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Exhibit 10.20
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement"), dated as of May 1,
1993, is made and entered into by and among SOCIETE GENERALE, a banking
corporation organized under the laws of France, acting through its New York
Branch (the "Bank"); RICHLAND PLACE, INC., a nonprofit corporation organized
and existing under the laws of the State of Tennessee (the "Company"); and
NATIONAL HEALTHCORP L.P., a Delaware Limited Partnership ("NHC").
R E C I T A L S
The Company has requested the Health and Educational Facilities Board
of the Metropolitan Government of Nashville and Davidson County, Tennessee (the
"Issuer") to issue, pursuant to the Trust Indenture (the "Trust Indenture")
dated as of May 1, 1993 between the Issuer and First American National Bank, as
trustee (the "Trustee"), its Multi-Modal Interchangeable Rate Health
Facility Revenue Bonds (Richland Place, Inc. Project) Series 1993, in the
aggregate principal amount of $33,300,000 (the "Bonds") for the purpose of
lending the proceeds thereof to the Company pursuant to a Loan Agreement (the
"Loan Agreement"), dated as of May 1, 1993, between the Company and the Issuer.
In order to provide credit and liquidity support for the Bonds, the
Company has requested that the Bank issue an irrevocable letter of credit in
favor of the Trustee in the amount of $33,747,042 (the "Letter of Credit") and,
in connection therewith, the Company and the Bank have entered into a
Reimbursement and Credit Agreement (the "Reimbursement Agreement") dated as of
May 1, 1993. As a condition to the issuance of the Letter of Credit, the Bank
has requested that the Company and NHC enter into this Agreement.
In consideration of the premises, and in order to induce the Bank to
issue the Letter of Credit, the parties hereto contract and agree as follows:
AGREEMENT
Section 1. Definitions and Interpretation.
1.1 Definitions. As used herein, the following terms shall have the
respective meanings set forth or referred to below:
"Accrued Fees" shall have the meaning set forth in Exhibit A hereto.
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"Agreement" means this Subordination Agreement.
"Agreement to Guaranty" means that certain Agreement to Guaranty dated
as of May 1, 1993 between the Company and NHC.
"Bank" is defined in the introduction to this Agreement.
"Bankruptcy Code" means 11 U.S.C. Section 101 et seq., as from time to
time hereafter amended, and any successor or similar statute.
"Bonds" is defined in the recitals of this Agreement.
"Company" is defined in the introduction to this Agreement.
"Financing Documents" means the Reimbursement Agreement, the Trust
Indenture, the Loan Agreement, the Mortgage, the Security Agreement, the Pledge
Agreement and each of the other documents, instruments and agreements referred
to as Financing Documents in the Reimbursement Agreement.
"Facility" means the Site and all improvements, fixtures and personal
property now or hereafter located thereon which comprises the campus and
facilities of a continuing care retirement center owned and operated by the
Company and known as Richland Place. The Facility is located on a +/- 7.40-acre
site in Nashville, Tennessee, and consists of Residential Units, Assisted
Living Units, a Skilled Nursing Facility and dining and communal facilities.
"Guaranty Fee" shall have the meaning set forth in the Agreement to
Guaranty.
"Issuer" is defined in the recitals of this Agreement.
"Letter of Credit" is defined in the recitals of this Agreement.
"Loan Agreement" is defined in the recitals of this Agreement.
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"Management Agreement" means that certain Management Agreement dated
as of February 1, 1989, between the Company and NHC, as amended.
"Management Fee" shall have the meaning set forth in the Management
Agreement.
"NHC" is defined in the introduction to this Agreement.
"Notice of Payment of Fees" means a certificate delivered by the
Company to the Bank substantially in the form of Exhibit A hereto.
"Participant" means the Bank or any bank or financial institution to
which the Bank may participate a portion of the Bank's credit exposure under
the Letter of Credit.
"Permitted Fee Payments" shall have the meaning set forth in Exhibit A
hereto.
"Person" means and includes any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Reimbursement Agreement" is defined in the recitals of this
Agreement.
"Senior Indebtedness" means and includes all loans, advances, debts,
liabilities, obligations, contingent obligations, covenants and duties owing by
the Company to the Bank or any other Participant, of any kind or nature,
present or future arising under the Reimbursement Agreement or under any other
Financing Document. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and any other sums chargeable
to the Company by the Bank under the Reimbursement Agreement or any other
Financing Document.
