EXHIBIT 4.5
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement")
dated as of October 1, 2003 is by and between Lovelace Health Systems, Inc. a
New Mexico corporation (together with its successors and permitted assignees,
the "Grantor") and Ardent Health Services, Inc., a Delaware corporation (the
"Lender").
WITNESSETH
WHEREAS, the Grantor is the successor by merger to AHS Albuquerque Regional
Medical Center LLC, a New Mexico limited liability company ("AHS Albuquerque");
and
WHEREAS, AHS Albuquerque was indebted to the Lender under the terms of the
Intercompany Promissory Note, dated September 30, 2003 (the "Original Note");
and
WHEREAS, the Original Note was secured by a Security Agreement, dated
September 30, 2003, between AHS Albuquerque and the Lender (the "Original
Security Agreement");
WHEREAS, the Grantor and the Lender desire to amend and restate the
Original Security Agreement to reflect the succession of the Grantor to the
obligations of AHS Albuquerque;
WHEREAS, the Grantor has delivered to the Lender an Amended and Restated
Intercompany Promissory Note (the "Promissory Note"), dated of even date hereof,
in the original principal amount of $70,000,000; and
WHEREAS, this Amended and Restated Security Agreement is required under
the terms of the Promissory Note.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Capitalized terms used and not otherwise defined herein shall have
the meanings provided in the Promissory Note.
(b) The following terms shall have the meanings assigned thereto in the
Uniform Commercial Code in effect in the State of New York on the date hereof:
Accession, Account, As-Extracted Collateral, Chattel Paper, Commercial Tort
Claim, Commingled Goods, Consumer Goods, Deposit Account, Document, Equipment,
Farm Products, Fixtures, General Intangible, Goods, Instrument, Inventory,
Investment Property, Letter-of-Credit Right, Manufactured Home, Proceeds,
Software, Supporting Obligation and Tangible Chattel Paper.
(c) As used herein, the following terms shall have the meanings set
forth below:
"Collateral" has the meaning provided in Section 2 hereof.
"Collateral Agent" means Bank One, NA, as collateral agent under
the Intercreditor and Subordination Agreement.
"Copyright License" means any written agreement, naming the
Grantor as licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 4(g) hereto.
"Copyrights" means (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings, and applications in the United
States Copyright Office including, without limitations, any thereof referred to
in Schedule 4(a) hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in Schedule 4(g) hereto.
"Grantor" has the meaning set forth in the introductory paragraph
hereof.
"Lender" has the meaning set forth in the introductory paragraph
hereof.
"Patent License" means any written agreement providing for the grant
by or to the Grantor of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitation, any thereof referred to in
Schedule 4(g) hereto.
"Patents" means (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any letters patent referred to in Schedule 4(g) hereto, and (b) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 4(g) hereto.
"Promissory Note" has the meaning set forth in the recitals hereto.
"Secured Obligations" means, without duplication, (a) all of the
obligations of the Grantor to the Lender under Promissory Note (including, but
not limited to, any interest accruing after the commencement by or against the
Grantor of a proceeding under any bankruptcy, insolvency or similar laws,
regardless of whether such interest is an allowed claim under such proceeding),
whether now existing or hereafter arising, due or to become due, direct or
indirect, absolute or contingent, howsoever evidenced, created, held or
acquired, whether primary, secondary, direct, contingent, or joint and several,
as such obligations may be amended, modified, increased, extended, renewed or
replaced from time to time, and (b) all costs and expenses incurred in
connection with enforcement and collection of the obligations described in the
foregoing clause (a), including reasonable attorney's fees.
"Security Agreement" has the meaning set forth in the introductory
paragraph hereof.
"Trademarks License" means any written agreement providing for the
grant by or to the Grantor of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 4(g) hereto.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 4(g) hereto, and (b) all
renewals thereof.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
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"Work" means any work that is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations, the
Grantor hereby grants to the Lender a continuing security interest in, and a
right to set off against, any and all right, title and interest of the Grantor
in and to all of the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Collateral"):
(a) All Accounts;
(b) all cash and currency;
(c) all Chattel Paper;
(d) those Commercial Tort Claims identified on
Schedule 2(d) attached hereto;
(e) all Copyrights;
(f) all Copyright Licenses;
(g) all Deposit Accounts;
(h) all Documents;
(i) all Equipment;
(j) all Fixtures;
(k) all General Intangibles;
(l) all Goods;
(m) all Instruments;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter-of-Credit Rights;
(q) all Patents;
(r) all Patent Licensee;
(s) all Software;
(t) all Supporting Obligations;
(u) all Trademarks;
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(v) all Trademark Licenses;
(v) all other personal property of the Grantor of
whatever type or description; and
(w) to the extent not otherwise included, all Accessions
and all Proceeds of any and all of the foregoing.
