SECURITY AGREEMENT
BETWEEN
PEAK MEDICAL OF IDAHO, INC.
AND
IHS ACQUISITION NO. 105, INC.
DATED AS OF MAY 29, 1998
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made and entered
into as of May 29, 1998, between PEAK MEDICAL OF IDAHO, INC., a Delaware
corporation ("Debtor") and IHS ACQUISITION NO. 105, INC., a Delaware corporation
("Secured Party").
RECITALS:
A. Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Lease between Secured Party and Debtor, dated as of
the date hereof ("Lease").
B. Pursuant to the Lease, Secured Party has leased to Debtor, for a Term
commencing June 1, 1998, the Leased Property.
C. As a condition to Secured Party's agreement to enter into the Lease,
Secured Party has required Debtor to enter into this Security Agreement and to
grant security interests to Secured Party as herein provided.
NOW, THEREFORE, in order to induce Secured Party to enter into the Lease,
and for other good and valuable consideration the receipt and sufficiency of
which hereby are acknowledged, the parties agree as follows:
ARTICLE I - DEFINITIONS
This Security Agreement is executed and delivered in connection with the
Lease. Terms defined in the Commercial Code (as hereinafter defined) and not
otherwise defined in this Security Agreement or in the Lease shall have the
meanings ascribed to those terms in the Commercial Code. In addition to the
other definitions contained herein, when used in this Agreement the following
terms shall have the following meanings:
"Collateral" means the collateral described in Article II, Section 2 below.
"Commercial Code" means the Uniform Commercial Code, as enacted and in
force from time to time in the state in which the Facility is located.
"Debtor's Personal Property" means any tangible personal property owned by
a Debtor and not used in connection with the operation of the Facility.
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ARTICLE II - AGREEMENT
1. GRANT OF SECURITY INTEREST. Debtor hereby grants to Secured Party a
continuing security interest in the Collateral to secure the payment of all
amounts now or hereafter due and owing to Secured Party from Debtor under the
Lease, or any extension or renewal thereof, and any and all other obligations
incurred in connection therewith, together with all other obligations or
indebtedness of Debtor to Secured Party however created, evidenced or arising,
whether direct or indirect, absolute or contingent, now or hereafter existing,
due or to become due, plus all interest, costs, out-of-pocket expenses and
reasonable attorneys' fees which may be made or incurred by Secured Party in the
administration, and collection thereof (the "Liabilities"), and in the
protection, maintenance, and liquidation of the Collateral. This Security
Agreement shall be and become effective when, and continue in effect as long as,
any Liabilities of Debtor to Secured Party are outstanding and unpaid, and
except as otherwise permitted pursuant to the terms of this Agreement or the
Lease, Debtor will not sell, assign, transfer, pledge or otherwise dispose of or
encumber any Collateral to any third party while this Security Agreement is in
effect without the prior and express written consent of Secured Party.
2. COLLATERAL. The "Collateral" covered by this Agreement is all of the
personal property described below that Debtor now owns or shall hereafter
acquire or create, immediately upon the acquisition or creation thereof, and
that is located at or used exclusively in connection with the Facility,
consisting of the following:
(a) Inventory. All inventory and goods, now owned or hereafter
acquired, including but not limited to, raw materials, work in process, finished
goods, food, medicines, tangible property, stock in trade, wares and merchandise
used in or sold in the ordinary course of business at the Facility (the
"Inventory"); and
(b) Equipment. All equipment, furniture, fixtures and other personal
property used in connection with the operation of the Facility, whether now
owned or hereafter acquired by Debtor, together with all accessions, additions,
parts, attachments, accessories, or appurtenances thereto including but not
limited to linens, motor vehicles, furniture, fixtures and movable equipment,
leasehold improvements, and all books and records now owned or hereafter
acquired pertaining to any of the above described property, including but not
limited to any computer readable memory and any computer hardware or software
necessary to process such memory, wherever located, other than Debtor's Personal
Property (the "Equipment"); and
(c) Licenses and Permits. To the extent permitted by law, all licenses
and permits now owned or hereafter acquired by Debtor and necessary or desirable
for the contemplated use and operation of the Facility as a health care facility
(the "Licenses"); and
(d) Certificates of Need. To the extent permitted by law, all
Certificates of Need now or hereafter issued in connection with the Facility
(the "Certificates"); and
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(e) Proceeds. Proceeds arising out of the operation of the Facility,
including, without limitation, proceeds of hazard or other insurance policies
and eminent domain or condemnation awards, of all of the foregoing described
Inventory or Equipment, together with any and all deposits or other sums at any
time credited by or due from Secured Party to Debtor and any and all
instruments, documents, policies and certificates of insurance, securities,
goods and the proceeds thereof (whether or not the same are Collateral or
Proceeds thereof hereunder) owned by Debtor or in which Debtor has an interest,
which are now or at any time hereafter in possession or under the control of
Secured Party or in transit by mail or carrier to or from Secured Party or in
the possession of any third party acting on behalf of Secured Party, without
regard to whether Secured Party received the same in pledge, for safekeeping, as
agent for collection or transmission or otherwise, or whether Secured Party has
conditionally released the same (the "Proceeds"); and
(f) Insurance Rights. All rights under contracts of insurance now
owned or hereafter acquired covering any of the Collateral ("Insurance Rights");
and
(g) Accounts Receivable. All accounts, accounts receivable and rights
to receive payment of Debtor, whether now existing or hereafter arising or
acquired, arising in connection with goods sold or leased or for services
rendered, including, without limitation, all of the third party reimbursable
portion of accounts receivable owing to Debtor arising out of the delivery by
Debtor of care or services at the Facility, including all rights to
reimbursement under any agreements with a third party payor and all accounts,
general intangibles, rights, remedies, guarantees, and security interests in
respect of the foregoing ("Accounts Receivable"); and
(h) Other Property. All other tangible and intangible property of
Debtor now or hereinafter acquired by Debtor and located at the Facility or used
exclusively in connection with the operation of the Facility; and
(i) Rights. All rights, remedies, powers and/or privileges of Debtor
with respect to any of the foregoing. The form of a description of the
Collateral to be attached to financing statements to be executed by each Debtor
is attached hereto as EXHIBIT A. Except to the extent set forth above, the term
"Collateral" does not include Debtor's Personal Property.