"Subordinated Indebtedness" means and includes Accrued Fees and all
other loans, advances, debts, liabilities, obligations, contingent obligations,
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covenants and duties owing by the Company to NHC, of any kind or
nature, present or future (whether or not arising in connection with the
Facility) except for the Company's obligations to NHC for any expenses
related to the direct labor costs incurred by any NHC employee whose sole
job is to provide services at the Facility, including salaries and wages,
any taxes related to that payroll expense, any direct expenses related to
the employee such as insurance benefits and benefit days relating to
vacation, holiday or sick leave, retirement plan, and any other expense
incurred by NHC which is directly related to the employee's compensation,
reimbursement of expense for travel, continuing education, and a pro rata
allocation of the cost of administration of the employee's benefit package.
"Trust Indenture" is defined in the recitals of this Agreement.
"Trustee" is defined in the recitals of this Agreement.
1.2 Interpretations. The section headings of this Agreement are included
herein for convenience of reference purposes only and shall not constitute a
part of this Agreement or affect its interpretation in any respect. Except
where the context otherwise requires, words imparting the singular number shall
include the plural number and vice versa.
1.3 References etc. Any reference in this Agreement to a document or
instrument shall mean such document or instrument and all exhibits thereto as
amended or supplemented from time to time. Any reference in this Agreement to
any Person as a party to any document or instrument shall include its
successors and assigns to such status and in the case of the Company shall
include its subsidiaries, if any, which are permitted or required under
Generally Accepted Accounting Principles to be consolidated with the Company in
its financial statements.
1.4 Incorporation of Certain Definitions by Reference. Each capitalized
term used herein and not otherwise defined herein shall have the meaning
provided therefor in the Reimbursement Agreement.
Section 2. Management Fee and Guaranty Fee.
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2.1 Permitted Management Fee Payments and Permitted Guaranty Fee
Payments.
Within 30 days after the end of each month in which a
Management Fee becomes due and payable pursuant to the Management
Agreement or a Guaranty Fee becomes due and payable pursuant to the
Agreement to Guaranty, the Company shall prepare and deliver to the
Bank a Notice of Payment of Fees, certifying as to the Permitted Fee
Payments, if any, and the Accrued Fees, if any.
For any month in which a Management Fee or a Guaranty Fee
becomes due and payable, the Company may only make payment to NHC of
an amount equal to Permitted Fee Payments, if any, so long as no event
has occurred and is continuing that, with the passage of time or the
giving of notice, or both, would constitute an Event of Default, as
defined in the Reimbursement Agreement.
2.2 Accrued Fees to be Subordinated Indebtedness.
Any Accrued Fees for any month shall automatically become
Subordinated Indebtedness, further payment of which and the rights of
holders of which shall be governed by all other provisions of this
Agreement.
Section 3. Subordination.
3.1 Subordinated Indebtedness Subordinated to Senior Indebtedness.
Each of the Company and NHC, for itself and its successors and assigns,
covenants and agrees, and each future holder of any Subordinated Indebtedness,
by its acceptance thereof, shall be deemed to have agreed, that the payment of
the Subordinated Indebtedness shall be subordinate and subject in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
payment in full of all Senior Indebtedness, and that the Bank, as the holder of
Senior Indebtedness, whether now outstanding or hereafter created, incurred,
assumed or guaranteed, shall be deemed to have acquired Senior Indebtedness in
reliance upon the provisions contained in this Agreement.
3.2 Subordinated Indebtedness Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation, Reorganization Etc. Upon any
payment or distribution of the assets of the Company of any kind or character,
whether in cash, property or securities (including any collateral, whether
proceeds thereof or in kind, at any time securing the Subordinated
Indebtedness) to creditors upon any dissolution, winding-
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up, total or partial liquidation, reorganization, composition, arrangement,
adjustment or readjustment of the Company or its securities (whether voluntary
or involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or upon an assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of the Company), then in
such event:
(1) the Bank shall be entitled to receive payment in full in
cash or cash equivalents (or to have such payment duly provided for in
a manner satisfactory to the Bank) of all amounts due or to become due
on or in respect of all Senior Indebtedness, before any payment in
cash or cash equivalents is made on account of or applied on the
Subordinated Indebtedness;
(2) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities the payment of which is subordinate, at least to the extent
provided in this Section 3 with respect to the Subordinated
Indebtedness, to the payment of all Senior Indebtedness of the Company
at the time outstanding and to the payment of all securities issued to
the Bank in exchange therefor), to which the holders of the
Subordinated Indebtedness would be entitled except for the provisions
of this Section 3, shall be paid or delivered by any debtor,
custodian, liquidating trustee, agent or other Person making such
payment or distribution, directly to the Bank, or its representative
for application to the payment of all such Senior Indebtedness
remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full after giving effect to any concurrent payments or
distribution, or provision therefor, to the Bank; and
(3) in the event that, notwithstanding the foregoing provisions
of this Section 3.2, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities (other than securities the payment of which is subordinate,
at least to the extent provided in this Section 3 with respect to the
Subordinated Indebtedness, to the payment of all Senior Indebtedness
of the Company at the time outstanding and to the payment of all
securities issued to the Bank in exchange therefor), shall be
received by any holder of Subordinated Indebtedness before all such
Senior Indebtedness is paid in full, such payment or distribution
shall be held in trust for the benefit of, and shall be immediately
paid or delivered by such holder to the Bank or its representative for
application to the payment of all such Senior Indebtedness remaining
unpaid to the
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extent necessary to pay all such Senior Indebtedness in full after giving
effect to any concurrent payment or distribution, or provision therefor, to
the Bank.