Notwithstanding anything to the contrary contained herein,
the security interests granted under this Security Agreement shall not
extend to (i) any Property that is subject to a Lien securing purchase
money Indebtedness permitted under the Credit Agreement pursuant to
documents that prohibit the Grantor from granting any other Liens in
such Property or (ii) any lease, license or other contract if the
grant of a security interest in such lease, license or contract in the
manner contemplated by this Security Agreement, under the terms
thereof and under applicable law, is prohibited and would result in
the termination thereof; provided in each case that any such
limitation on the security interests granted hereunder shall only apply
to the extent that any such prohibition would not be rendered
ineffective pursuant to the UCC or any other applicable law (including
bankruptcy, insolvency and similar laws) or principles of equity.
The Grantor and the Lender hereby acknowledge and agree that the
security interest created hereby in the Collateral (i) constitutes continuing
collateral security for all of the Secured Obligations, whether now existing or
hereafter arising and (ii) is not to be construed as an assignment of any
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or
Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, the Grantor
shall remain liable under each of the Accounts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise to each such
Account. The Lender shall not have any obligation or liability under any
Account (or any agreement giving rise thereto) by reason of or arising out of
this Security Agreement or the receipt by the Lender of any payment relating to
such Account pursuant hereto, nor shall the Lender be obligated in any manner
to perform any of the obligations of the Grantor under or pursuant to any
Account (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party under any Account (or
any agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts that
may have been assigned to it or to which it may be entitled at any time or
times.
(b) At any time after the occurrence and during the continuation
of an Event of Default, the Lender shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the Grantor
shall furnish all such assistance and information as the Lender may reasonably
require in connection with such test verifications, (ii) upon the Lender's
reasonable request and at the expense of the Grantor, the Grantor shall cause
independent public accountants or others reasonably satisfactory to the Lender
to furnish to the Lender reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts and (iii) the Lender in
its own name or in the name of the Grantor may communicate with account debtors
on the Accounts to the extent necessary to verify with them the existence,
amount and terms of any Accounts.
4. Representations and Warranties. The Grantor hereby represents
and warrants to the Lender that:
(a) Legal Name: State of Formation. The exact legal name
and state of formation of the Grantor is as set forth on the signature
pages hereto.
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(b) Change in Legal Name, State of Formation or Structure. Other than
as set forth on Schedule 4(b) hereto, in the five years preceding the date
hereof the Grantor has not (i) changed its name, (ii) changed its state of
formation, or (iii) been party to a merger, consolidation or other change in
structure.
(c) Chief Executive Office: Locations of Collateral. The location of
the Grantor's chief executive office and each location where the Grantor
maintains any Collateral are as set forth on Schedule 4(c) hereto.
(d) Ownership. The Grantor is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign or transfer the same.
(e) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Lender in the Collateral and, when
properly perfected by filing, shall constitute a valid perfected security
interest in the Collateral, to the extent such security interest can be
perfected by filing under the UCC, free and clear of all Liens except for
Permitted Liens.
(f) Types of Collateral. None of the Collateral consists of, or is the
Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm
Products, Manufactured Homes, or Standing Timber.
(g) Accounts. With respect to each Account of the Grantor, (i) such
Account and the papers and documents relating thereto are genuine and in all
material respects what they purport to be, (ii) such Account arises out of (A)
a bona fide sale of goods sold and delivered by the Grantor (or in the process
of being delivered) or (B) services theretofore actually rendered by the
Grantor to, the account debtor named therein, and (iii) if such Account is
evidenced by any Instrument or Chattel Paper, such Account has, to the extent
requested by the Lender, been endorsed over and delivered to, or submitted to
the control of, the Lender.
(h) Inventory. No Inventory of the Grantor is held by any Person
other than the Grantor pursuant to consignment, sale or return, sale on
approval or similar arrangement, unless the Grantor has perfected a purchase
money security interest therein.
(i) Copyrights, Patents and Trademarks.
(i) Schedule 4(g) hereto includes all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses
registered or applied for with the United States Copyright Office or the
United States Patent and Trademark Office and owned by the Grantor in its
own name, or to which the Grantor is a party, as of the date hereof.
