictitious business name except as disclosed on Schedule
3.6 under such Grantor’s name. 
Except as disclosed on Schedule 3.6 under such Grantor’s name, no
Grantor has acquired assets from any Person, other than assets acquired in the
ordinary course of such Grantor’s business, during the past five years.

 

SECTION 3.7                 Accounts.  Each existing Account constitutes, and each
hereafter arising Account will constitute, the legally valid and binding
obligation of the applicable Account Debtor. 
The amount represented by each Grantor to the Administrative Agent as
owing by each Account Debtor is, or will be, the correct amount actually and
unconditionally owing, except for ordinary course cash discounts and allowances
where applicable.  No Account Debtor has
any defense, set-off, claim or counterclaim against any Grantor that can be
asserted against the Administrative Agent, whether in any proceeding to enforce
the Administrative Agent’s rights in the Collateral or otherwise except defenses,
setoffs, claims or counterclaims that are not, in the aggregate, material to
the value of the Accounts.  None of the
Accounts is, nor will any hereafter arising Account be, evidenced by a
promissory note or other Instrument (other than a check) that has not been
pledged to the Administrative Agent in accordance with the terms hereof.

 

SECTION 3.8                 Chattel Paper.  As of the date hereof, no Grantor holds any
Chattel Paper in the ordinary course of its business.

 

SECTION 3.9                 Commercial
Tort Claims.  As of the date hereof,
all Commercial Tort Claims owned by any Grantor are listed on Schedule 3.9.

 

SECTION 3.10               Deposit Accounts.  As of the date hereof, all Deposit Accounts
(including, without limitation, cash management accounts that are Deposit
Accounts), securities accounts and lockboxes (including the: (a) owner of
the account, (b) name and address of financial institution or securities
broker where such accounts are located, (c) account numbers and (d) purpose
or use of such account) owned by any Grantor are listed on Schedule 3.10.

 

11

 

SECTION 3.11               Intellectual
Property.

 

(a)           As
of the date hereof, all Copyright registrations, Copyright applications, issued
Patents, Patent applications, Trademark registrations and Trademark
applications owned by any Grantor in its own name on the date hereof is listed
on Schedule 3.11.

 

(b)           Except
as set forth in Schedule 3.11 on the date hereof, none of the
Intellectual Property owned by any Grantor is the subject of any written
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor, except as could not reasonably be expected to have a Material
Adverse Effect.

 

(c)           Each
Grantor owns, or possesses the right to use, all of the Trademarks, Copyrights,
Patents, franchises, licenses and other Intellectual Property rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. 
All applications, registrations and grants for all material Patents,
Trademarks and Copyrights of each Grantor and to the knowledge of each Grantor,
all applications, registrations and grants for any material licensed
Intellectual Property are valid, subsisting and enforceable, are in good
standing, all required filings with any relevant governmental intellectual
property office have been made and all required filing, registration,
maintenance and other fees have been paid. 
To the best knowledge of each Grantor, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by any Grantor infringes upon any
rights held by any other Person.  No
claim or litigation regarding any of the foregoing is pending or, to the best
knowledge of each Grantor, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.12               Inventory.  Collateral consisting of Inventory is of good
and merchantable quality, free from any material defects.  To the knowledge of each Grantor, none of
such Inventory is subject to any licensing, Patent, Trademark, trade name or
Copyright with any Person that restricts any Grantor’s ability to manufacture
and/or sell such Inventory.  The
completion of the manufacturing process of such Inventory by a Person other
than the applicable Grantor would be permitted under any contract to which such
Grantor is a party or to which the Inventory is subject.

 

SECTION 3.13               Investment Property;
Partnership/LLC Interests.

 

(a)           As
of the date hereof, all Investment Property (including, without limitation,
Securities Accounts and cash management accounts that are Investment Property)
and all Partnership/LLC Interests owned by any Grantor are listed on Schedule
3.13.

 

(b)           All
Investment Property and all Partnership/LLC Interests issued by any Issuer to
any Grantor (i) have been duly and validly issued and, if applicable, are
fully paid and nonassessable, (ii) are beneficially owned as of record by
such Grantor and (ii) constitute all the issued and outstanding Equity
Interests of such Issuer issued to such Grantor.

 

(c)           None
of the Partnership/LLC Interests (i) are traded on a Securities exchange
or in Securities markets, (ii) by their terms expressly provide that they
are Securities

 

12

 

governed by Article 8 of
the UCC, (iii) are Investment Company Securities or (iv) are held in
a Securities Account.

 

SECTION 3.14               Instruments.  As of the date hereof, no Grantor holds any
Instruments or is named a payee of any promissory note or other evidence of
indebtedness other than as set forth on Schedule 3.14.

 

SECTION 3.15               Farm Products.  None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

 

SECTION 3.16               Government
Contracts.  As of the date hereof, no
Grantor is party to any Government Contract with a Governmental Authority under
which such Governmental Authority, as account debtor, owes a monetary
obligation to any Grantor under any account.

 

SECTION 3.17               Aircraft.  None of the Collateral constitutes, or is the
proceeds of, (i) an aircraft, airframe, aircraft engine or related
property, (ii) aircraft lease or (iii) any other interest in or to
any of the foregoing.

 

ARTICLE IV

 

COVENANTS

 

Until the
Obligations shall have been paid in full and the Commitments terminated, unless
consent has been obtained in the manner provided for in Section 7.1, each
Grantor covenants and agrees that:

 

SECTION 4.1                 Maintenance of
Perfected Security Interest; Further Information.

 

(a)           Each
Grantor shall maintain the Security Interest created by this Agreement as a
first priority perfected Security Interest (subject only to Permitted Liens)
and shall defend such Security Interest against the claims and demands of all
Persons whomsoever (other than holders of Permitted Liens).

 

(b)           Each
Grantor will furnish to the Administrative Agent upon the Administrative Agent’s
reasonable request statements and schedules further identifying and describing
the assets and property of such Grantor and such other reports in connection
therewith as the Administrative Agent may reasonably request, all in reasonable
detail.

 

SECTION 4.2                 Maintenance of
Insurance.

 

(a)           Each
Grantor will maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Collateral against loss by fire,
explosion, theft, fraud and such other casualties, including business
interruption, as may be reasonably satisfactory to the Administrative Agent in
amounts and with deductibles at least as favorable as those generally
maintained by businesses of similar size engaged in similar activities and (ii) insuring
such Grantor and the Administrative Agent, for the ratable benefit of the
Secured

 

13

 

Parties, against liability for
hazards, risks and liability to persons and property relating to the
Collateral, in amounts and with deductibles at least as favorable as those
generally maintained by businesses of similar size engaged in similar
activities, such policies to be in such form and having such coverage as may be
reasonably satisfactory to the Administrative Agent and the Lenders.

 

(b)           All
insurance referred to in subsection (a) above shall (i) name the
Administrative Agent, for the ratable benefit of the Secured Parties, as loss
payee (to the extent covering risk of loss or damage to tangible property) and
as an additional insured as its interests may appear (to the extent covering
any other risk), (ii) provide that no cancellation, material reduction in
amount or material change in coverage thereof shall be effective until at least
thirty (30) days after receipt by the Administrative Agent of written notice
thereof and (iii) be reasonably satisfactory in all other respects to the
Administrative Agent.

 

(c)           Upon
the request of the Administrative Agent from time to time, each Grantor shall
deliver to the Administrative Agent and the Lenders periodic information from a
reputable insurance broker with respect to the insurance referred to in this Section 4.2.

 

SECTION 4.3                 Changes in
Locations; Changes in Name or Structure. 
No Grantor will, except upon thirty (30) days’ prior written notice to
the Administrative Agent and delivery to the Administrative Agent of (a) all
additional financing statements (executed if necessary for any particular
filing jurisdiction) and other instruments and documents reasonably requested
by the Administrative Agent to maintain the validity, perfection and priority
of the Security Interests and (b) if applicable, a written supplement to
the Schedules of this Agreement:

 

(i)            permit any Deposit
Account (other than Excluded Deposit Accounts) to be held by or at a depositary
bank other than the depositary bank that held such Deposit Account as of the
date hereof as set forth on Schedule 3.10;

 

(ii)           permit any Investment
Property (other than Certificated Securities delivered to the Administrative
Agent pursuant to Section 4.5) to be held by a Securities
Intermediary other than the Securities Intermediary that held such Investment
Property as of the date hereof as set forth on Schedule 3.13;

 

(iii)          permit any of the
Inventory, Equipment or Fixtures to be kept at a location other than those
listed on Schedule 3.6, except as otherwise permitted hereunder;

 

(iv)          change its jurisdiction
of organization or the location of its chief executive office from that
identified on Schedule 3.6; or

 

(v)           change its legal name,
identity or corporate or organizational structure to such an extent that any
financing statement filed by the Administrative Agent in connection with this
Agreement would become misleading.

 

SECTION 4.4                 Required
Notifications.  Each Grantor shall
promptly notify the Administrative Agent, in writing, of: (a) any Lien
(other than Permitted Encumbrances and the other Liens permitted under the Loan
Documents) on any of the

 

14

 

Collateral which would adversely affect the ability of the
Administrative Agent to exercise any of its remedies hereunder, (b) the
occurrence of any other event which could reasonably be expected to have a
Material Adverse Effect on the aggregate value of the Collateral or on the
Security Interests, (c) any Collateral which, to the knowledge of such
Grantor, constitutes a Government Contract, and (d) the acquisition or
ownership by such Grantor of any (i) Commercial Tort Claim, (ii) Deposit
Account, or (iii) Investment Property after the date hereof.

 

SECTION 4.5                 Delivery
Covenants.  Each Grantor will deliver
and pledge to the Administrative Agent, for the ratable benefit of the Secured
Parties, all Certificated Securities, Partnership/LLC Interests evidenced by a
certificate, negotiable Documents, Instruments, and Tangible Chattel Paper
owned or held by such Grantor, in each case, together with an Effective
Endorsement and Assignment and all Supporting Obligations, as applicable,
unless such delivery and pledge has been waived in writing by the
Administrative Agent.

 

SECTION 4.6                 Control
Covenants; Certain Excluded Deposit Accounts.

 

(a)           Each
Grantor shall instruct (and otherwise use its commercially reasonable efforts
to cause) (i) each depositary bank holding a Deposit Account (other than
Excluded Deposit Accounts) owned by such Grantor and (ii) each Securities
Intermediary holding any Investment Property owned by such Grantor, to execute
and deliver a control agreement, sufficient to provide the Administrative Agent
with Control of such Deposit Account and otherwise in form and substance
satisfactory to the Administrative Agent (any such depositary bank executing
and delivering any such control agreement, a “Controlled Depositary”,
and any such Securities Intermediary executing and delivering any such control
agreement, a “Controlled Intermediary”). 
In the event any such depositary bank or Securities Intermediary refuses
to execute and deliver such control agreement, the Administrative Agent, in its
sole discretion, may require the applicable Deposit Account and Investment
Property to be transferred to the Administrative Agent or a Controlled
Depositary or Controlled Intermediary, as applicable.  After the date hereof, all Deposit Accounts
(other than Excluded Deposit Accounts) and all Investment Property will be
maintained with the Administrative Agent or with a Controlled Depository or a
Controlled Intermediary, as applicable.

 

(b)           Each
Grantor shall instruct each depositary bank holding a Deposit Account into
which Governmental Receivables are initially deposited to execute and deliver
an  account agreement substantially in
the form of Exhibit A attached hereto or such other form as the
Administrative Agent shall prescribe.  In
the event any such depositary bank refuses to execute and deliver such an
agreement, the Administrative Agent, in its sole discretion, may require the
applicable Deposit Account to be transferred to the Administrative Agent.  After the date hereof, all Deposit Accounts
into which Governmental Receivables are initially deposited will be maintained
with the Administrative Agent or with a depositary institution subject to an
account agreement (as set forth above), as applicable.

 

(c)           Each
Grantor will take such actions and deliver all such agreements as are requested
by the Administrative Agent to provide the Administrative Agent with Control of
all Letter of Credit Rights and Electronic Chattel Paper owned or held by such
Grantor, including, without limitation, with respect to any such Electronic
Chattel Paper, by having the

 

15

 

Administrative Agent identified
as the assignee on the Record(s) pertaining to the single authoritative
copy thereof.

 

(d)           If
any Collateral (other than Collateral specifically subject to the provisions of
Sections 4.6(a), 4.6(b) and 4.6(c)), exceeding in
value $200,000 in the aggregate (such Collateral exceeding such amount, the “Excess
Collateral”) is at any time in the possession or control of any consignee,
warehouseman, bailee (other than a carrier transporting Inventory to a
purchaser in the ordinary course of business), processor, or any other third
party, such Grantor shall notify such Person in writing of the Security
Interests created hereby, shall use its commercially reasonable efforts to
obtain such Person’s written agreement in writing to hold all such Collateral
for the Administrative Agent’s account subject to the Administrative Agent’s
instructions, and shall cause such Person to issue and deliver to the
Administrative Agent warehouse receipts, bills of lading or any similar
documents relating to such Collateral to the Administrative Agent together with
an Effective Endorsement and Assignment; provided that if such Grantor
is not able to obtain such agreement and cause the delivery of such items, the
Administrative Agent, in its sole discretion, may require such Excess
Collateral to be moved to another location specified thereby.  Further, each Grantor shall perfect and
protect such Grantor’s ownership interests in all Inventory stored with a
consignee against creditors of the consignee by filing and maintaining
financing statements against the consignee reflecting the consignment
arrangement filed in all appropriate filing offices, providing any written
notices required to notify any prior creditors of the consignee of the
consignment arrangement, and taking such other actions as may be appropriate to
perfect and protect such Grantor’s interests in such inventory under Section 2-326,
Section 9-103, Section 9-324 and Section 9-505 of the UCC (and
any foreign equivalent) or otherwise. 
All such financing statements filed pursuant to this 

Section 4.6(d) shall be assigned, on the face thereof, to the
Administrative Agent, for the ratable benefit of the Secured Parties.

 

SECTION 4.7                 Filing
Covenants.  Pursuant to Section 9-509
of the UCC and any other applicable Law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
Administrative Agent determines appropriate to perfect the Security Interests
of the Administrative Agent under this Agreement.  Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication
or description of Collateral that describes such property in any other manner
as the Administrative Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the Security
Interest in the Collateral granted herein, including, without limitation,
describing such property as “all assets” or “all personal property.”  Further, a photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.  Each Grantor hereby authorizes, ratifies and
confirms all financing statements and other filing or recording documents or
instruments filed by Administrative Agent prior to the date of this Agreement.

 

SECTION 4.8                 Accounts.

 

(a)           Other
than in the ordinary course of business consistent with its past practice, no
Grantor will (i) grant any extension of the time of payment of any
Account, (ii) compromise or settle any Account for less than the full
amount thereof, (iii) release, wholly or

 

16

 

partially, any Account Debtor, (iv) allow
any credit or discount whatsoever on any Account or (v) amend, supplement
or modify any Account in any manner that could reasonably be likely to
adversely affect the value thereof.

 

(b)           Each
Grantor will deliver to the Administrative Agent a copy of each material
demand, notice or document received by it that questions or calls into doubt
the validity or enforceability of any material Account.