3.3 No Payments With Respect to Subordinated Indebtedness in Certain
Circumstances.
(a) No payment (of either principal or accrued interest) on account of
the Subordinated Indebtedness or any judgment with respect thereto shall be
made by or on behalf of the Company so long as the Letter of Credit remains
outstanding or any Senior Indebtedness remains unpaid.
(b) Following an acceleration of the maturity of any Senior
Indebtedness and as long as such acceleration shall continue unrescinded,
such Senior Indebtedness shall first be paid in full, or provision for such
payment shall be made in a manner satisfactory to the Bank, before any
payment is made on account of or applied on the Subordinated Indebtedness.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 3.3, any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, shall
be received by any holder of Subordinated Indebtedness contrary to the
foregoing provisions of this Section 3.3, such payment or distribution
shall be held in trust for the benefit of, and shall be immediately paid or
delivered by such holder to the Bank or its representative for application
to the payment or prepayment of all such Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness in full
after giving effect to any concurrent payment or distribution or provisions
therefor to the Bank.
3.4 Holders of Subordinated Indebtedness to be Subrogated to Rights of the
Bank. Subject to the payment in full of all Senior Indebtedness, the rights of
the holders of Subordinated Indebtedness shall be subrogated to the rights of
the Bank to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until the Subordinated Indebtedness shall
be paid in full, and for purposes of such subrogation, no payment or
distribution to the Bank of assets, whether in cash, property or securities,
distributable to the Bank under the provisions hereof to which the holders of
the Subordinated Indebtedness would be entitled except for the provisions of
this Section 3, and no payment pursuant to the provisions of this Section 3 to
the Bank by the holders of the Subordinated Indebtedness shall, as between the
Company, its creditors
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(other than the Bank) and the holders of the Subordinated Indebtedness, be
deemed to be a payment by the Company to or on account of such Senior
Indebtedness, it being understood that the provisions of this Section 3 are, and
are intended, solely for the purpose of defining the relative rights of the
holders of the Subordinated Indebtedness, on the one hand, and the Bank, on the
other hand.
3.5 Obligations of the Company Unconditional. Nothing contained in this
Section 3 or elsewhere in this Agreement is intended to or shall impair, as
between the Company and its creditors other than the Bank, the obligations of
the Company to the holders of the Subordinated Indebtedness to pay the
Subordinated Indebtedness as and when it shall become due and payable in
accordance with its terms, nor is intended to or shall affect the relative
rights of the holders of the Subordinated Indebtedness and creditors of the
Company other than the Bank, nor shall anything herein or therein prevent any
holder of Subordinated Indebtedness from exercising all remedies otherwise
permitted by applicable law, subject to the rights, if any, under this Section 3
of the Bank in respect to assets, whether in cash, property or securities, of
the Company received upon the exercise of any such remedy.
3.6 Legend. The Company covenants to cause each note now or hereafter
issued to evidence any portion of the Subordinated Indebtedness to have affixed
upon it a legend which reads substantially as follows:
"This instrument is subject to the Subordination
Agreement dated as of May 1, 1993, among Societe Generale,
New York Branch, Richland Place, Inc., and National
HealthCorp L.P., which, among other things, contains
provisions subordinating the obligations of the maker hereof
to the payee hereof to the maker's obligations to Societe
Generale, New York Branch, to which provisions the holder
of this instrument, by acceptance hereof, agrees."
Section 4. Representations Warranties and Covenants.
