[Governing rights between
Senior Lender and Junior
Lenders]
FORM OF
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "Agreement") is made and
entered into as of January _____, 1998, among (i) Genesis Health Ventures, Inc.,
a Pennsylvania corporation ("Genesis"), in its capacity as a senior lender
(together with its successors and assigns, the "Senior Lender"), (ii) ET Capital
Corp., a Delaware corporation ("ET Capital"), (iii) Genesis, in its capacity as
a junior lender (together with ET Capital and their successors and assigns, the
"Junior Lenders"), (iv) Genesis, in its capacity as agent for the Junior Lenders
(the "Junior Agent"), (v) Genesis, in its capacity as collateral agent for the
Senior Lender and the Junior Lenders (the "Master Collateral Agent") and (vi)
Age Institute of Florida, Inc., a Florida non-profit corporation (the
"Borrower").
WHEREAS, Genesis, as Senior Lender, and the Borrower entered
into that certain Acquisition Loan and Security Agreement, dated as of August
31, 1996, as amended (the "Acquisition Loan Agreement"), pursuant to which the
Senior Lender agreed to make a loan to the Borrower in the original principal
amount of $45,000,000 (the "Acquisition Loan") and the Borrower granted the
Senior Lender a first priority security interest in the Facilities Collateral
(as hereinafter defined) and a second priority security interest in the Accounts
Receivable Collateral (as hereinafter defined) to secure its obligations in
connection with the Acquisition Loan;
WHEREAS, the Acquisition Loan was evidenced by a Promissory
Note dated August 31, 1996 by Borrower payable to the order of the Senior Lender
in the principal amount of $45,000,000;
WHEREAS, Genesis, as Junior Lender, and the Borrower also
entered into that certain Working Capital Loan and Security Agreement, dated as
of August 31, 1996, as amended (the "Working Capital Loan Agreement"), pursuant
to which Genesis agreed to make loans to the Borrower in the aggregate principal
amount of $10,000,000 (the "Working Capital Loan") and the Borrower granted
Genesis a first priority security interest in the Accounts Receivable Collateral
to secure its obligations in connection with the Working Capital Loan;
WHEREAS, the Working Capital Loan was evidenced by a
Promissory Note, dated August 31, 1996, made by Borrower payable to the order of
Genesis in the principal amount of $10,000,000 (the "Working Capital Note");
WHEREAS, simultaneously with the execution and delivery of the
Acquisition Loan Agreement and the Working Capital Loan Agreement, the Borrower
and Genesis also entered into a separate Security Agreement, dated as of August
31, 1996, as amended (the "Security Agreement"), whereby the Borrower granted
Genesis a security interest in all of its accounts, inventory, equipment and
general intangibles to secure the obligations of the Borrower under both the
Acquisition Loan and the Working Capital Loan (collectively, the "Working
Capital Loan Documents");
WHEREAS, the Borrower also entered into that certain Mortgage,
Assignment of Rents and Security Agreement, dated as of August 31, 1996, as
amended (the "Senior Mortgage"), whereby the Borrower granted the Senior Lender
a mortgage and security interest in the Facilities (as hereinafter defined) and
in certain other property to secure the obligations of the Borrower in
connection with the Acquisition Loan;
WHEREAS, pursuant to an Assignment and Assumption Agreement,
dated as of the date hereof (the "Assignment"), among the Junior Lenders, the
Junior Agent and the Borrower, ET Capital agreed to purchase, and Genesis agreed
to sell, an interest in the Working Capital Note in the amount of $7,500,000,
and Genesis was appointed as agent for the Junior Lenders;
WHEREAS, in connection with the Assignment, the Borrower is
amending and restating the Working Capital Note so that it is evidenced by (i)
an Amended and Restated Promissory Note payable to the order of Genesis in the
principal amount of $2,500,000 (the "$2.5 Million Note") and (ii) an Amended and
Restated Promissory Note payable to the order of ET Capital in the principal
amount of $7,500,000 (the "$7.5 Million Note"), each of which continues to be
secured as set forth in the Working Capital Loan Documents and in the
Assignment;
WHEREAS, the Borrower and the Junior Lenders have also entered
into an Amendment to Working Capital Loan and Security Agreement, dated as of
the date hereof, pursuant to which the Junior Lenders have agreed to extend the
maturity date of the Working Capital Loan;
WHEREAS, in consideration thereof and for other good and
valuable consideration, the Borrower has entered into that certain Second
Mortgage, Assignment of Rents and Security Agreement, dated as of the date
hereof (the "Junior Mortgage"), whereby the Borrower granted the Junior Agent
for the benefit of the Junior Lenders a second priority mortgage and security
interest in the Facilities and certain other property to secure the obligations
of the Borrower in connection with the Working Capital Loan;
WHEREAS, on the date hereof, the Borrower and the Senior
Lender entered into an Amendment to Acquisition Loan and Security Agreement,
which, among other things, reduced the principal amount of the Acquisition Loan
to $40,000,000, and Borrower executed and delivered an Amended and Restated
Promissory Note, dated the date hereof, payable to the order of the Senior
Lender in the principal amount of $40,000,000 (the "Acquisition Note");
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WHEREAS, Genesis, the Borrower and the Master Collateral Agent
have entered into an Assignment and Amendment to the Security Agreement, dated
as of the date hereof (the "Amendment to Security Agreement") pursuant to which
Genesis has assigned all of its rights and obligations as a secured party under
the Security Agreement to the Master Collateral Agent for the benefit of the
Senior Lender and the Junior Lenders, subject to the terms and provisions of
this Agreement; and
WHEREAS, the parties are entering into this Agreement in order
to define the existing relative rights and security interest priorities between
the Senior Lender and the Junior Lenders and to appoint Genesis as the Master
Collateral Agent to act on behalf of the Senior Lender, the Junior Lenders, and
the Junior Agent.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the
following meanings:
"Accounts Receivable Collateral" means all of Borrower's Gross
Patients Accounts Receivable and other personal property utilized in the
Facilities or in connection with the operation thereof, tangible or intangible,
whether now or hereafter acquired, and all proceeds and products thereof,
together with all documents, contracts, guarantees, books and records,
processing cards, tapes, tabulating runs, programs and similar material related
thereto.
