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Exhibit 10.22
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AMENDED AND RESTATED SECURITY AGREEMENT
BY AND BETWEEN
NEW AMERICAN HEALTHCARE CORPORATION,
AS BORROWER
AND
TORONTO DOMINION (TEXAS), INC.,
AS AGENT
DATED AS OF JANUARY 30, 1998
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AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") dated as
of January 30, 1998, is entered into by and between NEW AMERICAN HEALTHCARE
CORPORATION, a Tennessee corporation (the "Borrower"), and TORONTO DOMINION
(TEXAS), INC. (the "Agent"), for itself and as Agent on behalf of the Issuing
Bank and the Banks (all as defined in the hereinafter defined Credit Agreement).
This Agreement amends and restates in its entirety that certain Security
Agreement dated as of September 30, 1996, by and between the above-named
parties, as amended.
W I T N E S S E T H :
WHEREAS, the Borrower, the Agent, the Issuing Bank and the Banks are
parties to that certain Amended and Restated Credit Agreement dated as of
January 30, 1998 (as hereafter amended, modified or supplemented from time to
time, the "Credit Agreement"), which amends and restates in its entirety that
certain Credit Agreement dated as of September 30, 1996, entered into by and
between the Borrower, the Agent, the Issuing Bank and the Banks; and
WHEREAS, it is a condition precedent to the making of Loans and the
issuing of Letters of Credit (as said terms are defined in the Credit Agreement)
under the Credit Agreement that the Borrower shall have granted the security
interest contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Credit Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. The Borrower hereby conveys,
transfers, grants, assigns and pledges to the Agent a security interest in and
security title to (together with a right of setoff) all assets of the Borrower
including, without limitation, the Borrower's right, title and interest in and
to the following, whether now owned or hereafter acquired (collectively, the
"Collateral"):
(a) all inventory in all of its forms, wherever located, now
or hereafter existing (including, but not limited to (i) all goods,
merchandise and other personal property owned and held for sale, (ii)
all raw materials, work or goods in process, all finished products
thereof, and all materials and supplies which contribute to the
finished products of the Borrower in the ordinary course of business
and (iii) any goods which are returned to or repossessed by the
Borrower), whether the Borrower has an interest in mass or a joint or
other interest or right of any other kind (including, without
limitation, goods in which the Borrower has an interest or right as
consignee), and all accessions thereto and products thereof and
documents and warehouse receipts therefor
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(any and all such inventory, accessions, products and documents being
hereinafter referred to as the "Inventory");
(b) all accounts, contract rights, chattel paper, instruments,
warehouse receipts, drafts, acceptances, deposit and bank accounts (including,
without limitation, the Concentration Account), general intangibles (including
all patents, trademarks, tradenames, service marks, patent applications,
trademark applications and copyrights, and all licenses relating to any of the
foregoing) and documents of the Borrower, whether secured or unsecured, and
whether now existing or hereafter created or arising, and all rights now or
hereafter existing in and to all security agreements, leases and other contracts
securing or otherwise relating to any such accounts, contract rights, chattel
paper, instruments, deposit and bank accounts, drafts, acceptances and documents
(any and all such accounts, contract rights, chattel paper, instruments, deposit
and bank accounts, drafts, acceptances and documents being hereinafter referred
to as the "Accounts" and any and all such leases, security agreements and other
contracts being hereinafter referred to as the "Related Contracts"), and the
proceeds of all service contracts sold by or on behalf of the Borrower;
(c) all Certificates of Need, management services agreements, Health
Facility Licenses, Medicaid Provider Agreements and Medicare Provider Agreements
(but only to the extent that the Borrower will not be in default under any such
Medicaid Provider Agreement or Medicare Provider Agreement or violate any
Governmental Requirements as a result of a granting of the security interest to
the Agent therein);
(d) all books and records (including, without limitation, computer
tapes, programs and printouts and all other computer materials, records and
electronic data processing software) recording, evidencing or relating to any or
all of the foregoing Collateral;
(e) all deposit accounts (and the investments and earnings thereof and
documents evidencing the same) into which the proceeds of any of the foregoing
may from time to time be deposited;
(f) all equipment, including machinery, supplies, motor vehicles,
tractors, trailers, trucks, dollies, forklifts and computers, and all
accretions, accessions and parts attached thereto, including tires and tubes in
service, and all additions thereto, and replacements thereof;
(g) all Subsidiary Notes;
(h) all proceeds of the Loans; and
(i) all proceeds of any and all of the Collateral (including, without
limitation, cash proceeds and other proceeds which constitute property of the
types described in clauses (a) and (b) of this SECTION 2) and, to the extent not
otherwise included, all payments under insurance (whether or not the Agent is
the loss payee
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thereof) or under any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
Collateral.
