EXHIBIT 10.16
SECURITY AGREEMENT
(Working Capital Loan)
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into as of April 1, 2003 by and between SENIOR CARE FLORIDA LEASING, LLC, a
Delaware limited liability company ("Lessee"), SENIOR CARE GOLFVIEW, LLC, a
Delaware limited liability company, ("Golfview"), SENIOR CARE GOLFCREST, LLC, a
Delaware limited liability company, ("Golfcrest"), SENIOR CARE SOUTHERN PINES,
LLC, a Delaware limited liability company, ("Southern Pines"), and SENIOR CARE
CEDAR HILLS, LLC, a Delaware limited liability company, ("Cedar Hills", and
together with Lessee, Golfview, Golfcrest and Southern Pines, collectively
referred to herein as "Debtor"), and OMEGA HEALTHCARE INVESTORS, INC., a
Maryland corporation ("Secured Party").
RECITALS:
A. Capitalized terms used and not otherwise defined herein shall
have the meanings given them in Article I below.
B. Debtor and Secured Party have entered into the Loan Agreement
pursuant to which Secured Party will make certain loans to Debtor in connection
with the Debtor's use and operation of the Facilities.
C. As a condition to Secured Party's agreement to enter into the
Loan Agreement, 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 Loan
Agreement, 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 Loan Agreement. Terms defined in the Commercial Code (as hereinafter
defined) or in the Loan Agreement and not otherwise defined in this Security
Agreement or in the Loan Agreement shall have the meanings ascribed to those
terms in the Commercial Code. In addition to the other definitions contained
herein, when used in this Security 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 of Maryland.
"Facilities" means the healthcare facilities identified on attached
Schedule 1.
"Loan Agreement" means the Working Capital Loan Agreement executed
concurrently
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herewith by Secured Party, as lender, and Debtor, as borrowers and pursuant to
which Secured Party will make certain loans to Debtor, in connection with
Debtor's use and operation of the Facilities, in the maximum principal amount of
$2,000,000.00, evidenced by, among other things, a Secured Working Capital
Promissory Note of even date herewith.
ARTICLE II
AGREEMENT
1. GRANT OF SECURITY INTEREST.
(a) Debtor hereby grants to Secured Party a 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 Loan Agreement, or any
extension or renewal thereof, and any and all other obligations incurred in
connection therewith, whether direct or indirect, whether primary, secondary,
absolute, contingent or otherwise, now or hereafter existing (including future
advances), 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 disbursement, administration, and collection thereof, and in the
protection, maintenance, and liquidation of the Collateral (the "Liabilities").
(b) If the Debtor shall at any time acquire a commercial
tort claim, as defined in Article 9 of the Commercial Code ("Article 9"), Debtor
shall immediately notify the Secured Party, in a writing signed by Debtor, of
the details thereof and grant to Secured Party in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Security Agreement, with such writing to be in form and substance satisfactory
to Secured Party.