"Acquisition Loan Documents" means the Acquisition Loan
Agreement, the Senior Note, the Security Agreement, the Senior Mortgage and all
other agreements, instruments and documents executed and/or delivered in
connection therewith, as such documents may be amended, renewed, modified,
extended, assigned, refinanced or replaced from time to time.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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"Collateral" means, collectively, the Accounts Receivable
Collateral, the Facilities Collateral, the "Collateral" as defined in the
Security Agreement, which includes all of the Borrower's existing or hereafter
acquired Accounts, Inventory, Equipment and General Intangibles (all as defined
in the Security Agreement) and proceeds thereof and all of the "Property" as
defined in the Senior Mortgage and the Junior Mortgage, and any and all proceeds
of the foregoing.
"Facilities" means the eleven health care facilities located
in the Counties of Pinellas, Polk, Volusia, Bay and Okaloosa in the State of
Florida owned by Borrower and as described in the Acquisition Loan Agreement.
"Facilities Collateral" means the Facilities and all proceeds
and products thereof, together with all documents, contracts, guarantees, books
and records, processing cards, tapes, tabulating runs, programs and similar
material related thereto.
"Gross Patients Accounts Receivable" means all accounts
receivable of Borrower, including all rights of Borrower, if any, arising from
the payment for goods sold or leased or for services rendered with respect to
the Facilities, including, without limitation, (i) all accounts arising from the
operation of the Facilities and (ii) all rights to payment from the Medicare
program, Medicaid program or similar state or federal programs, boards, bureaus
or agencies and rights to payments from patients or private insurers and others
arising from the operation of their businesses, including rights to payment from
Reimbursement Contracts. Gross Patients Accounts Receivable shall include the
proceeds of the foregoing (whether cash or noncash, movable or immovable,
tangible or intangible) received from the sale, exchange, transfer, collection
or other disposition or substitution thereof but, shall not include, (i) gifts,
grants, bequests, donations and/or contributions made to Borrower and (ii) with
respect to reimbursements from Medicare or Medicaid or like programs, not those
accounts receivable in excess of allowable reimbursement amounts.
"Person" means any individual, corporation, association,
partnership, limited liability company, joint venture, cooperative, foundation,
trust or other organization, any individual, and any government, any political
subdivision thereof, and any agency of any such government or political
subdivision.
"Senior Indebtedness" means all present and future
obligations, liabilities and indebtedness of the Borrower of every type and
nature, currently or hereafter due, incurred or created, arising under or in
connection with the Acquisition Loan Documents, including, without limitation,
all principal and interest provided for in the Acquisition Loan Documents
(including, without limitation, interest arising prior to and after the
commencement of any bankruptcy or similar proceeding in which the Borrower is
the debtor, whether or not such interest is an allowed claim in such proceeding)
and all fees, premiums, charges, expenses, indemnities and other amounts payable
under or incidental to the Acquisition Loan Documents, including as such
obligations, liabilities and indebtedness may be amended, renewed, modified,
extended, assigned, refinanced or replaced from time to time. Notwithstanding
the foregoing, Senior Indebtedness held (whether as a result of subrogation or
otherwise) by the Borrower or any Affiliate of the Borrower (whether as a result
of subrogation or otherwise) or by any person who has acquired Senior
Indebtedness, directly or indirectly, which has been held by the Borrower or any
Affiliate of the Borrower, shall not constitute "Senior Indebtedness" under this
Agreement (other than under this sentence) until such time as all Senior
Indebtedness held by Persons other than the Borrower or Affiliates of the
Borrower has been indefeasibly paid in full in cash or cash equivalents, and no
Person acquiring Senior Indebtedness from the Borrower or an Affiliate of the
Borrower shall acquire any rights hereunder by virtue of holding such Senior
Indebtedness.
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"Senior Note" means the Acquisition Note and any amendments,
renewals, replacements, extensions, modifications, refinancings or assignments
thereof.
"Senior Noteholder" means the Senior Lender, in its capacity
as holder of the Senior Note and the Senior Indebtedness, and any other Person
acquiring all or any part of the Senior Note or the Senior Indebtedness;
provided, however, that neither the Borrower nor any Affiliate of the Borrower
or their successors or assigns shall have any rights otherwise available to the
Senior Noteholder under this Agreement in the event that any such party acquires
all or any part of the Senior Note or the Senior Indebtedness.
"Subordinated Indebtedness" means all present and future
obligations, liabilities and indebtedness of the Borrower of every type and
nature, currently or hereafter due, incurred or created, arising under or in
connection with the Working Capital Loan Documents, including, without
limitation, all principal and interest provided for in the Working Capital Loan
Documents and all fees, premiums, charges, expenses, indemnities and other
amounts arising under or incidental to the Working Capital Loan Documents, as
such obligations, liabilities and indebtedness may be amended, renewed,
modified, extended, assigned, refinanced or replaced from time to time, subject
to the provisions of this Agreement.
"Subordinated Noteholders" means the Junior Lenders, in their
capacity as holders of the Subordinated Notes and the Subordinated Indebtedness,
and any other Person acquiring all or any part of the Subordinated Notes or the
Subordinated Indebtedness; provided, however, that neither the Borrower nor any
Affiliate of the Borrower or their successors or assigns shall have any rights
otherwise available to the Subordinated Noteholders under this Agreement in the
event that any such party acquires all or any part of the Subordinated Notes or
the Subordinated Indebtedness.