(ii) To the best of the Grantor's knowledge, each Copyright,
Patent and Trademark of the Grantor is valid, subsisting, unexpired,
enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 4(g) hereto, none of the
Copyrights, Patents and Trademarks of the Grantor is the subject of any
licensing or franchise agreement.
(iv) Except as set forth on Schedule 4(g) hereto, to the best of
the Grantor's knowledge, no holding decision or judgement has been rendered
by any Governmental Authority that would limit, cancel or question the
validity of any Copyright, Patent or Trademark of the Grantor.
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(v) Except as set forth on Schedule 4(g) hereto,
no action or proceeding is pending seeking to limit, cancel or
question the validity of any Copyright, Patent or Trademark of
the Grantor, or that, if adversely determined, could
reasonably be expected to have a material adverse effect on
the value of any Copyright, Patent or Trademark of the
Grantor.
(vi) All applications pertaining to the
Copyrights, Patents and Trademarks of the Grantor have been
duly and properly filed, and all registrations or letters
pertaining to such Copyrights, Patents and Trademarks have
been duly and properly filed and issued, and all of such
Copyrights, Patents and Trademarks are valid and enforceable.
(vii) The Grantor has not made any assignment or
agreement in conflict with the security interest in the
Copyrights, Patents or Trademarks of the Grantor hereunder.
5. Covenants. The Grantor covenants that, so long as any of the
Secured Obligations remains outstanding, the Grantor shall:
(a) Other Liens. Defend the Collateral against the
claims and demands of all other parties claiming an interest therein
other than Permitted Liens. Nothing in this Agreement shall prevent
the Grantor from discontinuing the operation or maintenance of any of
its assets or properties if such discontinuance is, in the judgment of
its Board of Directors, desirable in the conduct of its business.
(b) Instruments/Tangible Chattel Paper/Documents. If any
amount payable under or in connection with any of the Collateral shall
be or become evidenced by any Instrument or Tangible Chattel Paper, or
if any property constituting Collateral shall be stored or shipped
subject to a Document, (i) ensure that such Instrument, Tangible
Chattel Paper or Document is either in the possession of the Grantor
at all times or, if requested by the Lender, is immediately delivered
to the Lender, duly endorsed in a manner satisfactory to the Lender
and (ii) ensure that any Collateral consisting of Tangible Chattel
Paper is marked with a legend acceptable to the Lender indicating the
Lender's security interest in such Tangible Chattel Paper.
(c) Change in Structure, Location or Type. Not, without
providing ten days prior written notice to the Lender (i) change its
name or state of formation or (ii) be party to a merger, consolidation
or other change in structure.
(d) Perfection of Security Interest. Execute and deliver
to the Lender such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of
existing documents, as the Lender may reasonably request) and do all
such other things as the Lender may reasonably deem necessary,
appropriate or convenient (i) to assure to the Lender the
effectiveness and priority of its security interests hereunder,
including (A) such instruments as the Lender may from time to time
reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and (B)
entering into lockbox arrangements with the Lender with respect to its
collection of Accounts pursuant to documentation reasonably
satisfactory to the Lender and in accordance with any applicable state
or federal law, (ii) to consummate the transactions contemplated
hereby and (iii) to otherwise protect and assure the Lender of its
rights and interests hereunder. To that end, the Grantor authorizes
the Lender to file one or more financing statements (with collateral
description broader and/or less specific than the description of the
Collateral contained herein, such as "all assets" or "all personal
property") disclosing the Lender's security interest in any or all of
the Collateral of the Grantor without the Grantor's signature thereon,
and further the Grantor also hereby irrevocably makes, constitutes and
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appoints the Lender, its nominee or any other Person whom the Lender may
designate, as the Grantor's attorney-in-fact with full power and for the limited
purpose to sign in the name of the Grantor any such financing statements
(including renewal statements), amendments and supplements, notices or any
similar documents that in the Lender's reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection of the
security interests granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable so long as the Secured Obligations
remain unpaid. Each Grantor hereby agrees that a carbon, photographic or other
reproduction of this Security Agreement or any such financing statement is
sufficient for filing as a financing statement by the Lender without notice
thereof to the Grantor wherever the Lender may in its sole discretion desire to
file the same. In the event for any reason the law of any jurisdiction other
than New York becomes or is applicable to the Collateral of the Grantor or any
part thereof, or to any of the Secured Obligations, the Grantor agrees to
execute and deliver all such instruments and to do all such other things as the
Lender in its sole discretion reasonably deems necessary, appropriate or
convenient to preserve, protect and enforce the security interests of the Lender
under the law of such other jurisdiction (and, if the Grantor shall fail to do
so promptly upon the request of the Lender, then the Lender may execute any and
all such requested documents on behalf of the Grantor pursuant to the power of
attorney granted hereinabove). If any Collateral is in the possession or control
of the Grantor's agents and the Lender so requests, the Grantor agrees to notify
such agents in writing of the Lender's security interest therein and, upon the
Lender's request, instruct them to hold all such Collateral for the account of
the holders of the Secured Obligations and subject to the Lender's instructions.