The security interest hereby granted in the Concentration Account
shall, so long as the Concentration Account shall be held by the Agent, the
Issuing Bank or any of the Banks, be perfected by possession thereof by the
Agent, the Issuing Bank or such Bank.
The Borrower and the Agent agree that the Excluded Leases shall be
excluded from the foregoing grant of security interest.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
of the Obligations and the Notes, whether now or hereafter existing. Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent, the Issuing Bank or the Banks under the Credit Agreement
and the Notes but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Borrower.
SECTION 4. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of the duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Agent of any of the
rights hereunder shall not release the Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither the Agent, the Issuing Bank nor any Bank shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Agent, the Issuing Bank or any Bank be
obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 5. DELIVERY OF CHATTEL PAPER. The Borrower will promptly upon
request by the Agent deliver, assign and endorse to the Agent all chattel paper
and all other documents held by the Borrower in connection therewith.
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants as follows:
(a) All of the Inventory, other than Inventory in transit, is located
at the places specified in SCHEDULE 1 attached hereto. The chief place of
business and chief executive office of the Borrower and the office where the
Borrower keeps records concerning the Accounts, and the originals of all chattel
paper that evidence Accounts, are located at its address specified in SCHEDULE 2
attached hereto. The originals of all chattel paper that evidence Accounts have
been delivered to the Agent. None of the Accounts is evidenced by a promissory
note or other instrument, other than a note or other instrument which has been
delivered to the Agent.
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(b) SCHEDULE 3 attached hereto and incorporated herein by reference
sets forth a true, complete and correct list of (i) all leases for Property in
which Inventory is stored (together with the name and mailing address of each
lessor with respect thereto) and (ii) the name and address of each location at
which Inventory is stored with a warehouseman or other bailee (together with the
name and address of each warehouseman or bailee with respect thereto).
(c) This Agreement creates a valid security interest in the Collateral,
securing the payment of the Obligations, and, to the best of the Borrower's
knowledge, all filings and other actions necessary or desirable to perfect and
protect such security interest will have been duly taken upon the filing of
UCC-1 financing statements listing the Borrower, as debtor, and the Agent, as
secured party, in the jurisdictions listed on SCHEDULE 4 attached hereto. Upon
the taking of such actions and the making of such filings, the Agent will have a
first priority perfected security interest in the Collateral, except to the
extent such priority is affected by Permitted Encumbrances.
(d) The Borrower represents and warrants that it has not operated or
owned the Collateral under any other name or tradename at any time during the
five-year period prior to the date of this Agreement other than the name of the
Borrower set forth on the signature pages hereof.
SECTION 7. FURTHER ASSURANCES.
(a) The Borrower agrees that from time to time, at the expense of the
Borrower, the Borrower will promptly execute and deliver all further instruments
and documents and take all further action that may be necessary or that the
Agent may request in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Borrower will: (i) xxxx
conspicuously each chattel paper included in the Accounts and, at the request of
the Agent, each document included in the Inventory, each Related Contract and
each of its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Agent, indicating that such document, chattel
paper, Related Contract or Collateral is subject to the security interest
granted hereby; (ii) if any Account shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Agent hereunder
such note or instrument or chattel paper duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such financing or
continuation statements or amendments thereto and such other instruments or
notices as may be necessary or as the Agent may reasonably request in order to
perfect and preserve the security interest granted or purported to be granted
hereby.
(b) The Borrower hereby authorizes the Agent and appoints the Agent its
attorney-in-fact to file one or more financing or continuation statements and
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amendments thereto relating to all or any part of the Collateral without the
signature of the Borrower where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) The Borrower covenants and agrees that it shall not change
its chief place of business and chief executive office or keep any records
concerning the Accounts at any address other than the addresses set forth on
SCHEDULE 2 unless written notice thereof is given to the Agent at least thirty
(30) calendar days prior to the creation of any new address for the keeping of
such records. The Borrower further agrees that it shall promptly advise the
Agent in writing, making reference to this SECTION 8(C), of the opening of any
new material place of business, the closing of any material place of business or
the change of the location of the places where it keeps the Collateral.