"Subordinated Notes" means, collectively, the $2.5 Million
Note and the $7.5 Million Note, and any amendments, renewals, replacements,
extensions, modifications or assignments thereof.
"Working Capital Loan Documents" means the Working Capital
Loan Agreement, the Subordinated Notes, the Security Agreement, the Junior
Mortgage and all other agreements, instruments and documents executed in
connection therewith, as such documents may be amended, renewed, modified,
extended, assigned, refinanced or replaced from time to time.
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2. CONSENTS OF HOLDERS.
Notwithstanding any of the terms or provisions of the Working
Capital Loan Documents, each Subordinated Noteholder, by its acceptance of a
Subordinated Note, does hereby ratify and acknowledge the existence of the
Senior Indebtedness and the liens securing the Senior Indebtedness and the
obligations of the Borrower in connection with the Acquisition Loan Documents.
Each Subordinated Noteholder further agrees that (i) such Subordinated
Noteholder will not challenge the liens and security interests securing payment
of the Senior Indebtedness, (ii) as between the Senior Noteholders and such
Subordinated Noteholder, the terms of this Agreement shall govern, even if part
or all of the Senior Indebtedness or any liens or security interest securing
payment thereof are avoided, disallowed, set aside or otherwise invalidated, and
(iii) to the extent that any of the terms and provisions of this Agreement may
be inconsistent with any of the terms or provisions of the Acquisition Loan
Documents or the Working Capital Loan Documents, such terms and provisions shall
be deemed to be superseded, and the terms of this Agreement shall govern.
3. PRIORITY OF LIENS.
As long as all or any portion of the Senior Indebtedness
remains outstanding, unpaid or unsatisfied, each of the Subordinated Noteholders
agrees that, notwithstanding any provision to the contrary in any of the
Acquisition Loan Documents or the Working Capital Loan Documents and
irrespective of the time, order or method of perfection, creation or attachment
of any security interests or liens in the Collateral, (i) the interests and
liens of the Senior Noteholders in all of the Collateral are, and shall be
deemed to be, prior and senior to any interests or liens the Subordinated
Noteholders or the Junior Agent may have in the Collateral, (ii) the interests
and liens of the Subordinated Noteholders and the Junior Agent in the Collateral
are, and shall be deemed to be, junior, subject and subordinate in all respects
to the interests and liens of the Senior Noteholders in the Noteholders and
(iii) the Subordinated Noteholders shall refrain from taking any action to
foreclose upon, acquire title to (by bidding at foreclosure or otherwise), take
possession of, liquidate or proceed against any of the Collateral.
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4. SUBORDINATION OF PAYMENT RIGHTS.
Each of the Borrower and the Subordinated Noteholders
covenants and agrees (and each such Subordinated Noteholder by its acceptance of
a Subordinated Note confirms) that all rights of each present and future
Subordinated Noteholder to payments or distributions of any kind or character
under or in respect of the Subordinated Indebtedness are hereby expressly
subordinated, to the extent and in the manner set forth in this Agreement, to
the prior indefeasible payment in full in cash or cash equivalents of all Senior
Indebtedness in accordance with the terms thereof.
5. LIQUIDATION, ETC.
(a) Upon any payment or distribution of any assets of the
Borrower of any kind or character, whether in cash, property or securities
(including, without limitation, payments or distributions payable to the
Subordinated Noteholders by virtue of the terms of any indebtedness which is
subordinated in right of payment to Subordinated Indebtedness (a "Junior
Subordinated Payment")), by set-off or otherwise, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrower, as the case may be, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other similar proceedings or upon an
assignment for the benefit of creditors, or any other marshaling of its assets
and liabilities (referred to herein as a "Proceeding"), the holders of Senior
Indebtedness shall first be entitled to receive payment in full in cash or cash
equivalents, in accordance with the terms of the Senior Indebtedness, of all
amounts payable under or in respect of the Senior Indebtedness, before any
payment or distribution is made on, or in respect of, any Subordinated
Indebtedness; and, upon any such Proceeding, any distribution or payment to
which the Subordinated Noteholders would be entitled except for the provisions
hereof, shall be paid by the Borrower, or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution directly to the Master Collateral Agent for the benefit of the
Senior Noteholders to the extent necessary to pay all such Senior Indebtedness
in full, after giving effect to any concurrent payment or distribution to the
Senior Noteholders.
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(b) If, notwithstanding the foregoing, in any Proceeding any
Junior Subordinated Payment or other payment or distribution of any assets of
the Borrower, as the case may be, of any kind or character, whether in cash,
property or securities, by set-off or otherwise, shall be received by any
Subordinated Noteholder before all Senior Indebtedness is indefeasibly paid in
full in cash or cash equivalents, such payment or distribution shall be received
(whether or not such payment or distribution shall have been made in accordance
with a plan of reorganization or arrangement approved in bankruptcy or other
proceedings) in trust on behalf of the Senior Noteholders and shall be paid over
to the Master Collateral Agent on behalf of the Senior Noteholders for
application to the payment of all Senior Indebtedness remaining unpaid until
such Senior Indebtedness shall have been indefeasibly paid in full in cash or
cash equivalents, after giving effect to any concurrent payment or distribution
to the Senior Noteholders. In the event of the failure of any Subordinated
Noteholder to endorse or assign to the Master Collateral Agent any such payment
or distribution, the Master Collateral Agent is hereby irrevocably authorized to
endorse or assign the same on behalf of such holder.