 

(c)           The
Administrative Agent shall have the right to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information
as the Administrative Agent may require in connection with such test
verifications.  At any time and from time
to time, upon the Administrative Agent’s request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts.

 

SECTION 4.9                 Intellectual
Property.

 

(a)           Except
as could not reasonably be expected to have a Material Adverse Effect, each
Grantor (either itself or through licensees) (i) will use each registered
Trademark (owned by such Grantor) and Trademark for which an application (owned
by such Grantor) is pending, to the extent reasonably necessary to maintain
such Trademark in full force free from any claim of abandonment for non-use, (ii) will
maintain products and services offered under such Trademark at a level
substantially consistent with the quality of such products and services as of
the date hereof, (iii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark could reasonably be expected to become invalidated or impaired in any
way, (iv) will not (and will not permit any licensee or sublicensee
thereof to) do any act, or knowingly omit to do any act, whereby any Patent
owned by such Grantor would reasonably be expected to become forfeited,
abandoned or dedicated to the public, (v) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any registered Copyright owned by such Grantor or Copyright for
which an application is pending (owned by such Grantor) could reasonably be
expected to become invalidated or otherwise impaired and (vi) will not
(either itself or through licensees) do any act whereby any material portion of
the Copyrights may fall into the public domain.

 

(b)           Each
Grantor will notify the Administrative Agent and the Lenders promptly if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property owned or licensed by such Grantor may become
forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor’s or its licensor’s
ownership of, or the validity of, any material Intellectual Property owned or
licensed by such Grantor or such Grantor’s right to register the same or to
license, or own and maintain the same.

 

17

 

(c)           Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Administrative Agent within five (5) Business Days after the last day of
the fiscal quarter in which such filing occurs. 
Upon request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Administrative Agent may reasonably request to evidence the
security interest of the Secured Parties in any material Copyright, Patent or
Trademark and the goodwill and General Intangibles of such Grantor relating
thereto or represented thereby.

 

(d)           Each
Grantor will take all reasonable and necessary steps, at such Grantor’s sole
cost and expense, including, without limitation, in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the material
Intellectual Property, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability.

 

(e)           In
the event that any material Intellectual Property owned or licensed by a
Grantor is infringed, misappropriated or diluted by a third party, the
applicable Grantor shall (i) at such Grantor’s sole cost and expense, take
such actions as such Grantor shall reasonably deem appropriate under the
circumstances or allowable pursuant to such Grantor’s license agreement  to protect such Intellectual Property and (ii) if
such Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns of such infringement, misappropriation or
dilution.

 

SECTION 4.10               Investment
Property; Partnership/LLC Interests.

 

(a)           Without
the prior written consent of the Administrative Agent, no Grantor will (i) vote
to enable, or take any other action to permit, any applicable Issuer to issue
any Investment Property or Partnership/LLC Interests, except for such
additional Investment Property or Partnership/LLC Interests that will be
subject to the Security Interest granted herein in favor of the Secured
Parties, or (ii) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any Investment Property or Partnership/LLC Interests or Proceeds
thereof.  The Grantors will defend the
right, title and interest of the Administrative Agent in and to any Investment
Property and Partnership/LLC Interests against the claims and demands of all
Persons whomsoever.

 

(b)           If
any Grantor shall become entitled to receive or shall receive (i) any
Certificated Securities (including, without limitation, any certificate
representing a stock dividend
or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the ownership interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any Investment Property, or otherwise in respect thereof, or (ii) any
sums paid upon or in respect of any Investment Property upon the liquidation or
dissolution of any Issuer, such Grantor shall accept the same as the agent of
the Secured Parties, hold the same in trust for the Secured Parties, segregated
from other funds of such Grantor, and promptly deliver the same

 

18

to the Administrative Agent, on
behalf of the Secured Parties, in accordance with the terms hereof.

 

SECTION 4.11               Equipment.  Each Grantor will maintain each item of
Equipment in good working order and condition (reasonable wear and tear and
obsolescence excepted), and generally in accordance with any manufacturer’s
manual, and will as quickly as practicable provide all maintenance, service and
repairs necessary for such purpose and will promptly furnish to the
Administrative Agent a statement respecting any material loss or damage to any
of the Equipment.

 

SECTION 4.12                   Vehicles.  Upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative Agent,
all applications for certificates of title or ownership indicating the
Administrative Agent’s first priority Lien on the Vehicle (subject to any
Permitted Liens) covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction which the
Administrative Agent shall deem reasonably advisable to perfect its Liens on
the Vehicles; provided that with respect to Vehicles subject to
Permitted Liens, no such application or other documentation shall be
required.  Prior thereto, each
certificate of title or ownership relating to each Vehicle shall be maintained
by the applicable Grantor in accordance with applicable Law to reflect the
ownership interest of such Grantor.

 

SECTION 4.13               Government
Contracts.  Each Grantor shall
promptly notify the Administrative Agent, in writing, if it enters into any
Government Contract with a Governmental Authority under which such Governmental
Authority, as account debtor, owes a material monetary obligation to any
Grantor under any Account.

 

SECTION 4.14               Further
Assurances.  Upon the request of the
Administrative Agent and at the sole expense of the Grantors, each Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the assignment of any Material
Contract, (ii) with respect to Government Contracts, assignment agreements
and notices of assignment, in form and substance satisfactory to the
Administrative Agent, duly executed by any Grantors party to such Government
Contract in compliance with the Assignment of Claims Act (and/or analogous
state or other applicable Law), and (iii) all applications, certificates,
instruments, registration statements, and all other documents and papers the
Administrative Agent may reasonably request and as may be required by law in
connection with the obtaining of any consent, approval, registration,
qualification, or authorization of any Person deemed necessary or appropriate
for the effective exercise of any rights under this Agreement.

 

ARTICLE V

 

REMEDIAL PROVISIONS

 

SECTION 5.1                 General
Remedies.  If an Event of Default
shall occur and be continuing, the Administrative Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them under applicable Law in this

 

19

 

Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party
under the UCC or any other applicable Law. 
Without limiting the generality of the foregoing, the Administrative
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Administrative Agent or any other Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. 
The Administrative Agent may disclaim any warranties in connection with
any sale or other disposition of the Collateral, including, without limitation,
any warranties of title, possession, quiet enjoyment and the like.  The Administrative Agent or any other Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of redemption
in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the
Administrative Agent’s request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor’s premises or elsewhere.  To the fullest extent permitted by applicable
Law, each Grantor waives all claims, damages and demands it may acquire against
the Administrative Agent or any other Secured Party arising out of the exercise
by them of any rights hereunder except to the extent any such claims, damages,
or demands result solely from the gross negligence or willful misconduct of the
Administrative Agent or any other Secured Party, in each case against whom such
claim is asserted.  If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least ten (10) days
before such sale or other disposition.

 

SECTION 5.2                 Specific
Remedies.

 

(a)           The
Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
Accounts in the ordinary course of its business; provided that, the
Administrative Agent may curtail or terminate such authority at any time after
the occurrence and during the continuance of an Event of Default.

 

(b)           Upon
the occurrence and during the continuance of an Event of Default:

 

(i)            the Administrative
Agent may communicate with Account Debtors of any Account subject to a Security
Interest and, upon the request of the Administrative Agent, each Grantor shall
notify (such notice to be in form and substance satisfactory to the
Administrative Agent) its Account Debtors and parties to the Material Contracts
subject to a Security Interest that such Accounts and the Material Contracts
have been assigned to the Administrative Agent, for the ratable benefit of the
Secured Parties;

 

20

 

(ii)           each Grantor shall forward to the Administrative Agent, on
the last Business Day of each week, deposit slips related to all cash, money,
checks or any other similar items of payment received by the Grantor during
such week, and, if requested by the Administrative Agent, copies of such checks
or any other similar items of payment, together with a statement showing the
application of all payments on the Collateral during such week and a collection
report with regard thereto, in form and substance satisfactory to the
Administrative Agent;

 

(iii)          the Administrative Agent may deliver such notices and
instructions in accordance with control agreements covering Deposit Accounts
(other than Excluded Accounts) and/or Securities Accounts.  In addition, whenever any Grantor shall
receive any cash, money, checks or any other similar items of payment relating
to any Collateral (including any Proceeds of any Collateral), subject to the
terms of any Permitted Liens, such Grantor agrees that it will, within one (1) Business
Day of such receipt, deposit all such items of payment into the Collateral
Account or in a Deposit Account (other than an Excluded Deposit Account) at a
Controlled Depositary, and until such Grantor shall deposit such cash, money,
checks or any other similar items of payment in the Collateral Account or in a
Deposit Account (other than an Excluded Deposit Account) at a Controlled
Depositary, such Grantor shall hold such cash, money, checks or any other
similar items of payment in trust for the Secured Parties and as property of
the Secured Parties, separate from the other funds of such Grantor, and the
Administrative Agent shall have the right to transfer or direct the transfer of
the balance of each Deposit Account (other than an Excluded Deposit Account) to
the Collateral Account.  All such
Collateral and Proceeds of Collateral received by the Administrative Agent
hereunder shall be held by the Administrative Agent in the Collateral Account
as collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 5.4;

 

(iv)          the Administrative Agent shall have the right to receive
any and all cash dividends, payments or distributions made in respect of any
Investment Property, any Partnership/LLC Interests or any other Proceeds paid
in respect of any Investment Property or any Partnership/LLC Interests, and any
or all of any Investment Property or any Partnership/LLC Interests shall be
registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such Investment Property or
such Partnership/LLC Interests at any meeting of shareholders, partners or
members of the relevant Issuers and (B) any and all rights of conversion,
exchange and subscription and any other rights, privileges or options
pertaining to such Investment Property or such Partnership/LLC Interests as if
it were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Investment Property or any and
all of the Partnership/LLC Interests upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate,
partnership or company structure of any Issuer or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option
pertaining to such Investment Property or such Partnership/LLC Interests, and
in connection therewith, the right to deposit and deliver any and all of the
Investment Property or any and all of the Partnership/LLC Interests with any
committee, depositary, transfer agent, registrar or 

 

21

 

other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it; but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege
or option and the Administrative Agent and the other Secured Parties shall not
be responsible for any failure to do so or delay in so doing.  In furtherance thereof, each Grantor hereby
authorizes and instructs each Issuer with respect to any Collateral consisting
of Investment Property and Partnership/LLC Interests to (i) comply with
any instruction received by it from the Administrative Agent in writing that (A) states
that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying following receipt of such
notice and prior to notice that such Event of Default is no longer continuing,
and (ii) except as otherwise expressly permitted hereby, pay any
dividends, distributions or other payments with respect to any Investment
Property, or any Partnership/LLC Interests directly to the Administrative
Agent; and

 

(v)           the Administrative Agent shall be entitled to (but shall
not be required to):  (A) proceed to
perform any and all obligations of the applicable Grantor under any Material
Contract and exercise all rights of such Grantor thereunder as fully as such
Grantor itself could, (B) do all other acts which the Administrative Agent
may deem necessary or proper to protect its Security Interest granted
hereunder, provided such acts are not inconsistent with or in violation
of the terms of any of the Credit Agreement, of the other Loan Documents or
applicable Law, and (C) sell, assign or otherwise transfer any Material
Contract in accordance with the Credit Agreement, the other Loan Documents and
applicable Law, subject, however, to the prior approval of each other party to
such Material Contract, to the extent required under the Material Contract.

 

(c)           Unless an Event of
Default shall have occurred and be continuing and the Administrative Agent
shall have given notice to the relevant Grantor of the Administrative Agent’s
intent to exercise its corresponding rights pursuant to Section 5.2(b),
each Grantor shall be permitted to receive all cash dividends, payments or
other distributions made in respect of any Investment Property and any
Partnership/LLC Interests, in each case paid in the normal course of business
of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and other
corporate, company and partnership rights with respect to any Investment
Property and any Partnership/LLC Interests; provided that, no vote shall
be cast or other corporate, company and partnership right exercised or other
action taken which, in the Administrative Agent’s reasonable judgment, would
impair the Collateral in any material respect or which would result in a
Default or Event of Default under any provision of the Credit
Agreement, this Agreement or any other Loan Document.

 

SECTION 5.3                 Registration Rights.

 

(a)           If the
Administrative Agent shall determine that in order to exercise its right to
sell any or all of the Collateral it is necessary or advisable to have such
Collateral registered under the provisions of the Securities Act (any such
Collateral, the “Restricted Securities Collateral”), the relevant Grantor will
cause each applicable Issuer (and the officers and directors thereof) to (i) execute
and deliver all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Administrative Agent, 

 

22

 

necessary or advisable to
register such Restricted Securities Collateral, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) use its
commercially reasonable efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of such Restricted Securities
Collateral, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of
the Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto.  Each Grantor agrees to cause each applicable
Issuer (and the officers and directors thereof) to comply with the provisions
of the securities or “Blue Sky” laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section II (a) of the
Securities Act.

 

(b)           Each Grantor
recognizes that the Administrative Agent may be unable to effect a public sale
of any or all the Restricted Securities Collateral, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  The Administrative
Agent shall be under no obligation to delay a sale of any of the Restricted
Securities Collateral for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act,
or under applicable state securities laws, even if such Issuer would agree to
do so.

 

(c)           Each Grantor agrees
to use its commercially reasonable efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales of all or any portion
of the Restricted Securities Collateral valid and binding and in compliance
with any and all other applicable Laws. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section 5.3 will cause irreparable injury to the
Administrative Agent and the other Secured Parties, that the Administrative
Agent and the other Secured Parties have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 5.3 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.

 

SECTION 5.4                 Application of Proceeds.  At such intervals as may be agreed upon by
the Borrowers and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent’s
election, the Administrative Agent may apply all or any part of the Collateral
or any Proceeds of the Collateral in payment in whole or in part of the
Obligations (after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the rights of
the Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable 

 

23

 

attorneys’ fees and disbursements) in accordance with Section 8.03
of the Credit Agreement.  Only after (i) the
payment by the Administrative Agent of any other amount required by any
provision of applicable Law, including, without limitation, Section 9-610
and Section 9-615 of the UCC and (ii) the payment in full of the
Obligations and the termination of the Commitments, shall the Administrative
Agent account for the surplus, if any, to any Grantor, or to whomever may be
lawfully entitled to receive the same (if such Person is not a Grantor).

 

SECTION 5.5                 Waiver, Deficiency.  Each Grantor hereby waives, to the extent
permitted by applicable Law, all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
Law in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any other Secured Party to
collect such deficiency.

 

ARTICLE VI

 

THE ADMINISTRATIVE AGENT

 

SECTION 6.1                 Administrative Agent’s Appointment as
Attorney-In-Fact.

 

(a)           Each Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, each Grantor hereby
gives the Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following
upon the occurrence and during the continuation of an Event of Default:

 

(i)            in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Account or Material Contract subject to a Security Interest or with respect to
any other Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys due
under any Account or Material Contract subject to a Security Interest or with
respect to any other Collateral whenever payable;

 

(ii)           in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the Administrative
Agent’s and the Secured Parties’ security interest in such Intellectual
Property and the goodwill and General Intangibles of such Grantor relating
thereto or represented thereby;

 

24

 

(iii)          pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance called
for by the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;

 

(iv)          execute, in connection with any sale provided for in this
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and

 

(v)           (A) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct; (B) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of any Collateral; (C) sign and
indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral; (D) commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (E) defend
any suit, action or proceeding brought against such Grantor with respect to any
Collateral; (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as
the Administrative Agent may deem appropriate; (G) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (H) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Security Interests of the Secured Parties therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.