Each Grantor agrees to maintain its books and records to reflect the security
interest of the Lender in the Collateral.
(e) Control. Execute and deliver all agreements, assignments,
instruments or other documents as the Lender shall reasonably request for the
purpose of obtaining and maintaining control within the meaning of the UCC with
respect to any Collateral consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights and Electronic Chattel Paper.
(f) Collateral held by Warehouseman, Bailee, etc. If any Collateral
with a fair market value in excess of $100,000 is at any time in the possession
or control of a warehouseman, bailee, agent or processor of the Grantor, (i)
notify the Lender of such possession or control, (ii) notify such Person of the
Lender's security interest in such Collateral, (iii) instruct such Person to
hold all such Collateral for the Lender's account and subject to the Lender's
instructions and (iv) use its reasonable efforts to obtain an acknowledgement
from such Person that it is holding such Collateral for the benefit of the
Lender.
(g) Treatment of Accounts. Not grant or extend the time for payment of
any Account in excess of $100,000, or compromise or settle any Account for less
than the full amount thereof, or release any Person or property, in whole or in
part, from payment thereof, or allow any credit or discount thereon, in each
case other than as normal and customary in the ordinary course of the Grantor's
business or as required by law.
(h) Covenants Relating to Copyrights. Other than any Copyright that
the Board of Directors of the Grantor deems not material to the conduct of its
business:
(i) Not do any act or knowingly omit to do any act whereby any
material Copyright may become invalidated and (A) not do any act, or
knowingly omit to do any act, whereby any material Copyright may become
injected into the public domain; (B) notify the Lender immediately if it
knows that any material Copyright may become injected into the public
domain or of any adverse determination or development (including without
limitation, the institution of, or any such determination or development in
any court or tribunal in the United States or any other country) regarding
the Grantor's ownership of any
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such Copyright or its validity; (C) take all necessary steps
as it shall deem appropriate under the circumstances, to
maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of
each material Copyright owned by the Grantor including,
without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Lender of any material
infringement of any material Copyright of the Grantor of
which it becomes aware and take such actions as it shall
reasonably deem appropriate under the circumstances to
protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief
and seeking to recover any and all damages for such
infringement.
(ii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of the
Grantor hereunder.
Notwithstanding in this Agreement shall prevent the Grantor
from discontinuing the use of any Copyright or pursuing the
application for any such Copyright if such discontinuance is,
in the judgment of its Board of Directors, desirable in the
conduct to the conduct of its business.
(i) Covenants Relating to Patents and Trademarks. Other
than any Patent or Trademark that the Board of Directors of the Grantor
deems not material to the conduct of its business:
(i) (A) Continue to use each registered
Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such
registered Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under such
registered Trademark, (C) employ such registered Trademark
with the appropriate notice of registration, (D) not adopt or
use any mark that is confusingly similar or a colorable
imitation of such registered Trademark unless the Lender
shall obtain a perfected security interest in such mark
pursuant to this Security Agreement, and (E) not (and not
permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any registered Trademark
may become invalidated.
(ii) Not do any act, or omit to do any act,
whereby any Patent may become abandoned or dedicated.
(iii) Notify the Lender immediately if it knows
that any application or registration relating to any Patent
or registered Trademark may become abandoned or dedicated, 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 or any court or tribunal in
any country) regarding the Grantor's ownership of any Patent
or registered Trademark or its right to register the same or
to keep and maintain the same.
(iv) Whenever the Grantor, either by itself or
through an agent, employee, licensee or designee, shall file
an application for the registration of any Patent or
registered Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, the Grantor
shall report such filing to the Lender within five Business
Days after the last day of the fiscal quarter in which such
filing occurs. Upon request of the Lender, the Grantor shall
execute and deliver any and all agreements, instruments,
documents and papers as the Lender may reasonably request to
evidence the security interest of the Lender in any Patent or
registered Trademark
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and the goodwill and general intangibles of the Grantor
relating thereto or represented thereby.