2. COLLATERAL. The "Collateral" covered by this Security
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, arises in connection with and/or is
related to the Facilities, consisting of the following:
All personal and fixture property of every kind and nature including,
without limitation, all furniture, fixtures, equipment, raw materials,
inventory, other goods, accounts, accounts receivable, contract rights
(including rights under any management agreement or franchise agreement
with respect to the Facilities), rights to the payment of money,
prepaid items, choses in action, insurance refund claims and all other
insurance claims and proceeds, commercial tort claims, chattel paper,
electronic chattel paper, documents, instruments, securities and all
other investment property, deposits, deposit accounts, rights to
proceeds of letters of credit, letter-of-credit rights, supporting
obligations of every nature, and general intangibles, including,
without limitation, to the extent permitted by applicable law:
(i) all tax refund claims, license fees, patents, patent
applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, rights to xxx and recover
for past infringement of patents, trademarks and copyrights,
computer programs, computer software, engineering drawings,
service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which
(a) the Debtor operates or has authority to operate, (b) the
Debtor possesses,
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uses or has authority to possess or use property (whether
tangible or intangible) of others, or (c) others possess, use,
or have authority to possess or use property (whether tangible
or intangible) of the Debtor; and
(ii) all recorded data of any kind or nature, regardless of the
medium of recording, including, without limitation, all
software, writings, plans, specifications, and schematics; and
(iii) to the extent permitted by law, all rights under that certain
program of medical assistance, funded jointly by the federal
government and the states, for impoverished individuals who
are aged, blind and/or disabled, and/or members of families
with dependent children, which program is more fully described
in Title XIX of the Social Security Act (42 U.S.C. xx.xx. 1396
et seq.) and the regulations promulgated thereunder; and
(iv) to the extent permitted by law, all rights under that certain
federal program providing health insurance for eligible
elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care, and other
providers are reimbursed for certain covered services they
provide to the beneficiaries of such program, which program is
more fully described in Title XVIII of the Social Security Act
(42 U.S.C. xx.xx. 1395 et seq.) and the regulations
promulgated thereunder; and
(v) any and all contracts, authorizations, agreements or consents
made by or on behalf of any patient or resident of any of the
Facilities, or any other person seeking or obtaining services
or goods from Debtor, pursuant to which Debtor provides
skilled nursing care, intermediate care, personal care and/or
assisted living facilities, or any form of patient or
residential care, as well as related services at any of the
Facilities (as such contracts, authorizations, agreements or
consents may be amended, supplemented, renewed, replaced,
extended or modified from time to time); including consents to
treatment and assignments of payment of benefits; and
(vi) to the extent permitted by law, the (a) operating licenses for
each of the Facilities, any certificate of need, any other
license, permit, approval or certificate which from time to
time, may be issued or is required to be issued by the United
States, any state or local government, or any agency or
instrumentality of any of the foregoing with respect to the
construction, installation or operation of any of the
Facilities or any portion or component of any of the
Facilities, the providing of any professional or other
services by the Debtor, the purchase, sale, dispensing,
storage, prescription or use of drugs, medications or the like
by Debtor, or any other operations or businesses of Debtor;
and (b) certifications and eligibility for participation by
Debtor, in respect of its operation of any of the Facilities
and any related businesses or operations, in programs or
arrangements of or reimbursement from any third-party payors,
including Medicare and Medicaid; and (c) all other licenses
permits and certificates used or useful in connection with the
ownership, operation, use or occupancy of any of the
Facilities; and
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(vii) to the extent permitted by law, all rights to third-party
reimbursement contracts for the Facilities which are now or
hereafter in effect with respect to residents or patients
qualifying for coverage under the same, including Medicare and
Medicaid, managed care plans and private insurance agreements,
and any successor program or other similar reimbursement
program and/or private insurance agreements, now or hereafter
existing; and
(viii) all ledgers, printouts, papers, data, file materials and
information pertaining to any of the above described property,
relating to any account debtors in respect thereof, and/or to
the operation of the Debtor's business relating to the
Facilities, and all rights of access to such books, records,
ledgers, printouts, data, file materials and information, and
all property in which such books, records, ledgers, printouts,
data, file materials and information are stored, including but
not limited to any computer readable memory and any computer
hardware or software necessary to process such memory,
wherever located.
and all rights, remedies, powers and/or privileges of Debtor with
respect to any of the foregoing and all proceeds therefrom 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 Debtor acknowledges and agrees that, with respect to any term used
herein that is defined in either (i) Article 9 in effect as of the date this
Security Agreement is signed by the Debtor, or (ii) Article 9 as in force at any
time hereafter, the meaning ascribed thereto with respect to any particular item
of property shall be that under the more encompassing of the two definitions.
The description of the Collateral to be included on any financing
statements executed in connection herewith shall be as follows: "All personal
property of Debtor, as described in that certain Security Agreement between
Debtor and Secured Party and that is located at, arises in connection with
and/or is related to the real property described on Exhibit(s) "A" attached
hereto and incorporated herein.