 

(b)           If any Grantor fails
to perform or comply with any of its agreements contained herein, the Administrative
Agent, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such agreement in
accordance with the provisions of Section 6.1(a).

 

(c)           The expenses of the
Administrative Agent incurred in connection with actions taken pursuant to the
terms of this Agreement, together with interest thereon at a rate per annum
equal to the Default Rate for Base Rate Loans under the Credit Agreement, from
the date of payment by the Administrative Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Administrative Agent
on demand.

 

(d)           Each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof in accordance with Section 6.1(a).  All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the Security Interests created hereby
are released.

 

25

 

SECTION 6.2                 Duty of Administrative Agent.  The sole duty of the Administrative Agent
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account. 
Neither the Administrative Agent, any other Secured Party nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.  The powers conferred on the
Administrative Agent and the other Secured Parties hereunder are solely to
protect the interests of the Administrative Agent and the other Secured Parties
in the Collateral and shall not impose any duty upon the Administrative Agent
or any other Secured Party to exercise any such powers.  The Administrative Agent and the other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.

 

SECTION 6.3                 Authority of Administrative Agent.  Each Grantor acknowledges that the rights and
responsibilities of the Administrative Agent under this Agreement with respect
to any action taken by the Administrative Agent or the exercise or non-exercise
by the Administrative Agent of any option, voting right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement to make any inquiry respecting such
authority.

 

ARTICLE VII

 

MISCELLANEOUS

 

SECTION 7.1                 Amendments, Waivers and Consents.  None of the terms, covenants, agreements or
conditions of this Agreement may be amended, supplemented or otherwise
modified, nor may they be waived, nor may any consent be given, except in
accordance with Section 10.01 of the Credit Agreement.

 

SECTION 7.2                 Notices. 
All notices and communications hereunder shall be given to the addresses
and otherwise made in accordance with Section 10.02 of the Credit
Agreement; provided that notices and communications to the Grantors
shall be directed to the Borrower Agent, at the address set forth in Section 10.02
of the Credit Agreement.

 

SECTION 7.3                 No Waiver, Cumulative Remedies.  No failure by any Secured Party to exercise,
and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder or under any other Loan Document shall operate as a waiver 

 

26

 

thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided and provided under each other Loan Document are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

 

SECTION 7.4                 Expenses, Indemnification, Waiver of
Consequential Damages, etc..

 

(a)           Each Grantor, jointly and severally, shall pay all
out-of-pocket expenses incurred by the Administrative Agent and each other
Secured Party pursuant to, and in accordance with, the applicable provisions of
Section 10.04 of the Credit Agreement.

 

(b)           Each Grantor, jointly and severally, shall
indemnify each Indemnitee pursuant to, and in accordance with, Section 10.04
of the Credit Agreement.

 

(c)           Notwithstanding
anything to the contrary contained in this Agreement, to the fullest extent
permitted by applicable Law, no Grantor shall assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Credit Extensions or the use
of the proceeds thereof.

 

(d)           No Indemnitee referred to in this Section 7.4
shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby.

 

(e)           Each Grantor agrees
to pay, and to save the Administrative Agent and the other Secured Parties
harmless from, any and all liabilities with respect to, or resulting from any
such Grantor’s delay in paying, any and all stamp, excise, sales withholding or
other taxes which may be payable or determined to be payable in connection with
any of the transactions contemplated by this Agreement.

 

(f)            All amounts due
under this Section 7.4 shall be payable promptly after demand
therefor.

 

SECTION 7.5                 Successors and Assigns.  The provisions of this Agreement shall be
binding upon and shall inure to the benefit of each Grantor (and shall bind all
Persons who become bound as a Grantor to this Agreement), the Administrative
Agent and the other Secured Parties and their respective successors and
permitted assigns; provided that no Grantor may assign or otherwise,
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and the Lenders (except as
otherwise provided by the Credit Agreement).

 

27

 

SECTION 7.6                 Survival of Indemnities.  Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the other
Secured Parties are entitled under the provisions of Section 7.4
and any other provision of this Agreement and the other Loan Documents shall
continue in full force and effect and shall protect the Administrative Agent
and the other Secured Parties against events arising after such termination as
well as before.

 

SECTION 7.7                     Right of Setoff.  If an
Event of Default shall have occurred and be continuing, each Secured Party and
each of its respective Affiliates is hereby authorized at any time and from
time to time, after obtaining the prior written consent of the Administrative
Agent, to the fullest extent permitted by applicable Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Secured Party or any such Affiliate to or
for the credit or the account of such Grantor against any and all of the
obligations of such Grantor now or hereafter existing under this Agreement or
any other Loan Document to such Secured Party irrespective of whether or not
such Secured Party shall have made any demand under this Agreement or any other
Loan Document and although such obligations of such Grantor may be contingent
or unmatured or are owed to a branch or office of such Secured Party different
from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Secured
Party and its respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Secured
Party or its respective Affiliates may have. 
Each Secured Party agrees to notify such Grantor and the Administrative
Agent promptly after any such set off and application; provided that the
failure to give such notice shall not affect the validity of such set off and
application.  Notwithstanding the
provisions of this Section 7.7, if at any time any Secured Party or
any of its Affiliates maintains one or more deposit accounts for either
Borrower or any other Loan Party into which Medicare and/or Medicaid
receivables are deposited, such Person shall waive the right of setoff set
forth herein.

 

SECTION 7.8                 Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  This Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties
hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 7.9                 Severability. 
If any provision of this Agreement or the other Loan Documents is held
to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the illegal, invalid or 

 

28

unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

SECTION 7.10               Governing Law; Jurisdiction; Service of Process.

 

(a)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(b)           Submission to Jurisdiction.  Each Grantor irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the State of New York sitting in Borough of Manhattan and the United
States District Court of the Southern District of New York, and any appellate
court thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the fullest extent permitted by
applicable Law, in such Federal court. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable Law.  Nothing in this
Agreement or in any other Loan Document shall affect any right that the Administrative
Agent or any other Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against any
Grantor or its properties in the courts of any jurisdiction.

 

(c)           Waiver of Venue. 
Each Grantor irrevocably and unconditionally waives, to the fullest
extent permitted by applicable Law, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to
in paragraph (b) of this Section. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

(d)           Service of Process. 
Each party hereto irrevocably consents to service of process in the
manner provided for notices in Section 10.02 of the Credit
Agreement.  Nothing in this Agreement
will affect the right of any party hereto to serve process in any other manner
permitted by applicable Law.

 

(e)           Appointment of the Borrower Agent as Agent for the
Grantors.  Each Grantor hereby
irrevocably appoints and authorizes the Borrower Agent to act as its agent for
service of process and notices required to be delivered under this Agreement or
under the other Loan Documents, it being understood and agreed that receipt by
the Borrower Agent of any summons, notice or other similar item shall be deemed
effective receipt by each Grantor and its Subsidiaries.

 

SECTION 7.11               Waiver of Jury Trial;
California Judicial Reference.

 

(a)           Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT 

 

29

 

IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

(b)           California
Judicial Reference.  If any action or
proceeding is filed in a court of the State of California by or against any
party hereto in connection with any of the transactions contemplated by this
Agreement or any other Loan Document, (a) the court shall, and is hereby
directed to, make a general reference pursuant to California Code of Civil
Procedure Section 638 to a referee (who shall be a single active or
retired judge) to hear and determine all of the issues in such action or
proceeding (whether of fact or of law) and to report a statement of decision, provided
that at the option of any party to such proceeding, any such issues pertaining
to a “provisional remedy” as defined in California Code of Civil Procedure Section 1281.8
shall be heard and determined by the court and (b) the Grantors, on a
joint and several basis, shall be solely responsible to pay all fees and
expenses of any referee appointed in such action or proceeding.

 

SECTION 7.12               Injunctive Relief.  The Grantors recognize that, in the event the
Grantors fail to perform, observe or discharge any of their obligations or
liabilities under this Agreement or any other Loan Document, any remedy of law
may prove to be inadequate relief to the Administrative Agent and the other
Secured Parties.  Therefore, the Grantors
agree that the Administrative Agent and the other Secured Parties, at the
option of the Administrative Agent and the other Secured Parties, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.

 

SECTION 7.13               Acknowledgements.

 

(a)           Each Grantor hereby
acknowledges that:  (i) it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party, (ii) it has received
a copy of the Credit Agreement and has reviewed and understands same, (iii) neither
the Administrative Agent nor any other Secured Party has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor, and (iv) no joint venture is created
hereby or by the other Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby or thereby among the Secured Parties or among
the Grantors and the Secured Parties.

 

30

 

(b)           Each Issuer party to
this Agreement acknowledges receipt of a copy of this Agreement and agrees to
be bound thereby and to comply with the terms thereof insofar as such terms are
applicable to it.  Each Issuer agrees to
provide such notices to the Administrative Agent as may be necessary to give
full effect to the provisions of this Agreement.

 

SECTION 7.14                   Releases.

 

(a)           At such time as the
Obligations shall have been paid in full in cash and the Commitments have been
terminated, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors.  At the request
and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such
termination.

 

(b)           If any of the
Collateral shall be sold, transferred or otherwise disposed of by any Grantor
in a transaction permitted by the Credit Agreement, then the Administrative
Agent, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable to evidence the release of the Liens created hereby on such
Collateral.  In the event that all the
Equity Interests of any Grantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Credit Agreement, then, at the
request of the Borrower Agent and at the expense of the Grantors, such Grantor
shall be released from its obligations hereunder; provided that the
Borrower Agent shall have delivered to the Administrative Agent, at least ten (10) Business
Days prior to the date of the proposed release, a written request for release
identifying the relevant Grantor and the terms of the sale or other disposition
in reasonable detail, including the price thereof and any expenses in
connection therewith, together with a certification by the Borrower Agent
stating that such transaction is in compliance with the Credit Agreement and
the other Loan Documents.

 

SECTION 7.15                   Additional Grantors.  Each Subsidiary of the Borrowers that is
required to become a party to this Agreement pursuant to Section 6.12
of the Credit Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of a joinder agreement
in form and substance satisfactory to the Administrative Agent.

 

SECTION 7.16                   All Powers Coupled with Interest.  All powers of attorney and other
authorizations granted to the Secured Parties, the Administrative Agent and any
Persons designated by the Administrative Agent or any other Secured Party
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as
any of the Obligations remain unpaid or unsatisfied, any of the Commitments
remain in effect or the Term Facility or Revolving Credit Facility have not
been terminated.

 

[Signature Pages to Follow]

 

31

 

IN WITNESS
WHEREOF, the parties hereto have caused this First Lien Collateral Agreement to
be executed under seal by their duly authorized officers, all as of the day and
year first written above.

 

	
   

  	
  [                                            ], as Grantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                            ], as Grantor and Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

[Signature Pages Continue]

 

 

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

 

 

SCHEDULE 3.6

to

Collateral Agreement

 

Exact Legal Name; Jurisdiction of Organization; Taxpayer Identification
Number; Registered

Organization Number;
Mailing Address; Chief Executive Office and other Locations

 

 

SCHEDULE 3.9

to

Collateral Agreement

 

Commercial Tort Claims

 

 

SCHEDULE 3.10

to

Collateral Agreement

 

Deposit Accounts

 

	
  Grantor

  	
   

  	
  Financial Institution

  	
   

  	
  Account Number

  	
   

  	
  Address of Financial

  Institution

  	
   

  	
  Account Purpose

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3.11

to

Collateral Agreement

 

Intellectual Property

 

1.             The listing of Trademarks (as
defined in the Collateral Agreement) should include: (a) the Trademark; (b) Registration
Number or Serial Number; (c) the Owner; (d) the Filing Date; (e) the
Registration Date (if applicable); (f) the Date Affidavit of Use and/or
Renewal is Due; and (g) Whether the Affidavit of Use and/or Renewal has
been filed.

 

2.             The listing of Trademark Licenses
(as defined in the Collateral Agreement) should include: (a) Name and
Address of Licensee/Licensor; (b) Date; (c) List of each Trademark
Licensed/Assigned; and (d) Description of product to which
license/assignment applies.

 

3.             The listing of Patents (as defined
in the Collateral Agreement) should include: (a) Country; (b) Patent
Number; (c) Issue Date; (d) Inventor(s); (e) Title of Invention;
(f) Dates on which Maintenance Fees were paid;  and (g) Identity of Party Paying
Maintenance Fees.

 

4.             The listing of Patent (as defined
in the Collateral Agreement) applications should include:  (a) Application Number; (b) Filing
Date; (c) Inventors; and (d) Title of Invention.

 

5.             The listing of Patent Licenses (as
defined in the Collateral Agreement) should include:  (a) Name and Address of
Licensee/Licensor; (b) Date; (c) List of each Patent
Licensed/Assigned; and (d) Description of product to which
license/assignment applies

 

6.             The listing of Copyrights (as
defined in the Collateral Agreement) should include: (a) Registration
Number; (b) Registration Date; (c) Title as listed in Registration; (d) Publication
Date; (e) Creation Date; (f) Author; and(g) Subject Matter
Covered.

 

7.             The listing of Copyright Licenses
(as defined in the Collateral Agreement) should include: (a) Name and
Address of Licensee/Licensor; (b) Date; (c) Work Licensed or
Assigned.

 

 

SCHEDULE 3.13

to

Collateral Agreement

 

Investment Property and
Partnership/LLC Interests

 

Certificated Securities:

[Grantor]:

 

	
  Name of Issuer

  	
   

  	
  Class and Series

  	
   

  	
  Par Value

  	
   

  	
  Certificate Number

  	
   

  	
  Percentage of

  Ownership Interests of

  such Class and Series

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

Securities Accounts (including cash management accounts that are
Investment Property) and Uncertificated Securities:

[Grantor]:

 

	
  Financial Institution

  	
   

  	
  Account Number

  	
   

  	
  Address of Financial

  Institution

  	
   

  	
  Account Purpose

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Name of Issuer

  	
   

  	
  Class and Series

  	
   

  	
  Par Value

  	
   

  	
  Percentage of Ownership

  Interests of such Class and Series

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

Partnerships/LLC Interests:

[Grantor]:

 

	
  Name of Issuer 

  (including identification of 

  type of entity)

  	
   

  	
  Type of Ownership Interest

  	
   

  	
  Certificate Number

  (if any)

  	
   

  	
  Percentage of Ownership

  Interests of such Type

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3.14

to

Collateral Agreement

 

Instruments

 

 

EXHIBIT A

to

Collateral Agreement

 

Form of Governmental Receivables Account AgreementExhibit 10.34

 

EXECUTION COPY

 

 

SECOND LIEN COLLATERAL AGREEMENT

 

dated as of August 8, 2007

 

by and among

 

PROSPECT MEDICAL HOLDINGS, INC.