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark 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 Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Lender after it learns
that any Patent or registered Trademark included in the
Collateral is infringed, misappropriated or diluted by a third
party and promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement,
misappropriation or dilution, or to take such other actions as
it shall reasonably deem appropriate under the circumstances
to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in
conflict with the security interest in the Patents or
Trademarks of the Grantor hereunder.
Nothing in this Agreement shall prevent any Grantor from
discontinuing the use of any Trademark or Patent or pursuing
the application of any such Patent or Trademark if such
discontinuance is, in the judgment of its Board of Directors,
desirable in the conduct of its business.
(j) Commercial Tort Claims.
(i) Promptly notify the Lender in writing of the
initiation of any Commercial Tort Claim in excess of
$1,000,000 before any Governmental Authority by or in favor of
the Grantor or any of its Subsidiaries.
(ii) Execute and deliver such statements,
documents and notices and do and cause to be done all such
things as the Lender amy reasonably deem necessary,
appropriate or convenient, or as are required by law, to
create, perfect and maintain the Lender's security interest in
any Commercial Tort Claim.
6. Advances by Holders of the Secured Obligations. On failure of
the Grantor to perform any of the covenants and agreements contained herein in a
material respect, the Lender may, as its sole option and in its sole discretion,
perform the same and in so doing may expend such sums as the Lender may
reasonably deem advisable in the performance thereof, including, without
limitation, the payment when due and payable of any insurance premiums or taxes,
a payment to obtain a release of a lien or potential lien, expenditures made in
defending against any adverse claim and all other expenditures that the Lender
may make for the protection of the security hereof or that may be compelled to
make by operation of applicable law. All such sums and out-of-pocket amounts so
expended shall be repayable by the Grantor promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are demanded at the default rate
specified in the Promissory Note. No such performance of any covenant or
agreement by the Lender on behalf of the Grantor, and no such advance or
expenditure therefor, shall relieve the Grantor of any default under the terms
of this Security Agreement, the other Loan Documents or any other documents
relating to the Secured Obligations. The Lender may make any payment hereby
authorized in accordance with any bill or statement procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill or statement or into the validity of any
tax assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is
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being contested in good faith by the Grantor in appropriate proceedings and
against which adequate reserves are being maintained in accordance with GAAP.
7. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default
and during the continuation thereof, the Lender shall have, in addition to the
rights and remedies provided herein, in the Promissory Note, in any other
documents relating to the Secured Obligations, or by applicable law (including,
without limitation, levy of attachment and garnishment), the rights and
remedies of a secured party under the UCC of the jurisdiction applicable to the
affected Collateral and, further, the Lender may, with or without judicial
process or the aid and assistance of others, (i) enter on any premises on which
any of the Collateral may be located and, without resistance or interference by
the Grantor, take possession of the Collateral, (ii) dispose of any Collateral
on any such premises, (iii) require the Grantor to assemble and make available
to the Lender at the expense of the Grantor any Collateral at any place and
time designated by the Lender that is reasonably convenient to both parties,
(iv) remove any Collateral from any such premises for the purpose of offering
sale or other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which the Grantor
hereby waives to the fullest extent permitted by applicable law, at any place
and time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more parcels, for
cash, upon credit or otherwise, at such prices and upon such terms as the
Lender deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). The Grantor acknowledges that any private sale
referenced above may be at prices and on terms less favorable to the seller
than the prices and terms that might have been obtained at a public sale and
agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner. Neither the Lender's compliance with the
applicable law nor its disclaimer of warranties relating to the Collateral
shall be considered to adversely affect the commercial reasonableness of any
sale. In addition to all other sums due the Lender with respect to the Secured
Obligations, the Grantor shall pay the Lender all reasonable documented costs
and out-of-pocket expenses incurred by the Lender including, but not limited
to, reasonable attorneys' fees, the allocated cost of internal counsel and
court costs, in obtaining or liquidating the Collateral, in enforcing payment
of the Secured Obligations, or in the prosecution or defense of any action or
proceeding by or against the Lender or the Grantor concerning any matter
arising out of or connected with this Security Agreement, any Collateral or the
Secured Obligations, including, without limitation, any of the foregoing
arising in, arising under or related to a case under any bankruptcy, insolvency
or similar laws. To the extent the rights of notice cannot be legally waived
hereunder, the Grantor agrees that any requirement of reasonable notice shall
be met if such notice is personally served on or mailed, postage prepaid, to