(c) For purposes of this Section 5 only, the words "any
payment or distribution of any assets of the Borrower of any kind or character,
whether in cash, property or securities" shall not be deemed to include a
payment or distribution of securities of the Borrower provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction which securities are subordinate in right of payment to
all then outstanding Senior Indebtedness at least to the same extent as the
Subordinated Indebtedness is so subordinate as provided in this Agreement.
(d) Notwithstanding any statute, including, without
limitation, the United States Bankruptcy Code and any state bankruptcy law, any
rule of law or any bankruptcy procedure to the contrary, to the extent permitted
by applicable usury limitations, the right of the holders of Senior Indebtedness
to have all of the Senior Indebtedness indefeasibly paid and satisfied in full
prior to the payment of any of the Subordinated Indebtedness shall include,
without limitation, the right of Senior Noteholders to be paid in full all
interest accruing (or that would have accrued in the absence of such statute,
rule, law or procedure at any time) on such obligations prior to any payment or
distribution to the Subordinated Noteholders by or out of the assets of the
Borrower. To the extent that the Senior Noteholders would not be entitled to the
interest referenced in the preceding sentence under such statute, rule or
procedure, then the difference between the amount to which they are entitled
under this paragraph and the amount to which they otherwise would be entitled
under such statute, rule or procedure, shall be paid from amounts otherwise due
to the Subordinated Noteholders, and the total amounts to be paid to the
Subordinated Noteholders shall be reduced accordingly.
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(e) To enable the Master Collateral Agent to enforce the
rights of the Senior Noteholders hereunder in any Proceeding, the Master
Collateral Agent is hereby irrevocably authorized and empowered, in its
discretion (i) to make and present such proofs of claim against the Borrower on
account of the Subordinated Indebtedness as it may deem expedient or proper, and
(ii) to receive and collect on behalf of the Senior Noteholders any and all
dividends and other payments or distributions made thereon in whatever form the
same may be paid; and upon the request of the Master Collateral Agent, each
Subordinated Noteholder shall execute and deliver to the Master Collateral
Agent, Senior Noteholders or their authorized representatives such powers of
attorney, assignments and other documents and instruments as such holders or
representatives may request, consistent with this Agreement. Nothing contained
in this Section 5(e) or elsewhere in this Agreement shall be construed to give
the Master Collateral Agent or the Senior Noteholders any right to vote with
respect to the treatment of the Subordinated Indebtedness or any claim
thereunder, or any portion of such Subordinated Indebtedness or such claim, in
any Proceeding, whether in connection with any resolution, arrangement, plan of
reorganization, compromise, settlement, election of a trustee or otherwise.
6. DEFAULT.
(a) In the event that any Senior Payment Default (as defined
below) shall have occurred and shall be continuing, then, effective at such time
as the Borrower first receives notice or acquires actual knowledge of the
occurrence of such Senior Payment Default, no payment or distribution of any
kind, whether in cash, property or securities (including, without limitation,
any Junior Subordinated Payment), by set-off or otherwise, shall be made on, or
in respect of, any Subordinated Indebtedness or for the acquisition, retirement,
repurchase, redemption or defeasance thereof unless and until such Senior
Payment Default shall have been cured or waived in accordance with the terms of
the Senior Indebtedness or shall have ceased to exist or all amounts then due
and payable in respect of Senior Indebtedness shall have been paid in full, or
provision shall have been made for such payment in cash or cash equivalents in a
manner satisfactory to the Senior Noteholders. "Senior Payment Default" means
any default in the payment when due of any Senior Indebtedness, whether at its
stated maturity, upon acceleration or otherwise.
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(b) In the event that any Senior Nonmonetary Default (as
defined below) shall have occurred and shall be continuing, then, upon receipt
by the Borrower of written notice (a "Nonmonetary Default Notice") of such
Senior Nonmonetary Default from any Senior Noteholder or any representative of
such a holder, no Junior Subordinated Payment or other payment or distribution
of any kind, whether in cash, property or securities, by set-off or otherwise,
shall be made on, or in respect of, any Subordinated Indebtedness or for the
acquisition, retirement, repurchase, redemption or defeasance of any
Subordinated Indebtedness during the period (the "Payment Blockage Period")
commencing on the date such Nonmonetary Default Notice is given and ending on
the earlier of (i) the date on which the Senior Noteholders that issued such
Nonmonetary Default Notice provide written notice to the Borrower that such
Senior Nonmonetary Default has been cured or waived in accordance with the terms
of the Senior Indebtedness or has been rescinded or annulled or the Senior
Indebtedness to which such Senior Nonmonetary Default relates has been fully
discharged in a manner satisfactory to the Senior Noteholders (which notice
shall be provided promptly by the applicable Senior Noteholders), or (ii) the
[179th] day after the date such Nonmonetary Default Notice is given. "Senior
Nonmonetary Default" means the occurrence or existence and continuance of any
event of default, other than a Senior Payment Default, permitting one or more
Senior Noteholder to declare such Senior Indebtedness due and payable prior to
the date on which it would otherwise become due and payable. If a Senior
Nonmonetary Default identified in a Nonmonetary Default Notice is cured, such
Senior Nonmonetary Default may not be the basis for another Nonmonetary Default
Notice in the [90] days immediately following the completion of such cure.
(c) If, notwithstanding the foregoing, any Subordinated
Noteholder shall receive any payment or distribution of any assets of the
Borrower of any kind or character, whether in cash, property or securities
(including, without limitation, any Junior Subordinated Payment), by set-off or
otherwise, in violation of this Section 6, then such cash, property or
securities shall be held in trust by the recipient thereof on behalf of the
Senior Noteholders and shall be paid over to the Master Collateral Agent acting
for the benefit of the Senior Noteholders for application to the payment of all
Senior Indebtedness until all Senior Indebtedness shall have been indefeasibly
paid in full in cash or cash equivalents, after giving effect to any concurrent
payment or distribution to the Senior Noteholders. In the event of the failure
of any Subordinated Noteholders to endorse or assign to the Master Collateral
Agent any such payment or distribution, the Master Collateral Agent is hereby
irrevocably authorized to endorse or assign the same on behalf of any
Subordinated Noteholder.