PROSPECT MEDICAL GROUP, INC.,

and certain of their Subsidiaries,

as Grantors,

 

in favor of

 

BANK OF AMERICA, N.A.,

as Administrative Agent

 

 

 

Table of
Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINED TERMS

  	
  1

  
	
  SECTION 1.1

  	
  Terms Defined in the Uniform
  Commercial Code.

  	
  1

  
	
  SECTION 1.2

  	
  Definitions

  	
  2

  
	
  SECTION 1.3

  	
  Other Interpretive Provisions

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE II SECURITY INTEREST

  	
  7

  
	
  SECTION 2.1

  	
  Grant of Security Interest

  	
  7

  
	
  SECTION 2.2

  	
  Grantors Remain Liable

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES

  	
  9

  
	
  SECTION 3.1

  	
  Existence, Qualification and
  Power; Compliance with Laws

  	
  9

  
	
  SECTION 3.2

  	
  Authorization; No Contravention;
  Binding Effect

  	
  9

  
	
  SECTION 3.3

  	
  Consents

  	
  10

  
	
  SECTION 3.4

  	
  Perfected Second Priority Liens

  	
  10

  
	
  SECTION 3.5

  	
  Title, No Other Liens

  	
  10

  
	
  SECTION 3.6

  	
  State of Organization; Location
  of Inventory, Equipment and Fixtures; other Information

  	
  11

  
	
  SECTION 3.7

  	
  Accounts

  	
  11

  
	
  SECTION 3.8

  	
  Chattel Paper

  	
  11

  
	
  SECTION 3.9

  	
  Commercial Tort Claims

  	
  11

  
	
   SECTION 3.10

  	
  Deposit Accounts

  	
  11

  
	
   SECTION 3.11

  	
  Intellectual Property

  	
  12

  
	
   SECTION 3.12

  	
  Inventory

  	
  12

  
	
   SECTION 3.13

  	
  Investment Property;
  Partnership/LLC Interests

  	
  12

  
	
   SECTION 3.14

  	
  Instruments

  	
  13

  
	
   SECTION 3.15

  	
  Farm Products

  	
  13

  
	
   SECTION 3.16

  	
  Government Contracts

  	
  13

  
	
   SECTION 3.17

  	
  Aircraft

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS

  	
  13

  
	
  SECTION 4.1

  	
  Maintenance of Perfected
  Security Interest; Further Information

  	
  13

  
	
  SECTION 4.2

  	
  Maintenance of Insurance

  	
  13

  
	
  SECTION 4.3

  	
  Changes in Locations; Changes in
  Name or Structure

  	
  14

  
	
  SECTION 4.4

  	
  Required Notifications

  	
  14

  
	
  SECTION 4.5

  	
  Delivery Covenants

  	
  15

  
	
  SECTION 4.6

  	
  Control Covenants; Certain
  Excluded Deposit Accounts

  	
  15

  
	
  SECTION 4.7

  	
  Filing Covenants

  	
  16

  
	
  SECTION 4.8

  	
  Accounts

  	
  16

  
	
  SECTION 4.9

  	
  Intellectual Property

  	
  17

  
	
   SECTION 4.10

  	
  Investment Property;
  Partnership/LLC Interests.

  	
  18

  
	
   SECTION 4.11

  	
  Equipment

  	
  19

  
	
   SECTION 4.12

  	
  Vehicles

  	
  19

  
	
   SECTION 4.13

  	
  Government Contracts

  	
  19

  
				

 

i

 

	
  SECTION 4.14

  	
  Further Assurances

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIAL PROVISIONS

  	
  20

  
	
  SECTION 5.1

  	
  General Remedies

  	
  20

  
	
  SECTION 5.2

  	
  Specific Remedies

  	
  20

  
	
  SECTION 5.3

  	
  Registration Rights

  	
  23

  
	
  SECTION 5.4

  	
  Application of Proceeds

  	
  24

  
	
  SECTION 5.5

  	
  Waiver, Deficiency

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI THE ADMINISTRATIVE
  AGENT

  	
  24

  
	
  SECTION 6.1

  	
  Administrative Agent’s
  Appointment as Attorney-In-Fact

  	
  24

  
	
  SECTION 6.2

  	
  Duty of Administrative Agent

  	
  26

  
	
  SECTION 6.3

  	
  Authority of Administrative
  Agent

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  26

  
	
  SECTION 7.1

  	
  Amendments, Waivers and Consents

  	
  26

  
	
  SECTION 7.2

  	
  Notices

  	
  27

  
	
  SECTION 7.3

  	
  No Waiver, Cumulative Remedies

  	
  27

  
	
  SECTION 7.4

  	
  Expenses, Indemnification,
  Waiver of Consequential Damages, etc.

  	
  27

  
	
  SECTION 7.5

  	
  Successors and Assigns

  	
  28

  
	
  SECTION 7.6

  	
  Survival of
  Indemnities

  	
  28

  
	
  SECTION 7.7

  	
  Right of Setoff

  	
  28

  
	
  SECTION 7.8

  	
  Counterparts; Integration;
  Effectiveness

  	
  28

  
	
  SECTION 7.9

  	
  Severability

  	
  29

  
	
   SECTION 7.10

  	
  Governing Law; Jurisdiction;
  Service of Process

  	
  29

  
	
   SECTION 7.11

  	
  Waiver of Jury
  Trial; California Judicial Reference

  	
  30

  
	
   SECTION 7.12

  	
  Injunctive Relief.

  	
  30

  
	
   SECTION 7.13

  	
  Acknowledgements

  	
  31

  
	
   SECTION 7.14

  	
  Releases

  	
  31

  
	
   SECTION 7.15

  	
  Additional Grantors

  	
  31

  
	
   SECTION 7.16

  	
  All Powers Coupled with Interest

  	
  32

  

 

ii

 

	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  Schedule 3.6

  	
  Exact Legal Name; Jurisdiction of Organization; Taxpayer
  Identification Number; Registered Organization Number; Mailing Address; Chief
  Executive Office and other Locations

  
	
  Schedule 3.9

  	
  Commercial Tort Claims

  
	
  Schedule
  3.10

  	
  Deposit Accounts

  
	
  Schedule
  3.11

  	
  Intellectual Property

  
	
  Schedule
  3.13

  	
  Investment Property and Partnership/LLC Interests

  
	
  Schedule
  3.14

  	
  Instruments

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Governmental Receivables Account Agreement

  

 

iii

 

SECOND LIEN
COLLATERAL AGREEMENT (this “Agreement”), dated as of August 8, 2007
by and among PROSPECT MEDICAL HOLDINGS, INC., a
Delaware corporation (“Holdings”), PROSPECT MEDICAL GROUP,
INC., a California professional corporation (together with Holdings,
the “Borrowers”), each of the Guarantors (as defined in the Credit
Agreement referred to below) and identified on the signature pages hereto
and any Additional Grantor (as defined below) who may become party to this
Agreement (such Guarantors and Additional Grantors, collectively, with the
Borrowers, the “Grantors”), in favor of BANK OF
AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative
Agent”) for the ratable benefit of the Secured Parties.

 

STATEMENT OF PURPOSE

 

Pursuant to
the Second Lien Credit Agreement, dated as of even date herewith by and among
the Borrowers, the banks and other financial institutions from time to time
party thereto (the “Lenders”) and the Administrative Agent (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), the Lenders have agreed to make Credit Extensions to the
Borrowers upon the terms and subject to the conditions set forth therein.

 

Pursuant to
the terms of a Second Lien Guaranty of even date herewith, the Guarantors who
are parties hereto have guaranteed the payment and performance of the
Obligations.

 

It is a
condition precedent to the obligation of the Lenders to make their respective
Credit Extensions to the Borrowers under the Credit Agreement that the Grantors
shall have executed and delivered this Agreement to the Administrative Agent,
for the ratable benefit of the Secured Parties.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Credit Extensions to the Borrowers
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Secured Parties, as follows:

 

ARTICLE I

 

DEFINED TERMS

 

SECTION 1.1             Terms
Defined in the Uniform Commercial Code.

 

(a)           The following terms
when used in this Agreement shall have the meanings assigned to them in the UCC
(as defined below) as in effect from time to time:  “Account”, “Account Debtor”, “Authenticate”,
“Certificated Security”, “Chattel Paper”; “Commercial Tort
Claim”, “Deposit Account”, “Documents”, “Electronic
Chattel Paper”, “Equipment”, “Farm Products” “Fixture”,
“General Intangible”, “Goods”, “Health-Care-Insurance
Receivables”, “Instrument”, “Inventory”, “Investment
Company Security”, “Investment Property”, “Letter of Credit
Rights”, “Payment Intangibles”, “Proceeds”, “Record”, “Registered
Organization”, “Security”, “Securities Entitlement”, “Securities
Intermediary”, “Securities Account”, “Security”, “Supporting
Obligation”, “Tangible Chattel Paper”, and “Uncertificated
Security”.

 

 

(b)           Terms defined in the
UCC and not otherwise defined herein or in the Credit Agreement shall have the
meaning assigned in the UCC as in effect from time to time.

 

SECTION 1.2                 Definitions.  The following terms when used in this
Agreement shall have the meanings assigned to them below:

 

“Additional
Grantor” means each Subsidiary of the Borrowers which hereafter becomes a
Grantor pursuant to Section 7.15 (as required pursuant to Section 6.12
of the Credit Agreement).

 

“Agreement”
means this Collateral Agreement, as amended, restated, supplemented or
otherwise modified from time to time.

 

“Applicable
Insolvency Laws” means all applicable Laws governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550
and other “avoidance” provisions of Title 11 of the United States Code).

 

“Assignment
of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15,
31 U.S.C.  Section 3737, and 31
U.S.C. Section 3727), including all amendments thereto and regulations
promulgated thereunder.

 

“Brotman
Shares” means the shares of common stock owned as of the date hereof issued
by Brotman Medical Center, Inc., a California corporation, to Prospect
Hospital Advisory Services, Inc.

 

“Capitated
Contract Rights” means, collectively, all of the Loan Parties’ contracts
whether presently existing or hereafter executed between Loan Parties and
various health maintenance organizations and all proceeds therefrom.

 

“Collateral”
has the meaning assigned thereto in Section 2.1.

 

“Collateral
Account” means any collateral account established by the Administrative
Agent as provided in Section 5.2.

 

“Collections”
means all funds received from or on behalf of Obligors in payment of any amount
owed with respect to Receivables.

 

“Control”
means the manner in which “control” is achieved under the UCC with respect to
any Collateral for which the UCC specifies a method of achieving “control”.

 

“Controlled
Depository” has the meaning assigned thereto in Section 4.6.

 

“Controlled
Intermediary” has the meaning assigned thereto in Section 4.6.

 

“Copyrights”
means collectively, all of the following of any Grantor: (a) all
copyrights, rights and interests in copyrights, works protectable by copyright,
copyright registrations and copyright applications anywhere in the world,
including, without limitation, those listed on 

 

2

 

Schedule 3.11
hereto, (b) all extensions, and renewals of any of the foregoing, (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past, present or future
infringements of any of the foregoing, (d) the right to sue for past,
present or future infringements of any of the foregoing and (e) all rights
corresponding to any of the foregoing throughout the world.

 

“Copyright
Licenses” means any written agreement naming any Grantor as licensor or
licensee, including, without limitation, those listed in Schedule 3.11,
granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

 

“Effective
Endorsement and Assignment” means, with respect to any specific type of
Collateral, all such endorsements, assignments and other instruments of
transfer reasonably requested by the Administrative Agent with respect to the
Security Interest granted in such Collateral, and in each case, in form and
substance satisfactory to the Administrative Agent.

 

“Excess
Collateral” has the meaning assigned thereto in Section 4.6(c).

 

“Excluded
Deposit Account” means, collectively, (a) Deposit Accounts established
solely for the purpose of funding payroll and other compensation and benefits
to employees and (b) all Deposit Accounts into which Governmental
Receivables are initially deposited.

 

“Fee-for-Service
Receivables” means Receivables other than Capitated Contract Rights.

 

“First Lien
Secured Parties” means the secured parties under the First Lien Collateral
Documents.

 

“Government
Contract” means a contract between any Grantor and an agency, department or
instrumentality of the United States or any state, municipal or local
Governmental Authority located in the United States or all obligations of any
such Governmental Authority arising under any Account now or hereafter owing by
any such Governmental Authority, as account debtor, to any Grantor; provided,
however, that such definition shall exclude all Government Reimbursement
Programs.

 

“Governmental
Receivable” means any Account that is payable pursuant to any Government
Reimbursement Program.

 

“Government
Reimbursement Program” means any program (a) relating to Medicare, (b) Medicaid,
or (c) any other state or federal programs as payor or program
administrated by the Centers for Medicare and Medicaid Services or any agent,
administrator, intermediary or carrier for any of the foregoing.

 

“Grantors”
has the meaning set forth in the Preamble of this Agreement.

 

“Intellectual
Property” means collectively, all of the following of any Grantor: (a) 
all systems software, applications software and internet rights, including,
without limitation, screen displays and formats, internet domain names, web
sites (including web links), program 

 

3

 

structures,
sequence and organization, all documentation for such software, including,
without limitation, user manuals, flowcharts, programmer’s notes, functional
specifications, and operations manuals, all formulas, processes, ideas and
know-how embodied in any of the foregoing, and all program materials,
flowcharts, notes and outlines created in connection with any of the foregoing,
whether or not patentable or copyrightable, (b) concepts, discoveries,
inventions, improvements and ideas, (c) any useful information relating to
the items described in clause (a) or (b), including know-how, technology,
engineering drawings, reports, design information, trade secrets, practices,
laboratory notebooks, specifications, test procedures, maintenance manuals,
research, development, manufacturing, marketing, merchandising, selling,
purchasing and accounting, (d) Patents and Patent Licenses, Copyrights and
Copyright Licenses, Trademarks and Trademark Licenses, and (e) other
licenses to use any of the items described in the foregoing clauses (a), (b), (c) and
(d) or any other similar items of such Grantor necessary for the conduct
of its business.

 

“Issuer”
means any issuer of any Investment Property or Partnership/LLC Interests
(including, without limitation, any Issuer as defined in the UCC).

 

“Obligations”
means with respect to the Borrowers, the meaning assigned thereto in the Credit
Agreement, and with respect to each Guarantor, the obligations of such
Guarantor under the Guaranty executed by such Guarantor and with respect to all
Grantors, all liabilities and obligations of the Grantors hereunder and all liabilities
and obligations of the Grantors with respect to overdrafts, returned items and
related liabilities and all indemnification obligations under the Loan
Documents now or hereafter owing by any Grantor to Bank of America, N.A., any
Affiliate thereof or the Administrative Agent arising from or in connection
with treasury, depositary or cash management services or in connection with any
automated clearinghouse transfer of funds for the benefit of such Grantor.

 

“Obligors”
means any person that is obligated  to
make payment with respect to any Capitated Contract or other Receivables.

 

“Partnership/LLC
Interests” means, with respect to any Grantor, the entire partnership,
membership interest or limited liability company interest, as applicable, of
such Grantor in each partnership, limited partnership or limited liability
company owned thereby, including, without limitation, such Grantor’s capital
account, its interest as a partner or member, as applicable, in the net cash
flow, net profit and net loss, and items of income, gain, loss, deduction and
credit of any such partnership, limited partnership or limited liability
company, as applicable, such Grantor’s interest in all distributions made or to
be made by any such partnership, limited partnership or limited liability
company, as applicable, to such Grantor and all of the other economic rights,
titles and interests of such Grantor as a partner or member, as applicable, of
any such partnership, limited partnership or limited liability company, as
applicable, whether set forth in the partnership agreement or membership
agreement, as applicable, of such partnership, limited partnership or limited
liability company, as applicable, by separate agreement or otherwise.