the Grantor in accordance with the notice provisions of the Promissory Note at
least ten (10) Business Days before the time of sale or other event giving rise
to the requirement of such notice. The Lender shall not be obligated to make
any sale or other disposition of the Collateral regardless of notice having
been given. To the extent permitted by applicable law, the Lender may be a
purchaser at any such sale. To the extent permitted by applicable law, the
Grantor hereby waives all of its rights of redemption with respect to any such
sale. Subject to the provisions of applicable law, the Lender may postpone or
cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by law, be made at the time and place
to which the sale was postponed, or the Lender may further postpone such sale by
announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an
Event of Default and during the continuation thereof, whether or not the Lender
has exercised any or all of its rights and remedies hereunder and in each case
in compliance with and to the extent permitted under applicable law (i) the
Grantor will promptly upon request of the Lender instruct all account debtors
to remit all payments in respect of Accounts to a mailing location selected by
the Lender and (ii) the Lender shall have the right to enforce the Grantor's
rights against its customers and account debtors, and the Lender or its
designee may notify the Grantor's customers and account debtors that the
Accounts of the Grantor have been assigned to the Lender or of the Lender's
security interests therein, and may (either in its own name or in the name of
the Grantor or both)
10
demand, collect (including without limitation by way of a lockbox arrangement),
receive, take receipt for, sell, sue for, compound, settle, compromise and give
acquittance for any and all amounts due or to become due on any Account, and,
in the Lender's discretion, file any claim or take any other action or
proceeding to protect and realize upon the security interest of the holders of
the Secured Obligations in the Accounts; provided, however, that Grantor and
the Lender must comply with assignments of payments to providers as set forth
in 42 U.S.C. Section 1395, as may be amended or any subsequent changes thereto.
The Grantor acknowledges and agrees that the Proceeds of its Accounts remitted
to or on behalf of the Lender in accordance with the provisions hereof shall be
solely for the Lender's own convenience and that the Grantor shall not have any
right, title or interest in such Accounts or in any such other amounts except
as expressly provided herein. The Lender shall have no liability or
responsibility to the Grantor for acceptance of a check, draft or other order
for payment of money bearing the legend "payment in full" or words of similar
import or any other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. The Grantor hereby agrees to
indemnify the Lender from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Lender (each, an "Indemnified Party") arising out
of its maintenance of the foregoing arrangements except as relating to or
arising out of the gross negligence or willful misconduct of an indemnified
Party or its officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by
the Grantor, its directors, shareholders or creditors or an Indemnified Party
or any other Person or any other Indemnified Party is otherwise a party
thereto.
(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, the
Lender shall have the right to enter and remain upon the various premises of
the Grantor without cost or charge to the Lender, and use the same, together
with materials, supplies, books and records of the Grantor for the purpose of
collecting and liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by foreclosure, auction or
otherwise. In addition, the Lender may remove Collateral, or any part thereof,
from such premises and/or any records with respect thereto, in order to
effectively collect or liquidate such Collateral. Notwithstanding the
foregoing, prior to receiving information from the Grantor under this Security
Agreement that contains patient information subject to: (i) the state privacy
laws, (ii) the Drug Abuse Prevention, Treatment and Rehabilitation Act, 42
U.S.C. 290ee3 et. seq. or (iii) the Health Insurance Portability and
Accountability Act of 1996, 42 U.S.C. 1320d et. seq., or (iv) regulations
promulgated pursuant to the foregoing statutes, the Lender agrees to execute an
agreement reasonably satisfactory to the Lender that complies with the
requirements relating to "business associates" as set forth in 45 CFR 502(e)(1)
and any applicable Laws.
(d) Nonexclusive Nature of Remedies. Failure by the Lender to exercise
any right, remedy or option under this Security Agreement, the Promissory Note,
any other documents relating to the Secured Obligations, or as provided by law,
or any delay by the Lender in exercising the same, shall not operate as a
waiver of any such right, remedy or option. No waiver hereunder shall be
effective unless it is in writing, signed by the party against whom such waiver
is sought to be enforced and then only to the extent specifically stated, which
in the case of the Lender shall only be granted as provided herein. The rights
and remedies of the Lender under this Security Agreement shall be cumulative
and not exclusive of any other right or remedy that the Lender may have.
(e) Retention of Collateral. To the extent permitted under applicable
law, in addition to the rights and remedies hereunder, upon the occurrence of
an Event of Default, the Lender may, after providing the notices required by
Sections 9-620 and 9-621 of the UCC or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, accept or retain
all or any portion of the Collateral in satisfaction of the Secured
Obligations. Unless and until the Lender shall have provided such notices,
however, the Lender shall not be deemed to have accepted or retained any
Collateral in satisfaction of any Secured Obligations for any reason.