(d) The provisions of this Section 6 shall not apply to any
payment or distribution by the Borrower in any Proceeding (such amounts and
distributions being subject to Section 5).
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7. PERMITTED PAYMENTS; LIMITS ON RECOURSE FOR PAYMENT OF
SUBORDINATED INDEBTEDNESS.
Until and unless a Senior Payment Default has occurred or a
Payment Blockage Period is in effect, the Borrower may make and the Subordinated
Noteholders may receive Interest Payments (as hereinafter defined) as the same
become due and payable. For purposes of this Section 7, "Interest Payments"
means the payments of interest which are due on the outstanding principal amount
of the Working Capital Loan, and shall in no event be deemed to refer to any
late charges or default interest or any other premium, fees, costs or other
payments. Until such time as all Senior Indebtedness is indefeasibly paid in
full in cash or cash equivalents, neither the Borrower nor any Affiliate of the
Borrower shall pay, and no Subordinated Noteholder shall ask, demand, claim,
take or receive from the Borrower, any Affiliate of the Borrower or any other
Person, any payment of the principal of the Subordinated Indebtedness or any
other payment of the Subordinated Indebtedness or any other premium, fee or cost
other than Interest Payments as permitted by this Section 7.
8. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Agreement are and are intended solely
for the purpose of defining the relative rights of the Subordinated Noteholders,
on the one hand, and the Senior Noteholders, on the other hand. Nothing
contained in this Agreement is intended to or shall (a) impair the obligation of
the Borrower, which is absolute and unconditional, to pay to the Subordinated
Noteholders the principal of and interest on the Subordinated Indebtedness and
all other amounts payable thereunder as and with the terms hereof and of the
Subordinated Indebtedness, (b) affect the relative rights against the Borrower
of creditors of the Borrower other than the Senior Noteholders and the
Subordinated Noteholders, or (c) increase the total obligations of the Borrower
under the Senior Indebtedness or the Subordinated Indebtedness.
9. APPOINTMENT OF MASTER COLLATERAL AGENT.
(a) Each of the Senior Noteholders, the Subordinated
Noteholders and the Junior Agent hereby irrevocably appoints and authorizes
Genesis as the Master Collateral Agent to act on behalf of such person hereunder
and under the Acquisition Loan Documents and the Working Capital Loan Documents
with respect to the Collateral and Genesis hereby accepts such appointment and
authorization. The Master Collateral Agent is hereby specifically authorized to
enter into the Amendment to Security Agreement as the secured party thereunder,
it being understood and agreed that the security interests granted under the
Security Agreement to the Master Collateral Agent are held by the Master
Collateral Agent for the benefit of the Senior Noteholders and Subordinated
Noteholders. It is further understood and agreed that, with respect to any
Collateral as to which perfection is accomplished by possession, the Master
Collateral Agent is holding such Collateral for the benefit of the Senior
Noteholders and the Subordinated Noteholders, thereby perfecting the security
interests in such Collateral on behalf of each of them. However, each of
Subordinated Noteholders and the Junior Agent also understand and agree that, so
long as any Senior Indebtedness shall not have been fully and indefeasibly paid,
the Master Collateral Agent shall accept directions only from the Senior
Noteholders with respect to any matter relating to the Collateral and shall have
no duty to the Subordinated Noteholders or the Junior Agent other than (i) the
safekeeping of Collateral or (ii) the perfection of liens on behalf of the
Subordinated Noteholder and the Junior Agent, and the Subordinated Noteholders
and the Junior Agent shall not have any rights to require the Master Collateral
Agent to take or omit to take any other action with respect to the Collateral.
Upon the indefeasible payment in full of the Senior Indebtedness, if the Master
Collateral Agent shall then be in possession of any Collateral at any time any
Subordinated Indebtedness shall be outstanding, then the Master Collateral
Agent's sole responsibility or obligation shall be, upon notice to the Junior
Agent, to turn over same to the Junior Agent or to whomever a court of competent
jurisdiction directs.
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(b) Each Senior Noteholder and each Subordinated Noteholder
agrees (which agreement shall survive the termination of this Agreement) to
indemnify the Master Collateral Agent, pro rata, according to such Senior
Noteholder's or such Subordinated Noteholder's ratable percentage of the
aggregate principal amount of the aggregate Senior Indebtedness and the
Subordinated Indebtedness, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as the Master Collateral
Agent or any of its directors, officers, employees or agents in any way relating
to or arising out of the Acquisition Loan Documents or the Working Capital Loan
Documents or any action taken or omitted by the Master Collateral Agent or any
of its directors, officers, employees or agents under the Acquisition Loan
Documents or the Working Capital Loan Documents, to the extent not reimbursed by
the Borrower; provided, however, that the Senior Noteholders and the
Subordinated Noteholders shall not be liable to the Master Collateral Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgment, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Master Collateral Agent, or any of
its directors, officers, employees or agents.