 

“Patents”
means collectively, all of the following of any Grantor: (a) all patents,
rights and interests in patents, patent disclosures, patentable inventions and
patent applications anywhere in the world, including, without limitation, those
listed on Schedule 3.11 hereto, (b) all 

 

4

 

improvements
thereto, reissues, continuations (in whole or in part), divisionals,
reexaminations and renewals and extensions of any of the foregoing, (c) all
income, royalties, damages or payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past, present or future
infringements of any of the foregoing, (d) the right to sue for past,
present or future infringements of any of the foregoing and (e) all rights
corresponding to any of the foregoing throughout the world.

 

“Patent
License” means all agreements now or hereafter in existence, whether
written, implied or oral, providing for the grant by or to any Grantor of any
right to manufacture, use or sell any invention covered in whole or in part by
a Patent, including, without limitation, any of the foregoing referred to in Schedule
3.11 hereto.

 

“Patient
Lists” means all records, documents, lists, electronic media or any other
method of recordation that shows in any way any Person to whom Loan Parties
supply medical services, medication, medical supplies, or professional
services, the name and mailing address of such Person, a complete and accurate
description of the medical services, medication, medical supply item or
professional service that is supplied to such Person, the physician at whose
direction such medical services, medication, medical supply or professional
service is delivered, and all other information Loan Parties used in the course
of Loan Parties’ ordinary course of business to supply such Person with medical
services, medication, medical supplies or professional service.

 

“Permitted
Liens” means the Liens permitted by Section 7.01(a)-(i) and
(k)-(l) of the Credit Agreement.

 

“Receivables”
means any right to payment, whether constituting an account, chattel paper,
instrument, general intangible, payment intangible or health-care insurance
receivable, Capitated Contract Rights, Fee-for-Service Receivable, Governmental
Receivable or otherwise, arising from the sale, rental or lease of healthcare
goods or equipment, or the provision of services and any ancillary sales,
including all rights and remedies to payment relating thereto, together with
any and all proceeds in any way derived, directly or indirectly therefrom.  The term “Receivables” shall include amounts
due under capitation and similar agreements, amounts due any Loan Party for
cost adjustments or undercharges for prior services, amounts due as any part of
a disproportionate share or risk share payment, workmen’s compensation claims,
and any other claims to payment held by any Loan Party.

 

“Restricted
Securities Collateral” has the meaning assigned thereto in Section 5.3.

 

“Securities
Act” means the Securities Act of 1933, including all amendments thereto and
regulations promulgated thereunder.

 

“Security
Interests” means the security interests granted pursuant to Article II,
as well as all other security interests created or assigned as additional security
for the Obligations pursuant to the provisions of the Credit Agreement.

 

“Trademarks”
means collectively all of the following of any Grantor: (a) all
trademarks, rights and interests in trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, service marks, logos, other business 

 

5

 

identifiers,
together with translations, adaptations, derivations and combinations thereof,
prints and labels on which any of the foregoing have appeared or appear,
whether registered or unregistered, all registrations and recordings thereof,
and all applications in connection therewith (other than each application to
register any trademark or service mark prior to the filing under applicable Law
of a verified statement of use for such trademark or service mark) anywhere in
the world, including, without limitation, those listed on Schedule 3.11
hereto, (b) all extensions and renewals of any of the foregoing, (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past, present or future
infringements of any of the foregoing, (d) the right to sue for past,
present or future infringements of any of the foregoing and (e) all rights
corresponding to any of the foregoing (including the goodwill) throughout the
world.

 

“Trademark
License” means any agreement now or hereafter in existence, whether written
or oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to in Schedule
3.11.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York, as
amended or modified from time to time.

 

“Vehicles”
means all cars, trucks, trailers, construction and earth moving equipment and
other vehicles covered by a certificate of title under the laws of any state,
all tires and all other appurtenances to any of the foregoing.

 

SECTION 1.3             Other
Interpretive Provisions.  Terms
defined in the Credit Agreement and not otherwise defined herein shall have the
meanings assigned thereto in the Credit Agreement.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:  (a) the definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined, (b) whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms, (c) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (d) the word “will” shall be construed to have the same
meaning and effect as the word “shall”, (e) any definition of or reference
to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document, as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (f) any
reference herein to any Person shall be construed to include such Person’s
permitted successors and assigns, (g) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (h) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (i) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights, (j) the term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or electronic
form, (k) in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and 

 

6

 

including;” the words “to” and “until” each mean “to but excluding;”
and the word “through” means “to and including”, (l) Section headings
herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document and (k) where the context requires, terms relating to
the Collateral or any part thereof, when used in relation to a Grantor, shall
refer to such Grantor’s Collateral or the relevant part thereof.  To the extent that a direct conflict between
the provisions of this Agreement and the provisions of the Credit Agreement
(other than with respect to any provision of this Agreement relating to the
grant, pledge and assignment of the Security Interest in the Collateral or the
exercise of remedies with respect thereto), the Credit Agreement shall govern.

 

SECTION 1.4             Intercreditor
Agreement.  Notwithstanding anything
contained herein to the contrary, the liens and security interests granted to
the Administrative Agent, for the benefit of the Secured Parties, pursuant to
this Agreement, and the exercise of any right or remedy by the Administrative
Agent, for the benefit of the Secured Parties, under this Agreement, are
subject to the provisions of the Intercreditor Agreement. In the event of any
conflict between the terms of the Intercreditor Agreement and this Agreement,
the terms of the Intercreditor Agreement shall govern and control.

 

ARTICLE II

 

SECURITY INTEREST

 

SECTION 2.1             Grant
of Security Interest.  Each Grantor
hereby grants, pledges and collaterally assigns to the Administrative Agent,
for the ratable benefit of the Secured Parties, a security interest in, all of
such Grantor’s right, title and interest in the following property, now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest, and
wherever located or deemed located (collectively, the “Collateral”), as
collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations:

 

(a)           all Accounts
including, without limitation, all “Health Care Insurance Receivables”, all
Receivables (including all Capitated Contract Rights) and all Collections and
other payments and proceeds with regard thereto;

 

(b)           all cash and
currency;

 

(c)           all Chattel Paper;

 

(d)           all Commercial Tort
Claims identified on Schedule 3.9;

 

(e)           all Deposit
Accounts;

 

(f)            all Documents;

 

(g)           all Equipment;

 

7

 

(h)           all Fixtures;

 

(i)            all General
Intangibles, including all Payment Intangibles, any disproportionate share
settlements, risk share settlements, cost report settlements, capitation
settlement payments or other distributions to any Loan Party related to the
Collateral or any portion thereof or the related contracts;

 

(j)            all Instruments;

 

(k)           all Intellectual
Property;

 

(l)            all Inventory;

 

(m)          all Investment Property
(other than the Brotman Shares);

 

(n)           all Letter of Credit
Rights;

 

(o)           all licenses, Permits
and governmental authorizations, including all operating and medical licenses
and permits, including any certificates of need, provider contracts, general
certifications and other similar type authorizations;

 

(p)           all Vehicles;

 

(q)           all Goods and all other
personal property not otherwise described above;

 

(r)            to the extent not
prohibited by applicable Health Care Laws all books and records pertaining to
the Collateral and all customer lists and Patient Lists;

 

(s)           to the extent not
otherwise included, all Proceeds, insurance claims and products of any and all
of the foregoing and all collateral security and Supporting Obligations (as now
or hereafter defined in the UCC) and other rights to payment not otherwise
included in the foregoing given by any Person with respect to any of the
foregoing.

 

provided, that (i) any Security Interest
on any Equity Interests issued by any Foreign Subsidiary shall be limited to
66% of all issued and outstanding shares of all classes of Equity Interests of
first tier Foreign Subsidiaries, (ii) the Security Interests granted
herein shall not extend to, and the term “Collateral” shall not include, any
rights under any lease, contract or agreement (including, without limitation,
any license for Intellectual Property) to the extent that the granting of a
security interest therein is specifically prohibited in writing by, or would
constitute an event of default under or would grant a party a termination right
under any agreement governing such right unless such prohibition is not
enforceable or is otherwise ineffective under applicable Law.  Notwithstanding any of the foregoing, such
proviso shall not affect, limit, restrict or impair the grant by any Grantor of
a Security Interest in any Account or any money or other amounts due and
payable to any Grantor or to become due and payable to any Grantor under such
lease, contract or agreement.

 

Notwithstanding
the foregoing, the payment and performance of the Obligations shall not be
secured by any Swap Contract between any Grantor and any Secured Party.

 

8

 

SECTION 2.2                 Grantors Remain Liable.
Anything herein to the contrary notwithstanding: (a) each Grantor shall
remain liable to perform all of its duties and obligations under the contracts
and agreements included in the Collateral to the same extent as if this
Agreement had not been executed, (b) the exercise by Administrative 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, (c) neither the Administrative Agent nor any other Secured
Party shall have any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the
Administrative Agent or any other 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, and (d) neither
the Administrative Agent nor any other Secured Party shall have any liability
in contract or tort for any Grantor’s acts or omissions.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Credit Extensions to the Borrowers
thereunder, each Grantor hereby represents and warrants to the Administrative
Agent and each other Secured Party that:

 

SECTION 3.1                 Existence, Qualification and Power;
Compliance with Laws.  Each Grantor (a) is
a corporation, partnership or limited liability company duly organized or
formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental permits, licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the
Loan Documents and Related Documents to which it is a party, and (c) is
duly qualified and is licensed, and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clauses (b)(i) or (c), to the extent the failure
to do so could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.2                 Authorization; No Contravention;
Binding Effect.  The execution,
delivery and performance by each Grantor of each Loan Document and Related
Document to which such Person is or is to be a party, have been duly authorized
by all necessary corporate or other organizational action, and do not and will
not (a) contravene the terms of any of such Person’s Organization
Documents; (b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, or require any payment to be made under (i) any
Contractual Obligation to which such Person is a party or affecting such Person
or the properties of such Person or any of its Subsidiaries or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any
Law.  This Agreement constitutes, and
each other Loan Document and Related Document when so delivered will
constitute, a legal, valid and binding obligation of the Grantors enforceable
in accordance with its terms.

 

9

 

SECTION 3.3                 Consents.  No approval, consent, exemption,
authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against any Grantor or any Issuer of this Agreement, except (a) as may be
required by laws affecting the offering and sale of securities generally, (b) filings
with the United States Copyright Office and/or the United States Patent and
Trademark Office, (c) filings under the UCC and/or the Assignment of
Claims Act and (d) as may be required with respect to Vehicles represented
by a certificate of title.

 

SECTION 3.4                 Perfected Second Priority Liens.  Each financing statement naming any Grantor
as a debtor is in appropriate form for filing in the appropriate filing offices
specified on Schedule 3.6.  The
Security Interests granted pursuant to this Agreement (a) constitute valid
security interests in all of the Collateral in favor of the Administrative Agent,
for the ratable benefit of the Secured Parties, as collateral security for the
Obligations, and (b):  (i) when UCC
financing statements (or foreign equivalents) containing an adequate
description of the Collateral shall have been filed in the offices specified in
Schedule 3.6, will constitute perfected security interests in all right,
title and interest of such Grantor in the Collateral to the extent that a
security interest therein may be perfected by filing pursuant to the UCC, prior
to all other Liens and rights of others therein except for Permitted Liens; (ii) when
each Copyright security agreement has been filed with the United States
Copyright Office, will constitute perfected security interests in all right,
title and interest of such Grantor in the Intellectual Property therein
described, prior to all other Liens and rights of others therein except for
Permitted Liens; and (iii) when each control agreement has been executed
and delivered to the Administrative Agent, will constitute perfected security
interests in all right, title and interest of the Grantors in the Deposit
Accounts and Securities Accounts, as applicable, subject thereto, prior to all
other Liens and rights of others therein and subject to no adverse claims
except for Permitted Liens.

 

SECTION 3.5                 Title, No Other Liens.  Except for the Security Interests, each
Grantor owns each item of the Collateral free and clear of any and all Liens or
claims other than Permitted Encumbrances and the other Liens permitted under
the Loan Documents.  No financing
statement under the UCC of any state (or any foreign equivalent) which names a
Grantor as debtor or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or in connection with Permitted
Encumbrances and the other Liens permitted under the Loan Documents.  No Collateral is in the possession or Control
of any Person asserting any claim thereto or security interest therein, except
that (a) the Administrative Agent or its designee may have possession or
Control of Collateral as contemplated hereby, (b) a depositary bank may
have Control of a Deposit Account owned by a Grantor at such depositary bank
and a Securities Intermediary may have Control over a Securities Account owned
by a Grantor at such Securities Intermediary, in each case subject to the terms
of any Deposit Account control agreement or Securities Account control
agreement, as applicable, and to the extent required by Section 4, in
favor of the Administrative Agent, and (c) a bailee, consignee or other
Person may have possession of the Collateral as contemplated by, and so long
as, the applicable Grantors have complied to the satisfaction of the
Administrative Agent with the applicable provisions of Section 4.6(c).

 

10

 

SECTION 3.6                 State of Organization; Location of
Inventory, Equipment and Fixtures; other Information.

 

(a)           The exact legal name of
each Grantor is set forth on Schedule 3.6.

 

(b)           Each Grantor is a
Registered Organization organized under the laws of the state identified on Schedule
3.6 under such Grantor’s name.  The
taxpayer identification number and Registered Organization number of each
Grantor is set forth on Schedule 3.6 under such Grantor’s name.

 

(c)           All Collateral
consisting of Inventory, Equipment and Fixtures (whether now owned or hereafter
acquired) is (or will be) located at the locations specified on Schedule 3.6,
except as otherwise permitted hereunder.

 

(d)           The mailing address,
chief place of business, chief executive office and office where each Grantor
keeps its books and records relating to the Accounts, Documents, General
Intangibles, Instruments and Investment Property in which it has any interest
is located at the locations specified on Schedule 3.6 under such Grantor’s
name.  No Grantor has any other places of
business except those separately set forth on Schedule 3.6 under such
Grantor’s name.  No Grantor does business
nor has done business during the past five years under any trade name or
fictitious business name except as disclosed on Schedule 3.6 under such
Grantor’s name.  Except as disclosed on Schedule
3.6 under such Grantor’s name, no Grantor has acquired assets from any
Person, other than assets acquired in the ordinary course of such Grantor’s
business, during the past five years.

 

SECTION 3.7                 Accounts.  Each existing Account constitutes, and each hereafter
arising Account will constitute, the legally valid and binding obligation of
the applicable Account Debtor.  The
amount represented by each Grantor to the Administrative Agent as owing by each
Account Debtor is, or will be, the correct amount actually and unconditionally
owing, except for ordinary course cash discounts and allowances where
applicable.  No Account Debtor has any
defense, set-off, claim or counterclaim against any Grantor that can be
asserted against the Administrative Agent, whether in any proceeding to enforce
the Administrative Agent’s rights in the Collateral or otherwise except
defenses, setoffs, claims or counterclaims that are not, in the aggregate,
material to the value of the Accounts. 
None of the Accounts is, nor will any hereafter arising Account be,
evidenced by a promissory note or other Instrument (other than a check) that
has not been pledged to the Administrative Agent in accordance with the terms
hereof.