3. PERFECTION OF SECURITY INTEREST.
(a) Perfection by Filing. Debtor hereby irrevocably
authorizes Secured Party, at any time and from time to time, pursuant to the
provisions of this Security Agreement, to take any and all actions Secured Party
may reasonably determine to be necessary to assure that the security interests
granted hereby are and remain perfected, including without limitation, filing
financing statements, continuation statements and amendments thereto that
describe the Collateral as all assets of Debtor or words of similar effect and
which contain any other information required by Part 5 of Article 9 for the
sufficiency or filing office acceptance of any financing statement, continuation
statement or amendment, including whether that Debtor is an organization, the
type of organization and any organization identification number(s) issued to the
Debtor. Debtor agrees to furnish any
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such information to Secured Party promptly upon request. Any such financing
statements, continuation statements or amendments may be signed by Secured Party
on behalf of Debtor, and may be filed at any time in any jurisdiction deemed
appropriate by Secured Party; provided that in any state in which an
indebtedness tax is imposed upon the filing of a financing statement, Secured
Party shall only file in such state if necessary under applicable law to perfect
the security interest created pursuant to this Agreement or if Secured Party
otherwise agrees to pay such indebtedness tax. Debtor further agrees to 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 and continuation financing statements (where not
covered by the first sentence of this paragraph), 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. Debtor also agrees to make appropriate
entries on its books and records disclosing Secured Party's security interests
in the Collateral.
(b) Other Perfection, etc. Debtor shall at any time and
from time to time take such steps as Secured Party may reasonably request for
Secured Party (i) to obtain an acknowledgment, in form and substance
satisfactory to Secured Party, of any bailee having possession of any of the
Collateral that the bailee holds such Collateral for the benefit of Secured
Party, (ii) to obtain "control" of any investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper, with any agreements
establishing control to be in form and substance satisfactory to Secured Party,
and (iii) otherwise to insure the continued perfection and priority of Secured
Party's security interest in any of the Collateral and of the preservation of
its rights therein. Debtor authorizes Secured Party to file financing statements
describing any statutory liens held by Secured Party.
4. WARRANTIES AND COVENANTS. In addition to the warranties and
representations, if any, made in the Loan Agreement, Debtor warrants, represents
and agrees that:
(a) To the extent permitted by law, Debtor has rights in or the
power to transfer the Collateral, and is and will be the
lawful owner or lessee of all of the Collateral, with the
right, to the extent permitted by law, to subject the
Collateral 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 adverse claims,
liens, restrictions on transfer or pledge, or 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. Debtor shall defend Secured
Party against any claims and demands of any and all other
persons to the Collateral inconsistent with this Security
Agreement;
(c) All of the Collateral that constitutes tangible personal
property is or will be (upon delivery) located at the
Facilities or at the chief executive offices of Debtor;
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(d) Except as permitted under the Loan Agreement or hereunder,
Debtor shall not remove the Collateral from the Facilities or
its chief executive offices 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 Loan Agreement or hereunder, Debtor shall
not remove any Collateral from the state in which the
Facilities or its chief executive offices are located, without
the prior written consent of Secured Party;
(e) Except as permitted under the Loan Agreement, Debtor shall not
conduct business under any name at the Facilities other than
that given above or set forth on attached Schedule 1, nor will
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 Facilities or its chief executive offices 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;
(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;
(h) Debtor shall not change its location (as that term is defined
in Section 9.307 of the Commercial Code). Debtor shall not
change its corporate name without providing Secured Party
thirty (30) days prior written notice;
(i) Debtor's (i) chief executive office is located in the state of
Tennessee; (ii) location (as that term is defined in Section
9.307 of the Commercial Code) is the State of Delaware (the
"Debtor State"); (iii) exact legal name is as set forth in the