(c) Neither the Master Collateral Agent nor any of its
officers, directors, employees or agents will be liable to the Senior
Noteholders or the Subordinated Noteholders for any action taken or omitted
hereunder or in connection herewith or in connection with any document or
instrument now or hereafter executed in connection herewith unless caused by its
gross negligence or willful misconduct. The Master Collateral Agent will not be
responsible for any recitals, warranties or representations in the Acquisition
Loan Documents or the Working Capital Loan Documents. The Master Collateral
Agent may execute any of its duties by or through agents or employees and will
be entitled to advice of counsel, accountants or other professionals of its
selection concerning all matters pertaining to its duties hereunder and
thereunder. The Master Collateral Agent will be entitled to rely upon any
writing or other document, telegram or telephone conversation believed by it to
have been signed, sent or made by the proper person or persons and, in respect
of legal matters, upon the advice of counsel selected by the Master Collateral
Agent. The Master Collateral Agent shall be fully justified in failing or
refusing to take any action under the Acquisition Loan Documents or the Working
Capital Loan Documents unless it shall first receive such advice or concurrence
of all the Senior Noteholders or the Subordinated Noteholders, as it deems
appropriate, or it shall first be indemnified to its satisfaction by the Senior
Noteholders and the Subordinated Noteholders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action except for its own gross negligence or willful misconduct.
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(d) Each of the Senior Noteholders and the Subordinated
Noteholders acknowledges that the Master Collateral Agent has not made any
representation or warranty to it and that no act taken by the Master Collateral
Agent will be deemed to constitute a representation or warranty by the Master
Collateral Agent to any of the Senior Noteholders or the Subordinated
Noteholders. Each Senior Noteholder and Subordinated Noteholder further
acknowledges that it has taken and will continue to take such action and to make
such investigation as it deems necessary to inform itself of the affairs of the
Borrower and that it has made and will continue to make its own independent
investigation of the creditworthiness and the business and operations of the
Borrower. In making an advance hereunder, each Senior Noteholder and
Subordinated Noteholder represents that it has not relied and will not rely upon
any information or representations furnished or given by the Master Collateral
Agent. The Master Collateral Agent will be under no duty or responsibility to
any Senior Noteholder or Subordinated Noteholder to ascertain or to inquire into
the performance or observance by the Borrower of any of the provisions of this
Agreement or any document or instrument now or hereafter executed in connection
herewith. The Master Collateral Agent will not have any duty or responsibility
to provide any Senior Noteholder or Subordinated Noteholder with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any affiliate thereof which may come into the possession of the
Master Collateral Agent. The Senior Noteholders and Subordinated Noteholders
understand and agree that the Master Collateral Agent will not be deemed to have
knowledge of the existence, occurrence or continuance of any event of default
under any of the Acquisition Loan Documents or the Working Capital Loan
Documents, unless the officers of the Master Collateral Agent immediately
responsible for matters concerning this Agreement will have actual knowledge of
such occurrence or will have been notified in writing by any Senior Noteholder
or Subordinated Noteholder or Borrower that such person or the Borrower, as
applicable, considers that such event of default has occurred and is continuing
and specifying the nature thereof.
(e) Subject to the appointment and acceptance of a successor
Master Collateral Agent as provided below, the Master Collateral Agent may
resign at any time by notifying the Senior Noteholders, the Subordinated
Noteholders and the Borrower. Upon any such resignation, the Senior Noteholders
and the Subordinated Noteholders will have the right to appoint a successor
Master Collateral Agent. If no successor Master Collateral Agent will have been
so appointed by the Senior Noteholders and the Subordinated Noteholders and will
have accepted such appointment within thirty (30) days after the retiring Master
Collateral Agent gives notice of its resignation, then the retiring Master
Collateral Agent may, on behalf of the Senior Noteholders and Subordinated
Noteholders, appoint a successor Master Collateral Agent. Upon the acceptance of
any appointment as Master Collateral Agent hereunder by a successor, such
successor will thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Master Collateral Agent and the
retiring Master Collateral Agent will be discharged from its duties and
obligations hereunder and under the Acquisition Loan Documents and the Working
Capital Loan Documents. After any Master Collateral Agent's resignation
hereunder, the provisions of this Section 9 will continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
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10. SUPPLEMENTAL ASSIGNMENTS, POWER OF ATTORNEY.
(a) Each Subordinated Noteholder agrees to execute and deliver
to the Master Collateral Agent such assignments or other instruments as may be
reasonably requested by the Master Collateral Agent in order to enable it to
enforce their rights hereunder and to collect, to the extent entitled thereto
under this Agreement, any and all dividends or other payments or disbursements
which may be made at any time on account of all or any of the Subordinated
Indebtedness so long as any Senior Indebtedness remains unpaid.
(b) Each Subordinated Noteholder hereby irrevocably
constitutes and appoints the Master Collateral Agent, and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in its place and
stead, in its own name or otherwise, from time to time (i) to receive, endorse
or assign payments and distributions made with respect to such Subordinated
Noteholder's Subordinated Indebtedness to the extent that such payments and
distributions are required to be made or turned over to the Senior Noteholders
and (ii) to execute and deliver such documents and instruments necessary to
enable the Senior Noteholders to enforce their rights under this Agreement. Each
Subordinated Noteholder hereby ratifies any and all lawful actions taken
pursuant to the foregoing power of attorney and confirms and agrees that such
power of attorney is coupled with an interest and is irrevocable.
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11. NO OBLIGATIONS OF SENIOR NOTEHOLDERS; BENEFIT OF SUBORDINATION PROVISIONS.
(a) Each Subordinated Noteholder agrees that the Senior
Noteholder shall not be liable for any action or failure to act under or in
connection with any of the Acquisition Loan Documents, it being understood that
the decisions as to whether or not to act and the manner of proceeding under
such instruments and documents are within the sole discretion of the Senior
Noteholder and shall not be affected in any manner by the existence of the
Subordinated Indebtedness. It is further agreed that such obligations as may be
imposed under the Acquisition Loan Documents shall run exclusively to the
benefit of the Senior Noteholder and may be enforced or waived only by the
Senior Noteholder.