 

SECTION 3.8                 Chattel Paper.  As of the date hereof, no Grantor holds any
Chattel Paper in the ordinary course of its business.

 

SECTION 3.9                 Commercial Tort Claims.  As of the date hereof, all Commercial Tort
Claims owned by any Grantor are listed on Schedule 3.9.

 

SECTION 3.10               Deposit Accounts.  As of the date hereof, all Deposit Accounts
(including, without limitation, cash management accounts that are Deposit
Accounts), securities accounts and lockboxes (including the: (a) owner of
the account, (b) name and address of 

 

11

 

financial
institution or securities broker where such accounts are located, (c) account
numbers and (d) purpose or use of such account) owned by any Grantor are
listed on Schedule 3.10.

 

SECTION 3.11               Intellectual Property.

 

(a)           As of the date hereof, all
Copyright registrations, Copyright applications, issued Patents, Patent
applications, Trademark registrations and Trademark applications owned by any
Grantor in its own name on the date hereof is listed on Schedule 3.11.

 

(b)           Except as set forth in Schedule
3.11 on the date hereof, none of the Intellectual Property owned by any
Grantor is the subject of any written licensing or franchise agreement pursuant
to which such Grantor is the licensor or franchisor, except as could not
reasonably be expected to have a Material Adverse Effect.

 

(c)           Each Grantor owns, or
possesses the right to use, all of the Trademarks, Copyrights, Patents,
franchises, licenses and other Intellectual Property rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person.  All
applications, registrations and grants for all material Patents, Trademarks and
Copyrights of each Grantor and to the knowledge of each Grantor, all
applications, registrations and grants for any material licensed Intellectual
Property are valid, subsisting and enforceable, are in good standing, all
required filings with any relevant governmental intellectual property office
have been made and all required filing, registration, maintenance and other
fees have been paid.  To the best
knowledge of each Grantor, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Grantor infringes upon any rights held by
any other Person.  No claim or litigation
regarding any of the foregoing is pending or, to the best knowledge of each
Grantor, threatened, which, either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

SECTION 3.12               Inventory.  Collateral consisting of Inventory is of good
and merchantable quality, free from any material defects.  To the knowledge of each Grantor, none of
such Inventory is subject to any licensing, Patent, Trademark, trade name or
Copyright with any Person that restricts any Grantor’s ability to manufacture
and/or sell such Inventory.  The
completion of the manufacturing process of such Inventory by a Person other
than the applicable Grantor would be permitted under any contract to which such
Grantor is a party or to which the Inventory is subject.

 

SECTION 3.13               Investment Property; Partnership/LLC
Interests.

 

(a)           As of the date hereof,
all Investment Property (including, without limitation, Securities Accounts and
cash management accounts that are Investment Property) and all Partnership/LLC
Interests owned by any Grantor are listed on Schedule 3.13.

 

(b)           All Investment Property
and all Partnership/LLC Interests issued by any Issuer to any Grantor (i) have
been duly and validly issued and, if applicable, are fully paid and
nonassessable, (ii) are beneficially owned as of record by such Grantor
and (ii) constitute all the issued and outstanding Equity Interests of
such Issuer issued to such Grantor.

 

12

 

(c)           None of the
Partnership/LLC Interests (i) are traded on a Securities exchange or in
Securities markets, (ii) by their terms expressly provide that they are
Securities governed by Article 8 of the UCC, (iii) are Investment
Company Securities or (iv) are held in a Securities Account.

 

SECTION 3.14               Instruments.  As of the date hereof, no Grantor holds any
Instruments or is named a payee of any promissory note or other evidence of
indebtedness other than as set forth on Schedule 3.14.

 

SECTION 3.15               Farm Products.  None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

 

SECTION 3.16               Government Contracts.  As of the date hereof, no Grantor is party to
any Government Contract with a Governmental Authority under which such
Governmental Authority, as account debtor, owes a monetary obligation to any
Grantor under any account.

 

SECTION 3.17               Aircraft.  None of the Collateral constitutes, or is the
proceeds of, (i) an aircraft, airframe, aircraft engine or related
property, (ii) aircraft lease or (iii) any other interest in or to
any of the foregoing.

 

ARTICLE IV

 

COVENANTS

 

Until the
Obligations shall have been paid in full and the Commitments terminated, unless
consent has been obtained in the manner provided for in Section 7.1, each
Grantor covenants and agrees that:

 

SECTION 4.1                 Maintenance of Perfected Security
Interest; Further Information.

 

(a)           Each Grantor shall
maintain the Security Interest created by this Agreement as a Second Priority
Lien (subject only to Permitted Liens) and shall defend such Security Interest
against the claims and demands of all Persons whomsoever (other than holders of
Permitted Liens).

 

(b)           Each Grantor will
furnish to the Administrative Agent upon the Administrative Agent’s reasonable
request statements and schedules further identifying and describing the assets
and property of such Grantor and such other reports in connection therewith as
the Administrative Agent may reasonably request, all in reasonable detail.

 

SECTION 4.2                 Maintenance of Insurance.

 

(a)           Each Grantor will
maintain, with financially sound and reputable companies, insurance policies (i) insuring
the Collateral against loss by fire, explosion, theft, fraud and such other
casualties, including business interruption, as may be reasonably satisfactory
to the Administrative Agent in amounts and with deductibles at least as
favorable as those generally maintained by businesses of similar size engaged
in similar activities and (ii) insuring such Grantor and the
Administrative Agent, for the ratable benefit of the Secured 

 

13

 

Parties, against liability for hazards, risks
and liability to persons and property relating to the Collateral, in amounts
and with deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities, such policies to be
in such form and having such coverage as may be reasonably satisfactory to the
Administrative Agent and the Lenders.

 

(b)           All insurance referred
to in subsection (a) above shall (i) name the Administrative Agent,
for the ratable benefit of the Secured Parties, as loss payee (to the extent
covering risk of loss or damage to tangible property) and as an additional
insured as its interests may appear (to the extent covering any other risk), (ii) provide
that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least thirty (30) days after
receipt by the Administrative Agent of written notice thereof and (iii) be
reasonably satisfactory in all other respects to the Administrative Agent.

 

(c)           Upon the request of the
Administrative Agent from time to time, each Grantor shall deliver to the
Administrative Agent and the Lenders periodic information from a reputable
insurance broker with respect to the insurance referred to in this Section 4.2.

 

SECTION 4.3                 Changes in Locations; Changes in
Name or Structure.  No Grantor will,
except upon thirty (30) days’ prior written notice to the Administrative Agent
and delivery to the Administrative Agent of (a) all additional financing
statements (executed if necessary for any particular filing jurisdiction) and
other instruments and documents reasonably requested by the Administrative
Agent to maintain the validity, perfection and priority of the Security
Interests and (b) if applicable, a written supplement to the Schedules
of this Agreement:

 

(i)            permit any Deposit
Account (other than Excluded Deposit Accounts) to be held by or at a depositary
bank other than the depositary bank that held such Deposit Account as of the
date hereof as set forth on Schedule 3.10;

 

(ii)           permit any Investment
Property (other than Certificated Securities delivered to the Administrative
Agent pursuant to Section 4.5) to be held by a Securities
Intermediary other than the Securities Intermediary that held such Investment
Property as of the date hereof as set forth on Schedule 3.13;

 

(iii)          permit any of the
Inventory, Equipment or Fixtures to be kept at a location other than those listed
on Schedule 3.6, except as otherwise permitted hereunder;

 

(iv)          change its jurisdiction
of organization or the location of its chief executive office from that
identified on Schedule 3.6; or

 

(v)           change its legal name,
identity or corporate or organizational structure to such an extent that any
financing statement filed by the Administrative Agent in connection with this
Agreement would become misleading.

 

SECTION 4.4                 Required Notifications.  Each Grantor shall promptly notify the
Administrative Agent, in writing, of: (a) any Lien (other than Permitted
Encumbrances and the other Liens permitted under the Loan Documents) on any of
the Collateral which would adversely affect the ability of the Administrative
Agent to exercise any of its remedies 

 

14

 

hereunder, (b) the
occurrence of any other event which could reasonably be expected to have a
Material Adverse Effect on the aggregate value of the Collateral or on the
Security Interests, (c) any Collateral which, to the knowledge of such
Grantor, constitutes a Government Contract, and (d) the acquisition or
ownership by such Grantor of any (i) Commercial Tort Claim, (ii) Deposit
Account, or (iii) Investment Property after the date hereof.

 

SECTION 4.5                 Delivery Covenants.  Each Grantor will deliver and pledge to the
Administrative Agent, for the ratable benefit of the Secured Parties, all
Certificated Securities, Partnership/LLC Interests evidenced by a certificate,
negotiable Documents, Instruments, and Tangible Chattel Paper owned or held by
such Grantor, in each case, together with an Effective Endorsement and
Assignment and all Supporting Obligations, as applicable, unless such delivery
and pledge has been waived in writing by the Administrative Agent.

 

SECTION 4.6                 Control
Covenants; Certain Excluded Deposit Accounts.

 

(a)           Each
Grantor shall instruct (and otherwise use its commercially reasonable efforts
to cause) (i) each depositary bank holding a Deposit Account (other than
Excluded Deposit Accounts) owned by such Grantor and (ii) each Securities
Intermediary holding any Investment Property owned by such Grantor, to execute
and deliver a control agreement, sufficient to provide the Administrative Agent
with Control of such Deposit Account and otherwise in form and substance
satisfactory to the Administrative Agent (any such depositary bank executing
and delivering any such control agreement, a “Controlled Depositary”,
and any such Securities Intermediary executing and delivering any such control
agreement, a “Controlled Intermediary”). 
In the event any such depositary bank or Securities Intermediary refuses
to execute and deliver such control agreement, the Administrative Agent, in its
sole discretion, may require the applicable Deposit Account and Investment Property
to be transferred to the Administrative Agent or a Controlled Depositary or
Controlled Intermediary, as applicable. 
After the date hereof, all Deposit Accounts (other than Excluded Deposit
Accounts) and all Investment Property will be maintained with the
Administrative Agent or with a Controlled Depository or a Controlled
Intermediary, as applicable.

 

(b)           Each Grantor shall
instruct each depositary bank holding a Deposit Account into which Governmental
Receivables are initially deposited to execute and deliver an  account agreement substantially in the form
of Exhibit A attached hereto or such other form as the Administrative
Agent shall prescribe.  In the event any
such depositary bank refuses to execute and deliver such an agreement, the
Administrative Agent, in its sole discretion, may require the applicable
Deposit Account to be transferred to the Administrative Agent.  After the date hereof, all Deposit Accounts
into which Governmental Receivables are initially deposited will be maintained
with the Administrative Agent or with a depositary institution subject to an
account agreement (as set forth above), as applicable.

 

(c)           Each Grantor will take
such actions and deliver all such agreements as are requested by the
Administrative Agent to provide the Administrative Agent with Control of all
Letter of Credit Rights and Electronic Chattel Paper owned or held by such
Grantor, including, without limitation, with respect to any such Electronic
Chattel Paper, by having the Administrative Agent identified as the assignee on
the Record(s) pertaining to the single authoritative copy thereof.

 

15

 

(d)           If any Collateral
(other than Collateral specifically subject to the provisions of Sections
4.6(a), 4.6(b) and 4.6(c)), exceeding in value $200,000
in the aggregate (such Collateral exceeding such amount, the “Excess
Collateral”) is at any time in the possession or control of any consignee,
warehouseman, bailee (other than a carrier transporting Inventory to a purchaser
in the ordinary course of business), processor, or any other third party, such
Grantor shall notify such Person in writing of the Security Interests created
hereby, shall use its commercially reasonable efforts to obtain such Person’s
written agreement in writing to hold all such Collateral for the Administrative
Agent’s account subject to the Administrative Agent’s instructions, and shall
cause such Person to issue and deliver to the Administrative Agent warehouse
receipts, bills of lading or any similar documents relating to such Collateral
to the Administrative Agent together with an Effective Endorsement and
Assignment; provided that if such Grantor is not able to obtain such
agreement and cause the delivery of such items, the Administrative Agent, in
its sole discretion, may require such Excess Collateral to be moved to another
location specified thereby.  Further,
each Grantor shall perfect and protect such Grantor’s ownership interests in
all Inventory stored with a consignee against creditors of the consignee by
filing and maintaining financing statements against the consignee reflecting
the consignment arrangement filed in all appropriate filing offices, providing
any written notices required to notify any prior creditors of the consignee of
the consignment arrangement, and taking such other actions as may be
appropriate to perfect and protect such Grantor’s interests in such inventory
under Section 2-326, Section 9-103, Section 9-324 and Section 9-505
of the UCC (and any foreign equivalent) or otherwise.  All such financing statements filed pursuant
to this Section 4.6(d) shall be assigned, on the face thereof,
to the Administrative Agent, for the ratable benefit of the Secured Parties.

 

SECTION 4.7                 Filing Covenants.  Pursuant to Section 9-509 of the UCC and
any other applicable Law, each Grantor authorizes the Administrative Agent to
file or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such
Grantor in such form and in such offices as the Administrative Agent determines
appropriate to perfect the Security Interests of the Administrative Agent under
this Agreement.  Such financing
statements may describe the Collateral in the same manner as described herein or
may contain an indication or description of Collateral that describes such
property in any other manner as the Administrative Agent may determine, in its
sole discretion, is necessary, advisable or prudent to ensure the perfection of
the Security Interest in the Collateral granted herein, including, without
limitation, describing such property as “all assets” or “all personal property.”  Further, a photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any
jurisdiction.  Each Grantor hereby
authorizes, ratifies and confirms all financing statements and other filing or
recording documents or instruments filed by Administrative Agent prior to the
date of this Agreement.

 

SECTION 4.8                 Accounts.

 

(a)           Other than in the
ordinary course of business consistent with its past practice, no Grantor will (i) grant
any extension of the time of payment of any Account, (ii) compromise or
settle any Account for less than the full amount thereof, (iii) release,
wholly or partially, any Account Debtor, (iv) allow any credit or discount
whatsoever on any Account or 

 

16

 

(v) amend, supplement or
modify any Account in any manner that could reasonably be likely to adversely
affect the value thereof.

 

(b)           Each Grantor will
deliver to the Administrative Agent a copy of each material demand, notice or
document received by it that questions or calls into doubt the validity or
enforceability of any material Account.

 

(c)           The Administrative
Agent shall have the right to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications.  At any time and from time to time, upon the
Administrative Agent’s request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to
the Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.

 

SECTION 4.9                 Intellectual Property.