first paragraph of this Security Agreement, (iv) Taxpayer
Identification Number is 00-0000000 (for Lessee), 00-0000000
(for Lessee), 00-0000000 (for Golfview), 00-0000000 (for
Golfcrest), 00-0000000 for (Southern Pines) and 00-0000000 for
(Cedar Hills); and (v) filing number with the Debtor State is
3429591 (for Lessee), 3429599 (for Golfview), 3429597 (for
Golfcrest), 3429600 for (Southern Pines) and 3429592 for
(Cedar Hills);
(j) The Debtor shall maintain the Collateral in good order and
repair and with reasonable promptness make all necessary and
appropriate repairs thereto of every kind and nature whether
ordinary or extraordinary, foreseen or unforeseen, or arising
by reason of a condition whether or not existing prior to the
date of this Security Agreement. It
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is the intention of this provision that the level of
maintenance of the Collateral shall be not less than that of a
first class nursing home operator making use of the Collateral
for its intended use;
(k) All agreements and papers required to be filed, registered or
recorded in order to create in favor of the Secured Party a
perfected lien in the Collateral are true and correct, have
been, or will be, filed, registered or recorded in the
appropriate filing offices, and to the best of Debtor's no
further or subsequent filing, refiling, registration,
reregistration, recorded or rerecording is necessary in any
jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements;
(l) Except as otherwise permitted pursuant to the terms of this
Security Agreement or the Loan Agreement, Debtor will not
sell, lease assign, transfer, grant any other security
interest in, pledge, license 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; and
5. COLLECTION OF ACCOUNTS.
(a) Secured Party conditionally authorizes Debtor to
collect accounts from Debtor's account debtors provided, however, this privilege
may be terminated by Secured Party at any time upon an Event of Default and,
upon such Event of Default, Secured Party shall have all of Debtor's rights,
title, and interest in the accounts (to the extent permitted under applicable
law), including a right of stoppage in transit. After the occurrence of an Event
of Default, Secured Party (to the extent permitted under applicable law) may
notify any account debtor(s) of Secured Party's security interest in Debtor's
accounts and shall be entitled to collect same, and Debtor will thereafter
receive all accounts payments as the agent of and as trustee for Secured Party
and will deliver to Secured Party on the day of receipt, all checks, cash,
drafts, acceptances, notes and other accounts payments and, until such delivery,
Debtor shall not use or commingle any accounts payments and shall at all times
keep all such remittances separate and apart from Debtor's own funds, capable of
identification as the Secured Party's property. Secured Party and its
representatives are hereby authorized to endorse in Debtor's name, any item
received by the Secured Party representing any payment on or proceeds of any of
the Collateral, and may sign Debtor's name upon all accounts, invoices,
assignments, financing statements, notices to debtors, bills of lading, storage
receipts, or other instruments or documents in respect to the account debtors,
the proceeds therefrom, or property related thereto. Debtor shall promptly give
Secured Party copies of all accounts statements, accompanied by such additional
information, documents, or copies thereof, as Secured Party may request. Debtor
shall maintain all records with respect to the accounts and with respect to the
general conduct and operation of Debtor's business, including balance sheets,
operating statements and other financial information, in accordance with
generally accepted accounting principles and as Secured Party may request.
(b) Until such time as Secured Party shall notify Debtor
of the revocation of such power and authority by reason of an Event of Default
(and effective only during the continuance thereof), Debtor (i) may, only in the
ordinary course of business, at its own expense, sell, lease or
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furnish under contracts of service any of the inventory normally held by Debtor
for such purpose; (ii) may use and consume any raw materials, work in process or
materials, the use and consumption of which is necessary in order to carry on
Debtor's business; (iii) replace equipment in accordance with the provisions of
the Loan Agreement; and (iv) shall, at its own expense, endeavor to collect, as
and when due, all amounts due with respect to any of the Collateral, including
the taking of such action with respect to such collection as Secured Party may
request or, in the absence of such request, as Debtor may deem advisable. A
sale, lease, furnishing of services or other transfer of the Collateral as a
partial or total satisfaction of any debt of Debtor shall not constitute a sale
in the ordinary course of business.