(b) The powers conferred on Genesis as Senior Lender and
Senior Noteholder under this Agreement are solely to protect its interests under
this Agreement and shall not impose any duty upon Genesis or any other holders
to exercise any such powers. In particular, neither Genesis nor any other Senior
Noteholder shall be required to make any demand or to make any inquiry as to the
nature of sufficiency of any payment received by it. Genesis and such other
holders shall be accountable only for amounts actually received as a result of
the exercise of such powers, and neither Genesis nor any other Senior
Noteholder, nor any of their respective officers, directors, employees, agents
or participants shall be responsible to the Borrower or any Subordinated
Noteholder, for any act or failure to act by it or them under this Agreement,
except for its or their own gross negligence or willful misconduct. Genesis and
each such other holder shall be entitled to rely upon any paper, instrument or
document which it in good faith believes to be genuine and correct and to have
been signed or sent by the proper person or persons.
12. NO PAYMENTS IN VIOLATION OF AGREEMENT.
The Borrower agrees that no payments or distributions, by
set-off or otherwise, will be made by or on behalf of the Borrower in violation
of the terms of this Agreement; and each Subordinated Noteholder agrees that it
will not receive or accept any such payment or distribution.
13. AVOIDED PAYMENTS.
Without limiting any other provision of this Agreement, Senior
Indebtedness shall not be deemed to have been paid for purposes of this
Agreement if any payment in respect thereof (i) shall have been avoided or
recovered by the payor or its trustee or other representative or successor in
accordance with the order of any court of competent jurisdiction in any
insolvency, bankruptcy, dissolution, liquidation or reorganization of the payor,
or as required upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with respect to the payor or any substantial part of
its property or otherwise, or (ii) is the subject of a pending or threatened
proceeding in which such avoidance or recovery is (or would be) sought. For
purposes of this Section 13, a payment in respect of Senior Indebtedness shall
be deemed to be the subject of a "threatened proceeding" only if the payor or a
trustee for or other authorized representative of the payor or its estate has
expressly informed the Senior Noteholders that such payment will be sought to be
avoided or recovered.
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14. NOTICE OF DEFAULT.
Each Subordinated Noteholder agrees to notify the Master
Collateral Agent and the Senior Noteholder in writing promptly upon any default
under any of the Working Capital Loan Documents and shall notify the Master
Collateral Agent and the Senior Noteholder in writing at least two (2) business
days prior to taking any action to accelerate such Subordinated Indebtedness.
15. CERTAIN POWERS OF SENIOR NOTEHOLDERS.
Each Subordinated Noteholder agrees that, without notice to or
further consent by it, (a) the liability of the Borrower in respect of the
Senior Indebtedness, the Acquisition Loan and the liens of the Senior
Noteholders may, in whole or in part, be amended, supplemented, renewed,
extended, modified, released, replaced, refinanced or refunded by the Senior
Noteholders and, as the Senior Noteholders may deem advisable, (b) any
Collateral and/or security interests in respect of the Senior Indebtedness may,
from time to time, in whole or in part, be exchanged, sold or surrendered by the
Master Collateral Agent, (c) the amount of the Senior Indebtedness may, from
time to time, be increased through further loans, or otherwise, (d) any deposit
balance or balances to the credit of the Borrower may, from time to time, in
whole or in part, be surrendered or released by the Master Collateral Agent or
the Senior Noteholders to the Borrower and (e) any of the provisions hereof may
be waived partially or entirely by the Master Collateral Agent or the Senior
Noteholders as to some Subordinated Indebtedness but not other Subordinated
Indebtedness, all without impairing or in any way affecting the subordination
contained in this Agreement; nor shall the subordination herein contained be
impaired or affected in any way by any other action, inaction or omission in
respect of the Senior Indebtedness or the liens of the Senior Noteholder.
16. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future Master Collateral Agent or
Senior Noteholder to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Borrower or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Borrower with the terms, provisions and covenants
of this Agreement, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
-16-
17. SUBROGATION TO RIGHTS OF THE SENIOR NOTEHOLDERS.
If, in any Proceeding or otherwise, the Senior Noteholder
receives distributions or payments which, but for this Agreement, would have
been made to the Subordinated Noteholders, then, subject to the payment in full
of all amounts due or to become due on or in respect of Senior Indebtedness, or
the provision for such payment in cash or cash equivalents in a manner
satisfactory to the Senior Noteholder, the Subordinated Noteholders shall be
subrogated to the rights of the Senior Noteholder to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of and any interest on the Subordinated
Indebtedness and all other amounts payable in respect of Subordinated
Indebtedness shall be paid in full. For purposes of such subrogation, no
payments or distributions to the Senior Noteholder of any cash, property or
securities to which the Subordinated Noteholders would be entitled except for
the provisions of this Agreement, and no payment over pursuant to the provisions
of this Agreement to the Senior Noteholder by the Subordinated Noteholders,
shall, as among the Borrower and their creditors (other than Senior Noteholder
and Subordinated Noteholders), be deemed to be a payment or distribution by the
Borrower to or on account of the Senior Indebtedness. At such time as the
Subordinated Noteholders become subrogated to the rights of the Senior
Noteholder to receive payments and distributions of cash, property and
securities applicable to Senior Indebtedness as set forth in this Section 17,
the Senior Noteholder shall execute and deliver to the Subordinated Noteholders
such assignments of the Acquisition Loan Documents (without recourse and without
representation or warranty of any kind, other than the ability of such holders
to execute and deliver such assignments) to the Subordinated Noteholders, as
such Subordinated Noteholders may reasonably request.
18. RELIANCE BY MASTER COLLATERAL AGENT.
Upon any payment or distribution of assets of the Borrower
referred to in this Agreement (whether such payment or distribution is made in a
Proceeding or otherwise), the Master Collateral Agent shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Subordinated Noteholders for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the Senior Noteholder and holders
of other indebtedness of the Borrower, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Agreement.