 

(a)           Except as could not
reasonably be expected to have a Material Adverse Effect, each Grantor (either
itself or through licensees) (i) will use each registered Trademark (owned
by such Grantor) and Trademark for which an application (owned by such Grantor)
is pending, to the extent reasonably necessary to maintain such Trademark in
full force free from any claim of abandonment for non-use, (ii) will
maintain products and services offered under such Trademark at a level
substantially consistent with the quality of such products and services as of
the date hereof, (iii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark could reasonably be expected to become invalidated or impaired in any
way, (iv) will not (and will not permit any licensee or sublicensee
thereof to) do any act, or knowingly omit to do any act, whereby any Patent
owned by such Grantor would reasonably be expected to become forfeited,
abandoned or dedicated to the public, (v) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any registered Copyright owned by such Grantor or Copyright for
which an application is pending (owned by such Grantor) could reasonably be
expected to become invalidated or otherwise impaired and (vi) will not
(either itself or through licensees) do any act whereby any material portion of
the Copyrights may fall into the public domain.

 

(b)           Each Grantor will notify
the Administrative Agent and the Lenders promptly if it knows, or has reason to
know, that any application or registration relating to any material
Intellectual Property owned or licensed by such Grantor may become forfeited,
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal
in any country) regarding such Grantor’s or its licensor’s ownership of, or the
validity of, any material Intellectual Property owned or licensed by such
Grantor or such Grantor’s right to register the same or to license, or own and
maintain the same.

 

17

 

(c)           Whenever such Grantor,
either by itself or through any agent, employee, licensee or designee, shall
file an application for the registration of any Intellectual Property with the
United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the
Administrative Agent within five (5) Business Days after the last day of
the fiscal quarter in which such filing occurs. 
Upon request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Administrative Agent may reasonably request to evidence the
security interest of the Secured Parties in any material Copyright, Patent or
Trademark and the goodwill and General Intangibles of such Grantor relating
thereto or represented thereby.

 

(d)           Each Grantor will take
all reasonable and necessary steps, at such Grantor’s sole cost and expense,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of the material Intellectual Property,
including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability.

 

(e)           In the event that any
material Intellectual Property owned or licensed by a Grantor is infringed,
misappropriated or diluted by a third party, the applicable Grantor shall (i) at
such Grantor’s sole cost and expense, take such actions as such Grantor shall
reasonably deem appropriate under the circumstances or allowable pursuant to
such Grantor’s license agreement  to
protect such Intellectual Property and (ii) if such Intellectual Property
is of material economic value, promptly notify the Administrative Agent after
it learns of such infringement, misappropriation or dilution.

 

SECTION 4.10                       Investment Property;
Partnership/LLC Interests.

 

(a)           Without the prior
written consent of the Administrative Agent, no Grantor will (i) vote to
enable, or take any other action to permit, any applicable Issuer to issue any
Investment Property or Partnership/LLC Interests, except for such additional
Investment Property or Partnership/LLC Interests that will be subject to the
Security Interest granted herein in favor of the Secured Parties, or (ii) enter
into any agreement or undertaking restricting the right or ability of such
Grantor or the Administrative Agent to sell, assign or transfer any Investment
Property or Partnership/LLC Interests or Proceeds thereof.  The Grantors will defend the right, title and
interest of the Administrative Agent in and to any Investment Property and
Partnership/LLC Interests against the claims and demands of all Persons
whomsoever.

 

(b)           If any Grantor shall
become entitled to receive or shall receive (i) any Certificated
Securities (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the ownership interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any Investment Property, or otherwise in respect thereof, or (ii) any
sums paid upon or in respect of any Investment Property upon the liquidation or
dissolution of any Issuer, such Grantor shall accept the same as the agent of
the Secured Parties, hold the same in trust for 

 

18

 

the Secured Parties, segregated from other
funds of such Grantor, and promptly deliver the same to the Administrative
Agent, on behalf of the Secured Parties, in accordance with the terms hereof.

 

SECTION 4.11                       Equipment.  Each Grantor will maintain each item of
Equipment in good working order and condition (reasonable wear and tear and
obsolescence excepted), and generally in accordance with any manufacturer’s
manual, and will as quickly as practicable provide all maintenance, service and
repairs necessary for such purpose and will promptly furnish to the
Administrative Agent a statement respecting any material loss or damage to any
of the Equipment.

 

SECTION 4.12                       Vehicles.  Upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative Agent,
all applications for certificates of title or ownership indicating the
Administrative Agent’s Second Priority Lien on the Vehicle (subject to any
Permitted Liens) covered by such certificate, and any other necessary documentation,
shall be filed in each office in each jurisdiction which the Administrative
Agent shall deem reasonably advisable to perfect its Liens on the Vehicles; provided
that with respect to Vehicles subject to Permitted Liens, no such application
or other documentation shall be required. 
Prior thereto, each certificate of title or ownership relating to each
Vehicle shall be maintained by the applicable Grantor in accordance with
applicable Law to reflect the ownership interest of such Grantor.

 

SECTION 4.13                       Government Contracts.  Each Grantor shall promptly notify the
Administrative Agent, in writing, if it enters into any Government Contract
with a Governmental Authority under which such Governmental Authority, as
account debtor, owes a material monetary obligation to any Grantor under any
Account.

 

SECTION 4.14                       Further Assurances.  Upon the request of the Administrative Agent
and at the sole expense of the Grantors, each Grantor will promptly and duly
execute and deliver, and have recorded, such further instruments and documents
and take such further actions as the Administrative Agent may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without limitation,
(i) the assignment of any Material Contract, (ii) with respect to
Government Contracts, assignment agreements and notices of assignment, in form
and substance satisfactory to the Administrative Agent, duly executed by any
Grantors party to such Government Contract in compliance with the Assignment of
Claims Act (and/or analogous state or other applicable Law), and (iii) all
applications, certificates, instruments, registration statements, and all other
documents and papers the Administrative Agent may reasonably request and as may
be required by law in connection with the obtaining of any consent, approval,
registration, qualification, or authorization of any Person deemed necessary or
appropriate for the effective exercise of any rights under this Agreement.

 

19

 

ARTICLE V

 

REMEDIAL PROVISIONS

 

SECTION 5.1                         General Remedies.  If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them under
applicable Law in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the UCC or any other applicable Law.  Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker’s board or office of the Administrative Agent or
any other Secured Party or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk.  The Administrative Agent may disclaim any
warranties in connection with any sale or other disposition of the Collateral,
including, without limitation, any warranties of title, possession, quiet
enjoyment and the like.  The Administrative
Agent or any other Secured Party shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released.  Each Grantor
further agrees, at the Administrative Agent’s request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor’s
premises or elsewhere.  To the fullest
extent permitted by applicable Law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any other Secured
Party arising out of the exercise by them of any rights hereunder except to the
extent any such claims, damages, or demands result solely from the gross
negligence or willful misconduct of the Administrative Agent or any other
Secured Party, in each case against whom such claim is asserted.  If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least ten (10) days before such sale or
other disposition.

 

SECTION 5.2                         Specific Remedies.

 

(a)           The Administrative
Agent hereby authorizes each Grantor to collect such Grantor’s Accounts in the
ordinary course of its business; provided that, the Administrative Agent
may curtail or terminate such authority at any time after the occurrence and
during the continuance of an Event of Default.

 

(b)           Upon the occurrence and
during the continuance of an Event of Default:

 

20

 

(i)            the Administrative
Agent may communicate with Account Debtors of any Account subject to a Security
Interest and, upon the request of the Administrative Agent, each Grantor shall
notify (such notice to be in form and substance satisfactory to the
Administrative Agent) its Account Debtors and parties to the Material Contracts
subject to a Security Interest that such Accounts and the Material Contracts
have been assigned to the Administrative Agent, for the ratable benefit of the
Secured Parties;

 

(ii)           each Grantor shall
forward to the Administrative Agent, on the last Business Day of each week,
deposit slips related to all cash, money, checks or any other similar items of
payment received by the Grantor during such week, and, if requested by the
Administrative Agent, copies of such checks or any other similar items of
payment, together with a statement showing the application of all payments on
the Collateral during such week and a collection report with regard thereto, in
form and substance satisfactory to the Administrative Agent;

 

(iii)          the Administrative Agent
may deliver such notices and instructions in accordance with control agreements
covering Deposit Accounts (other than Excluded Accounts) and/or Securities
Accounts.  In addition, whenever any
Grantor shall receive any cash, money, checks or any other similar items of
payment relating to any Collateral (including any Proceeds of any Collateral),
subject to the terms of any Permitted Liens, such Grantor agrees that it will,
within one (1) Business Day of such receipt, deposit all such items of
payment into the Collateral Account or in a Deposit Account (other than an
Excluded Deposit Account) at a Controlled Depositary, and until such Grantor
shall deposit such cash, money, checks or any other similar items of payment in
the Collateral Account or in a Deposit Account (other than an Excluded Deposit
Account) at a Controlled Depositary, such Grantor shall hold such cash, money,
checks or any other similar items of payment in trust for the Secured Parties
and as property of the Secured Parties, separate from the other funds of such
Grantor, and the Administrative Agent shall have the right to transfer or
direct the transfer of the balance of each Deposit Account (other than an
Excluded Deposit Account) to the Collateral Account.  All such Collateral and Proceeds of
Collateral received by the Administrative Agent hereunder shall be held by the
Administrative Agent in the Collateral Account as collateral security for all
the Obligations and shall not constitute payment thereof until applied as provided
in Section 5.4;

 

(iv)          the Administrative Agent
shall have the right to receive any and all cash dividends, payments or
distributions made in respect of any Investment Property, any Partnership/LLC
Interests or any other Proceeds paid in respect of any Investment Property or
any Partnership/LLC Interests, and any or all of any Investment Property or any
Partnership/LLC Interests shall be registered in the name of the Administrative
Agent or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such
Investment Property or such Partnership/LLC Interests at any meeting of
shareholders, partners or members of the relevant Issuers and (B) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Investment Property or such
Partnership/LLC Interests as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Investment Property or 

 

21

 

any and all of the Partnership/LLC Interests
upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate, partnership or company structure of any
Issuer or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Investment Property or such
Partnership/LLC Interests, and in connection therewith, the right to deposit
and deliver any and all of the Investment Property or any and all of the
Partnership/LLC Interests with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except to account
for property actually received by it; but the Administrative Agent shall have
no duty to any Grantor to exercise any such right, privilege or option and the
Administrative Agent and the other Secured Parties shall not be responsible for
any failure to do so or delay in so doing. 
In furtherance thereof, each Grantor hereby authorizes and instructs
each Issuer with respect to any Collateral consisting of Investment Property
and Partnership/LLC Interests to (i) comply with any instruction received
by it from the Administrative Agent in writing that (A) states that an
Event of Default has occurred and is continuing and (B) is otherwise in
accordance with the terms of this Agreement, without any other or further instructions
from such Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying following receipt of such notice and prior to notice
that such Event of Default is no longer continuing, and (ii) except as
otherwise expressly permitted hereby, pay any dividends, distributions or other
payments with respect to any Investment Property, or any Partnership/LLC
Interests directly to the Administrative Agent; and

 

(v)           the Administrative
Agent shall be entitled to (but shall not be required to):  (A) proceed to perform any and all
obligations of the applicable Grantor under any Material Contract and exercise
all rights of such Grantor thereunder as fully as such Grantor itself could, (B) do
all other acts which the Administrative Agent may deem necessary or proper to
protect its Security Interest granted hereunder, provided such acts are
not inconsistent with or in violation of the terms of any of the Credit
Agreement, of the other Loan Documents or applicable Law, and (C) sell,
assign or otherwise transfer any Material Contract in accordance with the
Credit Agreement, the other Loan Documents and applicable Law, subject,
however, to the prior approval of each other party to such Material Contract,
to the extent required under the Material Contract.

 

(c)           Unless an Event of
Default shall have occurred and be continuing and the Administrative Agent
shall have given notice to the relevant Grantor of the Administrative Agent’s
intent to exercise its corresponding rights pursuant to Section 5.2(b),
each Grantor shall be permitted to receive all cash dividends, payments or
other distributions made in respect of any Investment Property and any
Partnership/LLC Interests, in each case paid in the normal course of business
of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and other
corporate, company and partnership rights with respect to any Investment
Property and any Partnership/LLC Interests; provided that, no vote shall
be cast or other corporate, company and partnership right exercised or other
action taken which, in the Administrative Agent’s reasonable judgment, would
impair the Collateral in any material respect or which would result in a
Default or Event of Default under any provision of the Credit
Agreement, this Agreement or any other Loan Document.

 

22

 

SECTION 5.3                         Registration Rights.

 

(a)           If the Administrative
Agent shall determine that in order to exercise its right to sell any or all of
the Collateral it is necessary or advisable to have such Collateral registered
under the provisions of the Securities Act (any such Collateral, the “Restricted
Securities Collateral”), the relevant Grantor will cause each applicable Issuer
(and the officers and directors thereof) to (i) execute and deliver all
such instruments and documents, and do or cause to be done all such other acts
as may be, in the opinion of the Administrative Agent, necessary or advisable
to register such Restricted Securities Collateral, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its
commercially reasonable efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of such Restricted Securities
Collateral, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of
the Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto.  Each Grantor agrees to cause each applicable
Issuer (and the officers and directors thereof) to comply with the provisions
of the securities or “Blue Sky” laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section II (a) of the
Securities Act.

 

(b)           Each Grantor recognizes
that the Administrative Agent may be unable to effect a public sale of any or
all the Restricted Securities Collateral, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  The Administrative
Agent shall be under no obligation to delay a sale of any of the Restricted
Securities Collateral for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act,
or under applicable state securities laws, even if such Issuer would agree to
do so.

 

(c)           Each Grantor agrees to
use its commercially reasonable efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales of all or any portion
of the Restricted Securities Collateral valid and binding and in compliance
with any and all other applicable Laws. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section 5.3 will cause irreparable injury to the
Administrative Agent and the other Secured Parties, that the Administrative
Agent and the other Secured Parties have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 5.3 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.

 

23

 

SECTION 5.4                         Application of Proceeds.  At such intervals as may be agreed upon by
the Borrowers and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent’s
election, the Administrative Agent may apply all or any part of the Collateral
or any Proceeds of the Collateral in payment in whole or in part of the
Obligations (after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the rights of
the Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements) in accordance with Section 8.03
of the Credit Agreement.  Only after (i) the
payment by the Administrative Agent of any other amount required by any
provision of applicable Law, including, without limitation, Section 9-610
and Section 9-615 of the UCC and (ii) the payment in full of the
Obligations and the termination of the Commitments, shall the Administrative
Agent account for the surplus, if any, to any Grantor, or to whomever may be
lawfully entitled to receive the same (if such Person is not a Grantor).

 

SECTION 5.5                         Waiver, Deficiency.  Each Grantor hereby waives, to the extent
permitted by applicable Law, all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
Law in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any other Secured Party to
collect such deficiency.

 

ARTICLE VI

 

THE ADMINISTRATIVE AGENT

 

SECTION 6.1                         Administrative Agent’s
Appointment as Attorney-In-Fact.