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(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Lender is legally
entitled, the Grantor shall be liable for the deficiency, together with
interest thereon at the default rate specified in the Promissory Note, together
with the costs of collection and reasonable attorneys' fees (including the
allocated cost of internal counsel). Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned to the
Grantor or to whomsoever a court of competent jurisdiction shall determine to
be entitled thereto.
8. Rights of the Lender.
(a) Power of Attorney. In addition to other powers of attorney contained
herein, to the extent permitted by applicable law, the Grantor hereby designates
and appoints the Lender and each of its designees or agents, as attorney-in-fact
of the Grantor, irrevocably and with power of substitution, with authority to
take any or all of the following actions upon the occurrence and during the
continuation of an Event of Default:
(i) to demand, collect, settle, compromise and adjust, and give
discharges and releases concerning the Collateral, all as the Lender may
reasonably deem appropriate;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any of the Collateral and enforcing any other right
in respect thereof;
(iii) to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Lender may
reasonably deem appropriate;
(iv) to the extent permitted by applicable law and at all times
in accordance therewith, to receive, open and dispose of mail addressed to
the Grantor and endorse checks (other than for insurance premiums), notes,
drafts, acceptances, money orders, bills of lading, warehouse receipts or
other instruments or documents evidencing payment, shipment or storage of
the goods giving rise to the Collateral on behalf of and in the name of
the Grantor, or securing, or relating to such Collateral;
(v) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Collateral;
(vi) to direct any parties liable for any payment in connection
with any of the Collateral (other than insurance premiums) to make payment
of any and all monies due and to become due thereunder directly to the
Lender or as the Lender shall direct;
(vii) except as limited by applicable law, to receive payment of
and receipt for any and all monies, claims, and other amounts due and to
become due at any time in respect of or arising out of any Collateral;
(viii) to sell, assign, transfer, make any agreement in respect
of, or otherwise deal with or exercise rights in respect of, any
Collateral or the goods or services that have given rise thereto, as fully
and completely as though the Lender were the absolute owner thereof for
all purposes;
(ix) to adjust and settle claims under any insurance policy
under which the Grantor or the Lender is a beneficiary or additional
insured;
(x) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements, security
and pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Lender may reasonably deem
12
appropriate in order to perfect and maintain the security interests and
liens granted in this Security Agreement and in order to fully
consummate all of the transactions contemplated there in:
(xi) to institute any foreclosure proceedings that the
Lender may reasonably deem appropriate; and
(xii) to do and perform all such other acts and things as
the Lender may reasonably deem appropriate or convenient in connection
with the Collateral.
This power of attorney is a power coupled with an interest and shall
be irrevocable for so long as any of the Secured Obligations shall remain
outstanding. The Lender shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Lender in this Security Agreement, and shall not be
liable for any failure to do so or any delay in doing so. This power of
attorney is conferred on the Lender solely to protect, preserve and realize
upon its security interest in the Collateral.
(b) The Lender's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while being held
by the Lender hereunder, the Lender shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the Grantor
shall be responsible for preservation of all rights in the Collateral, and the
Lender shall be relieved of all responsibility for the Collateral upon
surrendering it or tendering the surrender of it to the Grantor. The Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Lender accords its own
property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Lender shall
not have responsibility for taking any necessary steps to preserve rights
against any parties with respect to any of the Collateral. In the event of a
public or private sale of Collateral pursuant to Section 7 hereof, the Lender
shall have no obligation to clean, repair or otherwise prepare the Collateral
for sale.
9. Applications of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral will be applied in reduction of
the Secured Obligations in the order determined by the Lender and the Grantor
irrevocably waives the right to direct the application of such payments and
proceeds and acknowledges and agrees that the Lender shall have the continuing
and exclusive right to apply and reapply any and all such payments and proceeds
in the Lender's sole discretion, notwithstanding any entry to the contrary upon
any of its books and records.
10. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any of the
Secured Obligations remains outstanding.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the Secured Obligations is rescinded or must otherwise be
restored or returned by the Lender as a preference, fraudulent conveyance or
otherwise under any bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event payment of all or any
part of the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including, without limitation, attorneys'
fees, the allocated cost of internal counsel and disbursements) incurred by the
Lender in defending and entering such reinstatement shall be deemed to be
included as a part of the Secured Obligations.