19. NO CHANGES TO SUBORDINATED INDEBTEDNESS.
None of the Subordinated Noteholders shall, without the prior
written consent of the Senior Noteholder, (a) make or agree to make any loans or
any advances of money or property to the Borrower other than the Working Capital
Loan, (b) amend, supplement, renew, extend, modify, replace or refinance in any
respect any of the Working Capital Loan Documents or any documents or
instruments creating, evidencing, securing or exchangeable for or convertible
into the Subordinated Indebtedness, (c) sell, assign or transfer all or any
portion of its interest in the Subordinated Indebtedness unless the buyer,
assignee or transferee thereof shall agree in writing to become bound by the
provisions of this Agreement and the Senior Noteholder shall have been furnished
with original counterparts of such agreements, together with opinions of counsel
or other appropriate confirmation of the validity and binding effect of such
agreements, all in form and substance reasonably satisfactory to the Senior
Noteholder, or (d) subordinate any Subordinated Indebtedness to any existing or
future indebtedness other than the Senior Indebtedness.
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20. NO OFFSET.
Each Subordinated Noteholder hereby covenants and agrees that
as long as any Senior Indebtedness remains outstanding, unpaid or unsatisfied,
if such Subordinated Noteholder at any time incurs any obligation to pay money
to the Borrower, such Subordinated Noteholder shall not set off or credit or
otherwise apply such obligation against any amount owed (or claimed to be owed)
to such Subordinated Noteholder with respect to Subordinated Indebtedness.
21. BINDING NATURE.
This Agreement shall be binding and inure to the benefit of
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
22. SEVERABILITY.
If any of the provisions or terms of this Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any of the other terms hereof, and this
Agreement shall be construed as if such unenforceable term has never been
contained herein.
23. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall constitute an original Agreement but all of which together
shall constitute one and the same instrument.
24. HEADINGS.
The descriptive headings herein are for convenience only and
shall not affect the meaning or construction of any of the provisions hereof.
Words used herein, regardless of the number and gender specifically used shall
be deemed and construed to include any other number, singular, or plural, and
any other gender, masculine, feminine or neuter, as the context requires.
-18-
25. NOTICES.
All notices, requests, consents, demands, approvals and other
communications hereunder shall be deemed to have been duly given, made or served
if in writing and when delivered personally (including without limitation by
means of telex, telecopies or telefax systems), or the day following delivery to
a nationally recognized, reputable overnight courier service which guarantees
delivery within twenty-four hours, charges prepaid, to the respective parties to
this Agreement as follows:
(a) If to the Borrower, to:
Age Institute of Florida, Inc.
Professional Arts Building
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
With a copy (which shall not constitute notice) to:
Blank, Rome, Xxxxxxx & XxXxxxxx
0 Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) If to the Senior Noteholders, to:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention:
With a copy (which shall not constitute notice) to:
-19-
Attention:
(c) If to the Junior Agent or the Subordinated Noteholders,
to:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention:
and
ET Capital Corporation
Attention:
with a copy (which shall not constitute notice) to:
Attention:
(d) If to the Master Collateral Agent, to:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention:
with a copy (which shall not constitute notice) to:
Attention:
The designation of the person to be so notified or the address
of such person for the purposes of such notice may be changed from time to time
by similar notice in writing, except that any communication with respect to a
change of address shall be deemed to be given and made when received by the
party to whom such communication was sent.
-20-
26. GOVERNING LAW.
The validity, meaning and effect of this Agreement shall be
determined in accordance with the substantive laws of the State of Florida
without regard to conflicts of laws principles thereof.
27. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION, ETC.
EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE
VALIDITY, PROTECTION, INTERPRETATION, OR ENFORCEMENT HEREOF. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF FLORIDA AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
OF ANY FEDERAL COURT LOCATED IN THE STATE OF FLORIDA IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
VALIDITY, PROTECTION INTERPRETATION OR ENFORCEMENT HEREOF. Each Subordinated
Noteholder irrevocably consents to the service of process on such Subordinated
Noteholder in any such proceeding by certified mail or overnight courier,
postage prepaid, to such Subordinated Noteholder at the address referred to in
Section 25. Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may effectively do so, any objection to the
venue of any such action or proceeding brought in any such court and any defense
that any such court is an inconvenient forum for any such action or proceeding.
28. ENTIRE AGREEMENT.
This Agreement represents the entire agreement among the
parties hereto with respect to the subject matter hereof and, except as
expressly provided herein, shall not be affected by reference to any other
documents.
29. AMENDMENT.
No provision of this Agreement may be amended, modified,
terminated or waived except by a writing duly executed by each party sought to
be bound by such amendment, modification, termination or waiver.
30. NO BENEFIT TO THE BORROWER.
The Borrower is not a beneficiary of any portion of this
Agreement and shall not have any rights arising under this Agreement or the
right to enforce any provision hereof.
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IN WITNESS WHEREOF, each party hereto has duly executed or
caused this Subordination Agreement to be duly executed on such party's behalf
as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
as Senior Lender
By:_____________________________________
Name:___________________________________
Title:__________________________________
GENESIS HEALTH VENTURES, INC.,
as Junior Lender
By:_____________________________________
Name:___________________________________
Title:__________________________________
ET CAPITAL CORP.,
as Junior Lender
By:_____________________________________
Name:___________________________________
Title:__________________________________
AGE INSTITUTE OF FLORIDA,
as Borrower
By:_____________________________________
Name:___________________________________
Title:__________________________________
GENESIS HEALTH VENTURES, INC.,
as Junior Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
GENESIS HEALTH VENTURES, INC.,
as Master Collateral Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
-22-