6. INSPECTIONS/INFORMATION. Debtor shall permit Secured Party or
its agents upon reasonable written request and during business hours to have
access to and to inspect any of the Collateral. Secured Party may from time to
time inspect, check, make copies of, or extracts from the books, records and
files of Debtor relating to the Collateral, and Debtor shall make the same
available to Secured Party upon reasonable written notice and during business
hours. Secured Party's right of access and inspection shall be subject to any
prohibitions or limitations on disclosure under applicable law, including any
so-called "Patient's Xxxx of Rights" or similar legislation, including such
limitations as may be necessary to preserve the confidentiality of the
Facility-patient relationship and the physician-patient relationship. Debtor
agrees to promptly supply Secured Party with such financial and other
information concerning its financial and business affairs, assets and
liabilities as Secured Party may from time to time request, and Debtor agrees
that Secured Party or its agents may from time to time verify Debtor's
continuing compliance with any of Debtor's warranties and covenants made in
Paragraph 4 above, at Debtor's cost and expense.
7. DEFAULT/REMEDIES.
(a) The occurrence of any of the following shall
constitute an Event of Default under this Security Agreement without any
additional notice or grace period:
(i) An Event of Default as defined in the Loan
Agreement;
(ii) Debtor fails to observe or perform any term,
covenant or condition of this Security Agreement and the
failure is not cured by Debtor within a period of fifteen (15)
days after written notice thereof from Secured Party, unless
the failure cannot with due diligence be cured within a period
of fifteen (15) days, in which case such failure shall not be
deemed an Event of Default if and for so long as Debtor
proceeds promptly and with due diligence to cure the failure
and completes the cure prior to the time that the same causes
a default under the Loan Agreement and prior to the time that
the same results in civil or criminal penalties to Secured
Party, Debtor, any affiliates of either or to the Facilities,
however in no event to exceed a period of sixty (60) days; or
(iii) Any of the representations or warranties of
the Debtor contained herein prove to be untrue when made in
any material respect, the Secured Party or Collateral is
materially and adversely affected thereby, and same is not
cured within fifteen (15) days after written notice from
Secured Party thereof.
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(b) Whenever an 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 Loan Agreement, this Security Agreement or
applicable law. Secured Party shall have the right to hold any property then in
or upon the Facilities (but excluding any property belonging to patients at the
Facilities) 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 an Event of Default and upon the request of Secured Party, to
assemble, at its expense, all of the Collateral 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 (i) a public sale with at least ten (10) calendar days prior
notice to Debtor and notice to the public by one publication in a local
newspaper is commercially reasonable, and (ii) a disclaimer of warranties at a
public or private sale 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) days before such disposition, by first class mail, postage
prepaid, addressed to the Debtor either at the address set forth in the notice
section hereof, or at any other address of the 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 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.
(d) The obligations of Debtor under this Security
Agreement, the Loan Agreement and other agreements and instruments executed by
Debtor and its Affiliates in connection with the Loan Agreement are
cross-defaulted and cross-collateralized such that upon an Event of Default
under the Loan Agreement, this Security Agreement and/or any such other
agreements and instruments, the Secured Party has the right to declare such
Event of Default to be an Event of Default without the benefit of any notice or
grace periods contained under any or all of this Security Agreement, the Loan
Agreement and such other agreements and instruments and without limitation to
resort to any or all of the Collateral and the other collateral securing such
obligations in pursuit of its remedies thereunder.
(e) Debtor acknowledges and agrees that in the event that
any of the Collateral is sold by the Secured Party for credit, then credit shall
be made against the Liabilities only as, if and when cash payments are actually
received by the Secured Party for such Collateral.