 

(a)           Each Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, each Grantor hereby
gives the Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following
upon the occurrence and during the continuation of an Event of Default:

 

(i)            in the name of such
Grantor or its own name, or otherwise, take possession of and indorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Account or Material Contract subject to a
Security Interest or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose of collecting
any and all such 

 

24

 

moneys due under any Account or Material
Contract subject to a Security Interest or with respect to any other Collateral
whenever payable;

 

(ii)           in the case of any
Intellectual Property, execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the Administrative Agent may
request to evidence the Administrative Agent’s and the Secured Parties’
security interest in such Intellectual Property and the goodwill and General
Intangibles of such Grantor relating thereto or represented thereby;

 

(iii)          pay or discharge taxes
and Liens levied or placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;

 

(iv)          execute, in connection
with any sale provided for in this Agreement, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral; and

 

(v)           (A) direct any
party liable for any payment under any of the Collateral to make payment of any
and all moneys due or to become due thereunder directly to the Administrative
Agent or as the Administrative Agent shall direct; (B) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (C) sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (D) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (E) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (F) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Administrative Agent may
deem appropriate; (G) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), for such term or terms, on such conditions, and in such
manner, as the Administrative Agent shall in its sole discretion determine; and
(H) generally, sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent’s option and such Grantor’s
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon the
Collateral and the Security Interests of the Secured Parties therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.

 

(b)           If any Grantor fails to
perform or comply with any of its agreements contained herein, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement in accordance with the provisions of Section 6.1(a).

 

25

 

(c)           The expenses of the
Administrative Agent incurred in connection with actions taken pursuant to the
terms of this Agreement, together with interest thereon at a rate per annum
equal to the Default Rate for Base Rate Loans under the Credit Agreement, from
the date of payment by the Administrative Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Administrative Agent
on demand.

 

(d)           Each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof in accordance with Section 6.1(a).  All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the Security Interests created hereby
are released.

 

SECTION 6.2                         Duty of Administrative
Agent.  The sole duty of the
Administrative Agent with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account.  Neither the Administrative Agent, any other
Secured Party nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.  The
powers conferred on the Administrative Agent and the other Secured Parties
hereunder are solely to protect the interests of the Administrative Agent and
the other Secured Parties in the Collateral and shall not impose any duty upon
the Administrative Agent or any other Secured Party to exercise any such
powers.  The Administrative Agent and the
other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.

 

SECTION 6.3                         Authority of Administrative
Agent.  Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Administrative Agent and
the Lenders, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement to make any inquiry respecting such
authority.

 

ARTICLE VII

 

MISCELLANEOUS

 

SECTION 7.1                         Amendments, Waivers and
Consents.  None of the terms,
covenants, agreements or conditions of this Agreement may be amended,
supplemented or 

 

26

 

otherwise
modified, nor may they be waived, nor may any consent be given, except in
accordance with Section 10.01 of the Credit Agreement.

 

SECTION 7.2                         Notices.  All notices and communications hereunder
shall be given to the addresses and otherwise made in accordance with Section 10.02
of the Credit Agreement; provided that notices and communications to the
Grantors shall be directed to the Borrower Agent, at the address set forth in Section 10.02
of the Credit Agreement.

 

SECTION 7.3                         No Waiver, Cumulative
Remedies.  No failure by any Secured
Party to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers
and privileges herein provided and provided under each other Loan Document are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

SECTION 7.4                         Expenses, Indemnification, Waiver
of Consequential Damages, etc..

 

(a)           Each Grantor, jointly and severally, shall pay all out-of-pocket
expenses incurred by the Administrative Agent and each other Secured Party
pursuant to, and in accordance with, the applicable provisions of Section 10.04
of the Credit Agreement.

 

(b)           Each Grantor, jointly and severally, shall indemnify each
Indemnitee pursuant to, and in accordance with, Section 10.04 of
the Credit Agreement.

 

(c)           Notwithstanding
anything to the contrary contained in this Agreement, to the fullest extent
permitted by applicable Law, no Grantor shall assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Credit Extensions or the use
of the proceeds thereof.

 

(d)           No Indemnitee referred
to in this Section 7.4 shall be liable for any damages arising from
the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.

 

(e)           Each
Grantor agrees to pay, and to save the Administrative Agent and the other
Secured Parties harmless from, any and all liabilities with respect to, or
resulting from any such Grantor’s delay in paying, any and all stamp, excise,
sales withholding or other taxes which may be payable or determined to be
payable in connection with any of the transactions contemplated by this Agreement.

 

27

 

(f)            All
amounts due under this Section 7.4 shall be payable promptly after
demand therefor.

 

SECTION 7.5                         Successors and Assigns.  The provisions of this Agreement shall be
binding upon and shall inure to the benefit of each Grantor (and shall bind all
Persons who become bound as a Grantor to this Agreement), the Administrative
Agent and the other Secured Parties and their respective successors and
permitted assigns; provided that no Grantor may assign or otherwise,
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and the Lenders (except as
otherwise provided by the Credit Agreement).

 

SECTION 7.6                         Survival of Indemnities.  Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the other
Secured Parties are entitled under the provisions of Section 7.4
and any other provision of this Agreement and the other Loan Documents shall
continue in full force and effect and shall protect the Administrative Agent
and the other Secured Parties against events arising after such termination as
well as before.

 

SECTION 7.7                         Right of Setoff.  If an
Event of Default shall have occurred and be continuing, each Secured Party and
each of its respective Affiliates is hereby authorized at any time and from
time to time, after obtaining the prior written consent of the Administrative
Agent, to the fullest extent permitted by applicable Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Secured Party or any such Affiliate to or
for the credit or the account of such Grantor against any and all of the obligations
of such Grantor now or hereafter existing under this Agreement or any other
Loan Document to such Secured Party irrespective of whether or not such Secured
Party shall have made any demand under this Agreement or any other Loan
Document and although such obligations of such Grantor may be contingent or
unmatured or are owed to a branch or office of such Secured Party different
from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Secured
Party and its respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Secured
Party or its respective Affiliates may have. 
Each Secured Party agrees to notify such Grantor and the Administrative
Agent promptly after any such set off and application; provided that the
failure to give such notice shall not affect the validity of such set off and
application.  Notwithstanding the
provisions of this Section 7.7, if at any time any Secured Party or
any of its Affiliates maintains one or more deposit accounts for either
Borrower or any other Loan Party into which Medicare and/or Medicaid
receivables are deposited, such Person shall waive the right of setoff set
forth herein.

 

SECTION 7.8                         Counterparts; Integration;
Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  This Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the 

 

28

 

Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

SECTION 7.9                         Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

SECTION 7.10                       Governing Law; Jurisdiction;
Service of Process.

 

(a)           Governing Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.

 

(b)           Submission to
Jurisdiction.  Each Grantor
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the courts of the State of New York sitting in
Borough of Manhattan and the United States District Court of the Southern
District of New York, and any appellate court thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State court or, to the fullest extent permitted by applicable Law, in
such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by applicable Law.  Nothing in this Agreement or in any other
Loan Document shall affect any right that the Administrative Agent or any other
Secured Party may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or its properties in
the courts of any jurisdiction.

 

(c)           Waiver of Venue.  Each Grantor irrevocably and unconditionally
waives, to the fullest extent permitted by applicable Law, any objection that
it may now or hereafter have to the laying of venue of any action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

(d)           Service of Process.  Each party hereto irrevocably consents to
service of process in the manner provided for notices in Section 10.02
of the Credit Agreement.  Nothing in this
Agreement will affect the right of any party hereto to serve process in any
other manner permitted by applicable Law.

 

29

 

(e)           Appointment of the
Borrower Agent as Agent for the Grantors. 
Each Grantor hereby irrevocably appoints and authorizes the Borrower
Agent to act as its agent for service of process and notices required to be
delivered under this Agreement or under the other Loan Documents, it being
understood and agreed that receipt by the Borrower Agent of any summons, notice
or other similar item shall be deemed effective receipt by each Grantor and its
Subsidiaries.

 

SECTION 7.11                       Waiver of Jury Trial; California Judicial
Reference.

 

(a)           Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

(b)           California
Judicial Reference.  If any action or proceeding is filed in a
court of the State of California by or against any party hereto in connection
with any of the transactions contemplated by this Agreement or any other Loan
Document, (a) the court shall, and is hereby directed to, make a general
reference pursuant to California Code of Civil Procedure Section 638 to a
referee (who shall be a single active or retired judge) to hear and determine
all of the issues in such action or proceeding (whether of fact or of law) and
to report a statement of decision, provided that at the option of any
party to such proceeding, any such issues pertaining to a “provisional remedy”
as defined in California Code of Civil Procedure Section 1281.8 shall be
heard and determined by the court and (b) the Grantors, on a joint and
several basis, shall be solely responsible to pay all fees and expenses of any
referee appointed in such action or proceeding.

 

SECTION 7.12                       Injunctive Relief.  The Grantors recognize that, in the event the
Grantors fail to perform, observe or discharge any of their obligations or
liabilities under this Agreement or any other Loan Document, any remedy of law
may prove to be inadequate relief to the Administrative Agent and the other
Secured Parties.  Therefore, the Grantors
agree that the Administrative Agent and the other Secured Parties, at the
option of the Administrative Agent and the other Secured Parties, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.

 

30

 

SECTION 7.13                       Acknowledgements.

 

(a)           Each Grantor hereby
acknowledges that:  (i) it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party, (ii) it has received
a copy of the Credit Agreement and has reviewed and understands same, (iii) neither
the Administrative Agent nor any other Secured Party has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor, and (iv) no joint venture is created
hereby or by the other Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby or thereby among the Secured Parties or among
the Grantors and the Secured Parties.

 

(b)           Each Issuer party to
this Agreement acknowledges receipt of a copy of this Agreement and agrees to
be bound thereby and to comply with the terms thereof insofar as such terms are
applicable to it.  Each Issuer agrees to
provide such notices to the Administrative Agent as may be necessary to give
full effect to the provisions of this Agreement.

 

SECTION 7.14                       Releases.

 

(a)           At such time as the
Obligations shall have been paid in full in cash and the Commitments have been
terminated, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors.  At the request
and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such
termination.

 

(b)           If any of the
Collateral shall be sold, transferred or otherwise disposed of by any Grantor
in a transaction permitted by the Credit Agreement, then the Administrative
Agent, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable to evidence the release of the Liens created hereby on such
Collateral.  In the event that all the
Equity Interests of any Grantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Credit Agreement, then, at the
request of the Borrower Agent and at the expense of the Grantors, such Grantor
shall be released from its obligations hereunder; provided that the
Borrower Agent shall have delivered to the Administrative Agent, at least ten (10) Business
Days prior to the date of the proposed release, a written request for release
identifying the relevant Grantor and the terms of the sale or other disposition
in reasonable detail, including the price thereof and any expenses in
connection therewith, together with a certification by the Borrower Agent
stating that such transaction is in compliance with the Credit Agreement and
the other Loan Documents.

 

SECTION 7.15                       Additional Grantors.  Each Subsidiary of the Borrowers that is
required to become a party to this Agreement pursuant to Section 6.12
of the Credit Agreement 

 

31

 

shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of a joinder agreement in form and
substance satisfactory to the Administrative Agent.

 

SECTION 7.16                       All Powers Coupled with
Interest.  All powers of attorney and
other authorizations granted to the Secured Parties, the Administrative Agent
and any Persons designated by the Administrative Agent or any other Secured
Party pursuant to any provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall be irrevocable so
long as any of the Obligations remain unpaid or unsatisfied or the Facility has
not been terminated.

 

[Signature Pages to Follow]

 

32

 

IN WITNESS
WHEREOF, the parties hereto have caused this Second Lien Collateral Agreement
to be executed under seal by their duly authorized officers, all as of the day
and year first written above.

 

	
   

  	
  [                                            ], as Grantor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                                            ], as Grantor and Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

[Signature Pages Continue]

 

 

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

 

SCHEDULE 3.6

to

Collateral
Agreement

 

Exact Legal Name; Jurisdiction of Organization; Taxpayer Identification
Number; Registered 

Organization Number; Mailing Address; Chief Executive Office and other
Locations

 

 

SCHEDULE 3.9

to

Collateral
Agreement

 

Commercial Tort
Claims

 

 

SCHEDULE 3.10

to

Collateral
Agreement

 

Deposit
Accounts

 

	
  Grantor

  	
   

  	
  Financial Institution

  	
   

  	
  Account Number

  	
   

  	
  Address of Financial

  Institution

  	
   

  	
  Account Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3.11

to

Collateral
Agreement

 

Intellectual
Property

 

1.             The listing of
Trademarks (as defined in the Collateral Agreement) should include: (a) the
Trademark; (b) Registration Number or Serial Number; (c) the Owner; (d) the
Filing Date; (e) the Registration Date (if applicable); (f) the Date Affidavit
of Use and/or Renewal is Due; and (g) Whether the Affidavit of Use and/or
Renewal has been filed.

 

2.             The listing of
Trademark Licenses (as defined in the Collateral Agreement) should include: (a) Name
and Address of Licensee/Licensor; (b) Date; (c) List of each
Trademark Licensed/Assigned; and (d) Description of product to which
license/assignment applies.

 

3.             The listing of
Patents (as defined in the Collateral Agreement) should include: (a) Country;
(b) Patent Number; (c) Issue Date; (d) Inventor(s); (e) Title
of Invention; (f) Dates on which Maintenance Fees were paid;  and (g) Identity of Party Paying
Maintenance Fees.

 

4.             The listing of Patent
(as defined in the Collateral Agreement) applications should include:  (a) Application Number; (b) Filing
Date; (c) Inventors; and (d) Title of Invention.

 

5.             The listing of Patent
Licenses (as defined in the Collateral Agreement) should include:  (a) Name and Address of
Licensee/Licensor; (b) Date; (c) List of each Patent
Licensed/Assigned; and (d) Description of product to which
license/assignment applies

 

6.             The listing of
Copyrights (as defined in the Collateral Agreement) should include: (a) Registration
Number; (b) Registration Date; (c) Title as listed in Registration; (d) Publication
Date; (e) Creation Date; (f) Author; and(g) Subject Matter
Covered.

 

7.             The listing of
Copyright Licenses (as defined in the Collateral Agreement) should include: (a) Name
and Address of Licensee/Licensor; (b) Date; (c) Work Licensed or
Assigned.

 

 

SCHEDULE 3.13

to

Collateral
Agreement

 

Investment
Property and Partnership/LLC Interests

 

Certificated Securities:

[Grantor]:

 

	
  Name of Issuer

  	
   

  	
  Class and Series

  	
   

  	
  Par Value

  	
   

  	
  Certificate Number

  	
   

  	
  Percentage of

  Ownership Interests of

  such Class and Series

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Securities Accounts (including cash management accounts that are
Investment Property) and Uncertificated Securities:

[Grantor]:

 

	
  Financial Institution

  	
   

  	
  Account Number

  	
   

  	
  Address of Financial

  Institution

  	
   

  	
  Account Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Name of Issuer

  	
   

  	
  Class and Series

  	
   

  	
  Par Value

  	
   

  	
  Percentage of Ownership

  Interests of such Class and Series

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Partnerships/LLC Interests:

[Grantor]:

 

	
  Name of Issuer

  (including identification of 

  type of entity)

  	
   

  	
  Type of Ownership Interest

  	
   

  	
  Certificate Number

  (if any)

  	
   

  	
  Percentage of Ownership

  Interests of such Type

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 3.14

to

Collateral
Agreement

 

Instruments

 

 

EXHIBIT A

to

Collateral Agreement

 

Form of Governmental Receivables Account Agreement

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