4.1. Incorporation of Representations and Warranties by Reference. NHC
hereby makes to the Bank the same representations and warranties as are set
forth in the Guaranty Agreement between NHC and the Bank dated as of May 1,
1993, which representations and warranties, as well as related defined terms
contained therein, are
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hereby incorporated by reference with the same effect as if each and every such
representation and warranty and defined term were set forth herein in its
entirety.
4.2. Authorization. NHC has the power and has taken all necessary action to
execute, deliver and perform this Agreement in accordance with its terms, and
the execution, delivery and performance of this Agreement are not in
contravention of any provision of law or of any agreement or indenture by which
NHC is bound or of the Amended and Restated Agreement of Limited Partnership of
NHC, and do not require the consent or approval of any Governmental Authority or
other Person which has not yet been obtained and a copy thereof furnished to the
Bank.
4.3. Validity and Enforceability. This Agreement constitutes a legal, valid
and binding obligation of NHC, enforceable against NHC in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, equitable principles of general application, or other similar
laws affecting creditors' rights generally, provided, however, that the
existence of such limitations do not affect the validity of this Agreement.
4.4. Approvals and Consents. All filings with, or approvals or consents of,
Governmental Authorities required under the laws of the State of Tennessee or
the United States to be made or obtained by NHC for the valid authorization,
execution, delivery and performance by NHC of this Agreement have been duly made
or obtained.
4.5. No Breach: No Defaults. Neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions of thereof will conflict
with or result in a breach of, or require any consent under, the Amended and
Restated Agreement of Limited Partnership of NHC, or any law or regulation
applicable to NHC, or any order, writ, injunction or decree of any court or
governmental authority or agency applicable to NHC, or any agreement or
instrument to which NHC is a party or by which it is bound or to which it is
subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
property of NHC pursuant to the terms of any such agreement or instrument.
4.6. Reliance by the Bank. All representations and warranties made herein,
or deemed made herein, to the Bank are made with the understanding that the Bank
is relying upon the accuracy of such representations and warranties.
Notwithstanding that the Bank may conduct its own investigation as to some or
all of the matters covered by the representations and warranties in this
Agreement, the Bank is entitled to rely on all
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representations and warranties as a material inducement to the Bank's extension
of the credit evidenced by the Letter of Credit and the Term Loan Note.
Section 5. Miscellaneous.
5.1 Notices. All notices hereunder shall be in writing and shall be
sufficiently given if personally delivered or mailed by first class registered
or certified mail, return receipt requested, postage prepaid, and addressed:
(a) If to NHC:
National HealthCorp L.P.
City Center
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Xx.
Senior Vice President and General Counsel;
(b) If to the Company, to it at its address of the Company originally
specified in the Reimbursement Agreement;
(c) If to the Bank, to it at its address originally specified in the
Reimbursement Agreement;
(d) If to the Trustee, to it at its address originally specified in the
Trust Indenture;
or to such other address or addresses as the party to whom such notice is
directed may have designated by like notice in writing to the other parties
hereto. A notice shall be deemed to have been given when personally delivered
or, if mailed, on the earlier of (i) three (3) days after the date on which it
is deposited in the mails, or (ii) the date on which it is received.
5.2 Successors; Continuing Effect; etc. This Agreement is being entered
into for the benefit of, and shall be binding upon the parties hereto, and their
respective successors and assigns. This Agreement shall be a continuing
agreement and shall be irrevocable and shall remain in full force and effect as
long as there is both Senior and
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Subordinated Indebtedness outstanding, but shall terminate upon the payment in
full of all outstanding Senior Indebtedness.
5.3 No Disposition of Subordinated Indebtedness. No holder of Subordinated
Indebtedness will sell, assign, pledge, encumber or otherwise dispose of any of
the Subordinated Indebtedness unless such sale, assignment, pledge, encumbrance
or disposition is made expressly subject to this Agreement.
5.4 Amendments. etc. This Agreement may be amended, and the terms hereof
may be waived, only with the written consent of the Bank, the Company and NHC.
5.5 Applicable Law. This Agreement, which may be executed in any number of
counterparts, shall be governed by and construed in accordance with the laws of
the State of New York.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BANK:
SOCIETE GENERALE, New York Branch
By: /s/
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Name: XXXXXX X.XXXX
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Title: VP
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COMPANY:
RICHLAND PLACE, INC.
By: /s/
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Name: Xxxx X. Xxxx
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Title: Chmn.
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NHC:
NATIONAL HEALTHCORP L.P.
By /s/
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Name: Xxxxxxx X. XxXxxxx Xx.
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Title: Sr. VP
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