8. INDEMNITY. In addition to the indemnities set forth in the
Loan Agreement, Debtor shall protect (except to the extent same is caused by the
gross negligence or willful misconduct of Secured Party), indemnify and hold
harmless Secured Party and its officers, employees, directors and agents from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, and out-of-pocket costs and expenses whatsoever (including, without
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limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by
or asserted against Secured Party or its officers, employees, directors or
agents, by reason of the ownership, use, construction and operation of the
Collateral by Debtor, its officers, directors, servants, agents and employees or
by reason of enforcement of Secured Party's rights hereunder or under the Loan
Agreement. As used in this Security Agreement, the term "attorneys' fees"
includes fees incurred in any appeal and/or enforcement proceedings. In case any
action, suit or proceeding is brought against Secured Party by reason of the
enforcement of Secured Party's rights hereunder or under the Loan Agreement,
Debtor, upon request of Secured Party, shall at Debtor's expense cause such
action, suit or proceeding to be resisted and defended by counsel approved by
Secured Party with respect to proceedings and matters involving Secured Party.
Any amounts payable to Secured Party under this Section 8 which are not paid
within thirty (30) days after written demand therefor shall bear interest at the
Default Interest Rate as specified in the Loan Agreement from the date of such
demand, and such amounts, together with such interest, shall be indebtedness
secured by this Security Agreement. The obligations of Secured Party under this
Section 8 shall survive the expiration or earlier termination of the Term of the
Loan Agreement for a period of three (3) years; provided, however, if Secured
Party has delivered notice to Debtor of a claim or potential claim under this
Section 8, then the obligations of Debtor shall be extended with respect to such
claim or potential claim until the final resolution of such claim or potential
claim by the parties thereto.
9. GENERAL.
(a) Time. Time shall be deemed of the essence with
respect to this Security Agreement.
(b) Condition of Collateral. 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.
(c) Waivers. Any delay on the part of Secured Party in
exercising any power, privilege or right under the Loan Agreement, this Security
Agreement or under any other instrument or document executed by 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 in writing of any default by
Debtor shall not constitute a waiver of any subsequent defaults but shall be
restricted to the default so waived.
(d) Rights Cumulative. All rights, remedies and powers of
Secured Party hereunder are irrevocable and cumulative, and nothing contained
herein shall be construed as in any way modifying, limiting, creating an
alternative to or exclusive of, and shall be in addition to all rights, remedies
and power is given by the Loan Agreement or the Commercial Code, or any other
applicable rules of decision, regulations or laws now existing or hereafter
enacted.
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(e) Rules of Construction. In this Security Agreement,
words in the singular include the plural, and in the plural include the
singular; words of the masculine gender include the feminine and the neuter, and
when the sense so indicates words of the neuter gender may refer to any gender
and the word "or" is disjunctive but not exclusive; and the words "include",
"including" or "includes" are not limiting terms. The captions and section
numbers appearing in this Security Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or intent of the
provisions of this Security Agreement.
(f) Severability. If any term or provision set forth in
this Security Agreement shall be held invalid or unenforceable, the remainder of
this Security Agreement, or the application of such terms or provisions to
persons or circumstances, other than those to which it is held invalid or
unenforceable, shall be construed in all respects as if such invalid or
unenforceable term or provision were omitted.
(g) Counterparts. This Security Agreement may be executed
in any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Security Agreement by signing
and delivering one or more counterparts.
(h) Successors. The terms of this Security Agreement
shall be binding upon the Debtor, its successors, assigns, heirs, executors and
personal representatives, including all "new debtors" within the meaning of the
Commercial Code, and shall inure to the benefit of Secured Party, its successors
and any holder, owner or assignee of any rights in the Loan Agreement and will
be enforceable by them as their interest may appear.
(i) Enforcement Expenses. 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) Choice of Law. THIS SECURITY AGREEMENT SHALL BE
CONSTRUED, AND THE RIGHTS AND OBLIGATIONS OF THE DEBTOR AND SECURED PARTY SHALL
BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, EXCEPT THAT
THE LAWS OF THE STATE WHERE THE COLLATERAL IS LOCATED SHALL GOVERN THIS SECURITY
AGREEMENT (A) TO THE EXTENT NECESSARY TO PERFECT AND/OR ENFORCE THE LIENS
CREATED BY THIS SECURITY AGREEMENT AND TO THE EXTENT NECESSARY TO OBTAIN THE
BENEFIT OF THE RIGHTS AND REMEDIES SET FORTH HEREIN WITH RESPECT TO THE
COLLATERAL, AND (B) FOR PROCEDURAL REQUIREMENTS THAT MUST BE GOVERNED BY THE
LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED.