13
11. Amendments and Waivers. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except with the consent of the Grantor and the Collateral Agent.
12. Successors in Interest.
(a) This Security Agreement shall create a continuing security
interest in the Collateral and shall be binding upon the Grantor, its
successors and assigns, and shall inure, together with the rights and remedies
of the Lender hereunder, to the benefit of the Lender and its successors and
permitted assigns; provided however, that the Grantor may not assign its rights
or delegate its duties hereunder except as consented to by the Collateral Agent.
(b) The Grantor acknowledges and consents to the collateral
assignment by the Lender of its rights hereunder to the Collateral Agent.
13. Notices. All notices and other communications required or
permitted to be given hereunder shall be given as follows:
If to the Mortgagor:
Lovelace Health Systems, Inc.
One Burton Hills Boulevard, Suite 250
Nashville, Tennessee 37215
Attention: Page Barnes
Telephone: 615-296-3316
Facsimile: 615-296-6316
If to the Mortgagee:
Ardent Health Services, Inc.
One Burton Hills Boulevard, Suite 250
Nashville, Tennessee 37215
Attention: Page Barnes
Telephone: 615-296-3316
Facsimile: 615-296-6316
14. Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
15. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning
or construction of any provision of this Security Agreement.
16. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
14
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY
OF THIS SECURITY AGREEMENT, THE GRANTOR AND THE LENDER CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
THE GRANTOR AND THE LENDER IRREVOCABLY WAIVES TO THE EXTENT PERMITTED BY
APPLICABLE LAW ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT
RELATED THERETO. THE GRANTOR AND THE LENDER WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
17. Waiver of Right to Trial by Jury.
EACH PARTY TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS SECURITY AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS SECURITY
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATURES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
18. Severability. If any provision of this Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
19. Entirety. This Security Agreement, the Promissory Note and the
other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters
or correspondence relating to the Promissory Note, any other documents relating
to the Secured Obligations, or the transactions contemplated herein and therein.
20. Survival. All representations and warranties of the Grantor
hereunder shall survive the execution and delivery of this Security Agreement,
the Promissory Note and the other documents relating to the Secured
Obligations, the delivery of the Promissory Note and the extension of credit
thereunder or in connection therewith.
21. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities
15
owned by the Grantor), or by a guarantee, endorsement or property of any other
Person, then the Lender shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Lender shall have the right in its sole discretion, to determine which
rights, security, liens, security interests or remedies the Lender shall at any
time pursue, relinquish, subordinate, modify or take with respect thereto,
without in any way modifying or affecting any of them or the Secured Obligations
or any of the rights of the Lender under this Security Agreement, under the
Promissory Note or under any other document relating to the Secured Obligations.
[Signature Pages Follow]
16
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
GRANTOR: LOVELACE HEALTH SYSTEMS, INC.,
a New Mexico corporation
By: /s/ Stephen C. Petrovich
-----------------------------------
Name: Stephen C. Petrovich
Title: Secretary
LENDER: ARDENT HEALTH SERVICES, INC.,
a Delaware corporation
By: /s/ William P. Barnes
-----------------------------------
Name: William P. Barnes
Title: Senior Vice President/Treasurer
17
SCHEDULE 2(d)
COMMERCIAL TORT CLAIMS
None.
SCHEDULE 4(a)
LOCATION OF CHIEF EXECUTIVE
OFFICE LOCATIONS OF COLLATERAL
Lovelace Health Systems
5400 Gibson Blvd. SE
Albuquerque, NM 87108
(505) 262-7000 or (800) 877-7526
(505) 262-7428 (fax)
SCHEDULE 4(b)
CHANGE OF NAME; STATE OF FORMATION
AND CORPORATE STRUCTURE; TRADENAMES
Lovelace Health Systems, Inc., a New Mexico corporation ("Lovelace"),
was party to the Lovelace/Sandia Reorganization, pursuant to which AHS
Albuquerque Regional Medical Center, LLC, AHS Northeast Heights Hospital, LLC,
AHS Albuquerque Rehabilitation Hospital, LLC, AHS West Mesa Hospital, LLC, and
AHS Albuquerque Physician Group, LLC, all New Mexico limited liability
corporations, were merged with and into Lovelace, and pursuant to which Lovelace
acquired certain assets from Mesilla Valley Hospital, Inc., a New Mexico
corporation.
Lovelace is the surviving corporation in connection with the
Lovelace/Sandia Reorganization.
SCHEDULE 4(g)
INTELLECTUAL PROPERTY RIGHTS
None.