SECTION 8. INSURANCE. The Borrower shall, at its own expense, maintain
insurance with respect to the Collateral in such amounts, against such risks, in
such form and with such insurers as are in compliance with the requirements of
the Credit Agreement.
SECTION 9. TRANSFERS OF COLLATERAL; LIENS. The Borrower shall not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except Inventory in the
ordinary course of business and as otherwise permitted by the Credit Agreement,
or (ii) create or permit to exist any Lien, security interest, option or other
charge or encumbrance upon or with respect to any of the Collateral, except for
Permitted Encumbrances.
SECTION 10. AGENT APPOINTED ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints the Agent its attorney-in-fact, with full authority in the
place and stead of the Borrower and in the name of the Borrower or otherwise, at
such time as an Event of Default has occurred under the Credit Agreement and the
Agent is exercising any of the remedies available under SECTION 9.2 of the
Credit Agreement, to take any action and to execute any instrument which the
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in connection with the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection therewith;
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent with respect to any of the Collateral; and
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(d) to use any trademarks, trade names, licenses or other
intellectual property rights to the extent necessary to sell Inventory
and to collect any amounts due under any Accounts or Related Contracts.
SECTION 11. AGENT MAY PERFORM. If the Borrower fails to perform any
agreement contained herein, the Agent may itself perform or cause the
performance of such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by the Borrower under the Credit
Agreement.
SECTION 12. AGENT'S DUTIES. The powers conferred on the Agent hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it, any Bank or the Issuing Bank to exercise any such powers. Except
for the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own property. Each
reference herein to any right granted to, benefit conferred upon, or power
exercisable by the "Agent" shall be a reference to the Agent (including any
successors to the Agent pursuant to the Credit Agreement) for itself and for the
benefit of the Banks and the Issuing Bank, and each action taken or right
exercised hereunder shall be deemed to have been so taken or exercised by the
Agent for itself and for the benefit of and on behalf of all of the Banks and
the Issuing Bank.
SECTION 13. REMEDIES. If any Event of Default shall have occurred and
until such Event of Default is waived in writing in accordance with the Credit
Agreement:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party under
the Uniform Commercial Code (the "Code") in effect in the State of New
York at that time or any other applicable jurisdiction, and also may
(i) require the Borrower to, and the Borrower hereby agrees that it
will at its expense and upon request of the Agent forthwith, assemble
all or part of the Collateral as directed by the Agent and make it
available to the Agent at one or more locations where the Borrower
regularly maintains inventory and (ii) without notice, except as
specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Agent's offices
or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as are commercially reasonable. The Borrower agrees
that, to the extent notice of sale shall be required by law, at least
ten (10) calendar days' notice to the Borrower of the time and place
of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral, regardless of notice of sale
having been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. The Agent
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is hereby granted a license or other right to use, without charge, the
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter or any
property of a similar nature, whether owned by the Borrower or with respect to
which the Borrower has rights under license, sublicense or other agreements, as
it pertains to the Collateral, in preparing for sale, advertising for sale and
selling any Collateral, and the Borrower's rights under all licenses shall inure
to the benefit of Agent.
(b) Any cash held by the Agent as Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral may, in the discretion of the
Agent, be held by the Agent as collateral for, and/or then or at any time
thereafter be applied in whole or in part by the Agent against, all or any part
of the Obligations. Any surplus of such cash or cash proceeds held by the Agent
and remaining after payment in full of all the Obligations shall be paid over to
the Borrower or to whomsoever may be lawfully entitled to receive such surplus.
(c) The Borrower hereby acknowledges that the Obligations arise out of
a commercial transaction and agrees that if an Event of Default shall occur, the
Agent shall have the right to the appointment of a receiver for the properties
and assets of the Borrower, and the Borrower hereby consents to such right and
appointment and hereby waives any objection which the Borrower may have thereto
or the right to have a bond or other security posted by the Agent, the Issuing
Bank or any Bank in connection therewith.