(k) Jurisdiction, Venue, Service of Process. DEBTOR
CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF THE
STATE IN WHICH THE COLLATERAL IS LOCATED AND MARYLAND AND AGREES THAT ALL
DISPUTES CONCERNING THIS SECURITY AGREEMENT BE HEARD IN THE STATE AND FEDERAL
COURTS LOCATED IN THE STATE IN WHICH THE COLLATERAL IS LOCATED
11
OR IN MARYLAND. DEBTOR AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT
UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE IN WHICH THE COLLATERAL
IS LOCATED OR MARYLAND, AND DEBTOR IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN
THE STATE AND FEDERAL COURTS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED AND
MARYLAND.
(l) Amendments. No amendment to this Security Agreement
shall be effective unless the same shall be in writing and signed by the party
to be charged.
(m) Notices. All notices, demands or requests required or
permitted to be given to any party hereto shall be given and deemed effective as
provided in the Loan Agreement. The parties hereby agree that a notice sent as
specified in this paragraph at least ten (10) 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.
(n) Joint Preparation. This Security Agreement shall be
deemed to have been prepared jointly by the parties hereto. Any ambiguity herein
shall not be interpreted against any party hereto and shall be interpreted as if
each of the parties hereto had prepared this Security Agreement.
(o) Entire Agreement. This Security Agreement, the
schedules and exhibits hereto and the agreements and instruments required to be
executed and delivered hereunder set forth the entire agreement of the parties
with respect to the subject matter hereof and supersede and discharge all prior
agreements (written or oral) and negotiations and all contemporaneous oral
agreements concerning such subject matter and negotiations. There are no oral
conditions precedent to the effectiveness of this Security Agreement.
(p) Joint and Several. If more than one Debtor has signed
this Security Agreement, their obligations shall be joint and several.
[Signature Page Follows]
12
SIGNATURE PAGE TO LESSEE SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first written above.
SECURED PARTY:
OMEGA HEALTHCARE INVESTORS, INC., a
Maryland corporation
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Its: CEO
-------------------------------
DEBTOR:
SENIOR CARE FLORIDA LEASING, LLC, a By: SENIOR CARE GOLFVIEW, LLC
Delaware limited liability company SENIOR CARE GOLFCREST, LLC
SENIOR CARE SOUTHERN PINES, LLC
By: Diversicare Leasing Corp., its sole SENIOR CARE CEDAR HILLS, LLC
member
By: /s/ Xxxxxxx X. Council, III
----------------------------------
Name: Xxxxxxx X. Council, III By: Senior Care Florida Leasing, LLC, its
----------------------- sole member
Its: President
------------------------------
By: Diversicare Leasing Corp., its sole
member
By: /s/ Xxxxxxx X. Council, III
---------------------------
Name: Xxxxxxx X. Council, III
-----------------------
Its: President
---------
SCHEDULE 1
DEBTOR: OMEGA HEALTHCARE INVESTORS, INC.
SECURED PARTY: SENIOR CARE FLORIDA LEASING, LLC
SENIOR CARE GOLFVIEW, LLC
SENIOR CARE GOLFCREST, LLC
SENIOR CARE SOUTHERN PINES, LLC
SENIOR CARE CEDAR HILLS, LLC
FACILITIES: 1. Golfview Nursing Home, 0000 00xx Xxxxxx
Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000
2. Golfcrest Nursing Home, 000 Xxxxx 00xx
Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000
3. Southern Pines Nursing Center, 0000 Xxxxxxxx
Xxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxx 00000
4. Cedar Hills Nursing Center, 0000 Xxxx Xxxx
Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000