3. PERFECTION OF SECURITY INTEREST. Debtor shall execute and deliver to
Secured Party, concurrently with Debtor's execution of this Security Agreement
and at any time or times hereafter at the request of Secured Party, all
financing statements, continuation financing statements, assignments,
affidavits, reports, notices, letters of authority, vehicle title notations and
all other documents that Secured Party may reasonably request, in a form
reasonably satisfactory to Secured Party, to perfect and maintain perfected
Secured Party's security interests in the Collateral. In order to fully
consummate all of the transactions contemplated hereunder, Debtor shall make
appropriate entries on its books and records disclosing the security interests
created hereby in the Collateral.
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4. WARRANTIES AND COVENANTS. In addition to the warranties and
representations, if any, made in the Lease, Debtor warrants, represents and
agrees that:
(a) Debtor is and will be the lawful owner or lessee of all of the
Collateral, with the right to subject the owned or leased property to the
security interests of Secured Party hereunder;
(b) Except for the security interests in the Collateral herein granted
to Secured Party, there are no other security interests in the Collateral that
are known to Debtor, and there are no financing statements covering any of the
Collateral filed in any public office created by or known to Debtor prior to the
date hereof, except as previously disclosed by Debtor to Secured Party. Debtor
shall defend Secured Party against any claims and demands of any and all other
persons to the Collateral inconsistent with this Agreement;
(c) All of the Collateral is or will be (upon delivery) located at the
Facility;
(d) Except as permitted under the Lease or hereunder, Debtor shall not
remove the Collateral from the Facility without Secured Party's prior written
consent and shall not use or permit the Collateral to be used for any unlawful
purpose whatsoever. Except as permitted under the Lease or hereunder, Debtor
shall not remove any Collateral from the state in which the Facility is located
without the prior written consent of Secured Party;
(e) Except as permitted under the Lease, Debtor shall not conduct
business under any name at the Facility other than that set forth on EXHIBIT A
to the Lease, nor will any Debtor change or reorganize the type of business
entity under which it presently does business, except upon prior and express
written approval of Secured Party, and, if such approval is granted, Debtor
agrees that all documents, instruments and agreements reasonably requested by
Secured Party and relating to such change shall be prepared, filed and recorded
at Debtor's expense before the change occurs;
(f) Debtor shall not remove any records concerning the Collateral
located at the Facility nor keep any of its records concerning the same at any
other location unless written notice thereof is given to Secured Party at least
ten (10) days prior to the removal of such records to any new addresses; and
(g) Debtor has the right and power and is duly authorized to enter
into this Security Agreement. The execution of this Security Agreement does not
and will not constitute a breach of any provision contained in any agreement or
instrument to which Debtor is or may become a party or by which Debtor is or may
be bound or affected.
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7. DEFAULT/REMEDIES
(a) The occurrence and continuation of any Event of Default under the
Lease shall constitute a Security Agreement Event of Default.
(b) Whenever a Security Agreement Event of Default shall have occurred
and so long as its continues, Secured Party may exercise from time to time any
rights and remedies, including the right to immediate possession of the
Collateral, available to it under the Lease, this Security Agreement or
applicable law. Secured Party shall have the right to hold any property then in
or upon the Facility (but excluding any property belonging to patients at the
Facility) at the time of repossession not covered by this Security Agreement
until return is demanded in writing by Debtor. Debtor agrees, in case of the
occurrence of a Security Agreement Event of Default that is continuing and upon
the request of Secured Party, to assemble, at its expense, all of the Collateral
under its control at a convenient place acceptable to Secured Party and to pay
all costs of Secured Party of collection of all the Liabilities, and enforcement
of rights hereunder, including reasonable attorneys' fees and legal expenses,
including participation in bankruptcy proceedings, and the expenses of locating
the Collateral and the expenses of any repairs to any realty or other property
to which any of the Collateral may be affixed or be a part. If the Collateral is
disposed of at a public sale, the parties agree that a public sale with at least
ten (10) business days prior notice to Debtor and notice to the public by one
publication in a local newspaper is commercially reasonable. If any notification
of intended disposition of any of the Collateral is required by law, such
notification, if mailed, shall be deemed reasonably and properly given if sent
at least ten (10) business days before such disposition, by first class mail,
postage prepaid, addressed to Debtor either at the address set forth in the
notice section hereof, or at any other address of Debtor appearing on the
records of Secured Party.