SECTION 14. REMEDIES CUMULATIVE. Each right, power and remedy of the
Agent, the Issuing Bank and any Bank as provided for in this Agreement and the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power or remedy provided for in this Agreement and the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by any of
the Agent, the Issuing Bank or the Banks of any one or more of such rights,
powers, or remedies shall not preclude the simultaneous or later exercise by any
of the Agent, the Issuing Bank and the Banks of any or all such other rights,
powers, or remedies.
SECTION 15. EXPENSES. The Borrower will upon demand pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use, operation or sale of, collection from, or other realization
upon any of the Collateral, (iii) the exercise or enforcement of any of the
rights of the Agent hereunder or (iv) the failure by the Borrower to perform or
observe any of the provisions hereof.
SECTION 16. POSSESSION UNTIL DEFAULT. Until an Event of Default shall
occur, except as otherwise provided in this Agreement, the Credit Agreement or
the other Loan
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Documents, the Borrower will have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of its business,
subject to and upon the terms hereof and of the Credit Agreement and the other
Loan Documents.
SECTION 17. AMENDMENTS; ETC. No waiver of any provision of this
Agreement, and no consent to any departure by the Borrower herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by the Agent and the Borrower.
SECTION 18. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be given in the form and manner and delivered to
the Agent or the Borrower, as the case may be, at its respective address
specified in the Credit Agreement or, as to either party, at such other address
as shall be designated by such party in a written notice to the other party.
SECTION 19. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER CREDIT
AGREEMENT. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until (x) the payment
in full of the Obligations and (y) the expiration or termination of the
Commitment and the Letter of Credit Commitment, (ii) be binding upon the
Borrower and its successors and assigns, and (iii) inure to the benefit of and
be enforceable by the Agent for the benefit of the Banks and the Issuing Bank
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Bank may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Loans owing to it and any Note held by it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Bank herein or otherwise, subject, however, to the
provisions of SECTION 11.1 of the Credit Agreement. Upon the payment in full of
the Obligations and all other amounts payable under this Agreement and the
expiration or termination of the Commitment and the Letter of Credit Commitment,
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Borrower. No transfer or renewal, extension,
assignment or termination of this Agreement, the Credit Agreement, any other
Loan Document or any other instrument or document executed and delivered by the
Borrower to the Agent, the Issuing Bank or the Banks, nor any additional Loans
made by the Banks or the Issuing Bank to the Borrower, nor the taking of further
security, nor the retaking or re-delivery of the Collateral to the Borrower by
the Agent, nor any other act of the Agent, the Issuing Bank or the Banks shall
release the Borrower from any obligation hereunder, except upon a release or
discharge executed in writing by the Agent with respect to such obligation or
upon payment of such obligation or upon full satisfaction of all the Obligations
and the expiration or termination of the Commitment and the Letter of Credit
Commitment. The Agent shall not, by any act, delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder unless such waiver
is in writing and signed by the Agent and then only to the extent therein set
forth. A waiver by the Agent of any right or remedy on any occasion shall not be
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construed as a bar to the exercise of any such right or remedy which the Agent
has or would otherwise have had on any other occasion.
SECTION 20. GOVERNING LAW; TERMS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
reference to the conflict or choice of law principles thereof, except to the
extent that the validity or perfection of the security interest hereunder, or
the remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of New York. Any terms used
herein which are used in the Uniform Commercial Code of the State of New York
shall have the same meanings herein as such terms have in said Uniform
Commercial Code.
SECTION 21. MISCELLANEOUS.
(a) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the
same instrument.
(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of
such prohibition or unenforceability in such jurisdiction without
invalidating the remaining provisions hereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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IN WITNESS WHEREOF, the Borrower and the Agent have caused this
Agreement to be duly executed and delivered as of the date first above written.
NEW AMERICAN HEALTHCARE
CORPORATION
By:
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Its:
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TORONTO DOMINION (TEXAS), INC.
By:
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Its:
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SCHEDULE 1 - Inventory Locations
SCHEDULE 2 - Locations of Records
SCHEDULE 3 - Leased Property
SCHEDULE 4 - UCC-1 Filing Jurisdictions
THIS IS A SIGNATURE PAGE FOR THE AMENDED AND RESTATED SECURITY AGREEMENT BETWEEN
NEW AMERICAN HEALTHCARE CORPORATION AND
TORONTO-DOMINION (TEXAS), INC., AS AGENT
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