(c) TO THE EXTENT PERMITTED BY LAW, DEBTOR AGREES THAT SECURED PARTY
SHALL, UPON THE OCCURRENCE OF ANY SECURITY AGREEMENT EVENT OF DEFAULT, HAVE THE
RIGHT TO PEACEFULLY RETAKE ANY OF THE COLLATERAL. DEBTOR WAIVES ANY RIGHT IT MAY
HAVE, IN SUCH INSTANCE, TO A JUDICIAL HEARING PRIOR TO SUCH RETAKING.
7. GENERAL
(a) Time shall be deemed of the essence with respect to this Security
Agreement.
(b) Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if it takes
such action for that purpose as Debtor requests in writing, but failure of
Secured Party to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care. Failure of Secured Party to preserve or
protect any rights with respect to such Collateral against any prior parties
shall not be deemed a failure to exercise reasonable care in the custody and
preservation of such Collateral.
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(c) Any delay on the part of Secured Party in exercising any power,
privilege or right under the Lease, this Security Agreement or under any other
instrument or document executed by a Debtor in connection herewith shall not
operate as a waiver thereof. No single or partial exercise thereof, or the
exercise of any other power, privilege or right shall preclude other or further
exercise thereof, or the exercise of any other power, privilege or right. The
waiver by Secured Party of any default by Debtor shall not constitute a waiver
of any subsequent defaults or defaults by any other Debtor but shall be
restricted to the default so waived.
(d) All rights, remedies and powers of Secured Party hereunder are
irrevocable and cumulative, and not alternative or exclusive, and shall be in
addition to all rights, remedies and power is given by the Lease or the
Commercial Code, or any other applicable laws now existing or hereafter enacted.
(e) Whenever the singular is used hereunder, it shall be deemed to
include the plural (and vice-versa), and reference to one gender shall be
construed to include all other genders, including neuter, whenever the context
of this Security Agreement so requires. Section captions or headings used in
this Security Agreement are for convenience and reference only and shall not
affect the construction thereof.
(f) Whenever possible each provision of this Security Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Security Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Security Agreement.
(g) This Security Agreement may be executed in multiple counterparts,
each of which shall be considered an original but all of which, when taken
together, shall constitute one agreement.
(h) The rights and privileges of Secured Party hereunder shall inure
to the benefit of its successors and assigns, and this Security Agreement shall
be binding on all assigns and successors of Debtor as may be permitted under the
Lease.
(i) In the event of any action to enforce this Security Agreement or
to protect the security interest of Secured Party in the Collateral, or to
protect, preserve, maintain, process, assemble, develop, insure, market or sell
any Collateral, Debtor agrees to pay the costs owed and expenses thereof,
together with reasonable and documented attorneys' fees (including fees incurred
in appeals and post judgment enforcement proceedings).
(j) THIS SECURITY AGREEMENT SHALL BE CONSTRUED, AND THE RIGHTS AND
OBLIGATIONS OF EACH DEBTOR AND SECURED PARTY SHALL BE DETERMINED, IN ACCORDANCE
WITH THE LAWS OF THE STATE OF IDAHO.
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(k) DEBTOR CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND
FEDERAL COURTS OF THE STATE OF IDAHO AND AGREES THAT ALL DISPUTES CONCERNING
THIS SECURITY AGREEMENT BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN THE
STATE OF IDAHO. DEBTOR AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT
UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF IDAHO, AND DEBTOR
IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS OF THE
STATE OF IDAHO.
(l) No amendment to this Security Agreement shall be effective unless
the same shall be in writing and signed by the parties.
(m) Nothing contained herein shall be construed as in any way
modifying or limiting the effect of terms or conditions set forth in the Lease,
but each and every term and condition hereof shall be in addition thereto.
(n) All notices required or permitted to be given hereunder shall be
given and deemed effective as provided in the Lease. The parties hereby agree
that a notice sent as specified in this paragraph at least ten (10) business
days before the date of any intended public sale or the date after which any
private sale or other intended disposition of the Collateral is to be made shall
be deemed to be reasonable notice of such sale or other disposition.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first written above.
SECURED PARTY:
IHS ACQUISITION NO. 105, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
--------------------------------------
DEBTOR:
PEAK MEDICAL OF IDAHO, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Name: Xxxx Xxxxxx
-------------------------------------------
Title: Senior Vice President and General Counsel
------------------------------------------
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