EXHIBIT 10.20
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of August 19, 2003 (this "Security
Agreement"), among FOUNTAIN VIEW, INC., a Delaware corporation (the "Company"),
the Subsidiaries of the Company listed in Schedule 1 annexed hereto (the Company
and such undersigned Subsidiaries are sometimes collectively referred to herein
as "Grantors" and individually as a "Grantor"); and CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company, as administrative agent and collateral agent
for the lenders under the Mezzanine Loan Agreement, having an address at 4445
Willard Avenue, 12th Floor, Chevy Chase, Maryland 20815 (in such capacity as
Agent, together with its successors and assigns, referred to herein as
"Lender").
W I T N E S S E T H:
1. The Company and certain of its subsidiaries filed for reorganization
under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Central District
of California, Los Angeles Division (the "Bankruptcy Court"); and
2. By order, dated July 10, 2003, the Debtors' Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code, dated April 22,
2003, in Case No. LA 01-39678BB through LA 01-39697BB and LA
01-45516BB, LA 01-45520BB and LA 01-45525BB, in the United States
Bankruptcy Court for the Central District of California, Los Angeles
Division, as such may be modified, amended or supplemented from time to
time (the "Plan"), has been approved in accordance with section 1129 of
the Bankruptcy Code and such Plan has become effective as of August __,
2003;
3. As part of the Plan, the Company has agreed to grant Liens on the
Collateral.
4. SHG Property Resources, LLC, a Delaware limited liability company and
SHG Investments, LLC, a Delaware limited liability company
(collectively "Borrower") has requested that the lenders under the Loan
Agreement make a loan to Borrower in the aggregate principal amount of
$23,000,000.00 (the "Loan"), pursuant to that certain Mezzanine Loan
Agreement (as defined herein), and as evidenced by those certain
Mezzanine Promissory Notes, each dated as of the date hereof (as the
same may be amended, restated, replaced, supplemented, increased,
extended, consolidated or otherwise modified from time to time,
collectively, the "Note");
5. As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration
or otherwise) of the Debt, Grantors have agreed to grant the lenders
under the Loan Agreement, subject to the Permitted Liens, a first
priority security interest upon all of Grantor's right, title and
interest in, to and under the Collateral (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Mezzanine Loan Agreement
or Annex A attached hereto. All other undefined terms contained in this Security
Agreement, unless the context indicates otherwise, have the meanings provided
for by the Code to the extent the same are used or defined therein.
2. GRANT OF LIEN.
(a) To secure the prompt and complete payment, performance and
observance of all of the Debt, each Grantor hereby grants, assigns, conveys,
mortgages, pledges, hypothecates and transfers to Lender, a Lien upon all of its
right, title and interest in, to and under the following personal property and
other assets, whether now owned by or owing to, or hereafter acquired by or
arising in favor of such Grantor (including under any trade names, styles or
derivations thereof), and whether owned or consigned by or to, or leased from or
to, such Grantor, and regardless of where located which is used in the conduct
of the pharmaceutical business and the physical therapy business of the Company
and its Subsidiaries (all of which being hereinafter collectively referred to as
the "Collateral"):
(i) all tangible personal property, including without
limitation all present and future Inventory and Equipment (other than
items of Equipment which are or become Fixtures);
(ii) all intangible personal property, including without
limitation all present and future Accounts, securities, contract
rights, Permits, General Intangibles, Chattel Paper, Documents,
Instruments, Deposit Accounts, Letter-of-Credit Rights and Supporting
Obligations, commercial tort claims, rights to the payment of money or
other forms of consideration of any kind, including, without
limitation, payment intangibles, tax refunds, insurance proceeds, now
owned or hereafter acquired, and all intangible and tangible personal
property relating to or arising out of any of the foregoing;
(iii) all present and future Government Contracts and
rights thereunder and the related Government Accounts and proceeds
thereof; provided, however, that the Collateral shall not include any
rights under any Government Contract of any Grantor or in the related
Government Account where the taking of such security interest would be
a violation of an express prohibition contained in the Government
Contract (for purposes of this limitation, the fact that a Government
Contract is subject to, or otherwise refers to, Title 31, Section 203
or Title 41, Section 15 of the United States Code shall not be deemed
an express prohibition against assignment thereof) or is prohibited by
applicable law; and
(iv) any and all additions to any of the foregoing, and
any and all replacements, products and Proceeds (including insurance
proceeds) of any of the foregoing.
Notwithstanding the foregoing provisions of this Section 2,
such grant of a security interest shall not extend to, and the term "Collateral"
shall not include, (x) any General Intangible, contract, agreement or document
of any Grantor to the extent that (i) such General Intangible, contract,
agreement or document is not assignable or capable of being encumbered as
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a matter of law or under the terms of any license or other agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law, which applicable law includes Section 9-408 of the Uniform
Commercial Code), without the consent of the licensor thereof or other
applicable party thereto, and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of a security interest shall extend to, and
the term "Collateral" shall include, each of the following: (a) any General
Intangible which is in the nature of an Account or a right to the payment of
money or a proceed of, or otherwise related to, the enforcement or collection
of, any Account or right to the payment of money, (b) any and all proceeds of
any General Intangible, contract, agreement or document that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (c) upon obtaining the consent of any such
licensor or other applicable party with respect to any such otherwise excluded
General Intangible, contract, agreement or document, such General Intangible,
contract, agreement or document as well as any and all proceeds thereof that
might theretofore have been excluded from such grant of a security interest and
from the term "Collateral"; (y) any asset of any Grantor to the extent that (i)
such asset is subject to a contract, agreement or document otherwise permitted
pursuant to the Mezzanine Loan Agreement, which contract, agreement or document
restricts the grant of such security interest (but solely to the extent that any
such restriction shall be enforceable under applicable law) without the consent
of the other party to such contract, agreement or document, and (ii) such
consent has not been obtained; provided, however, that the foregoing grant of a
security interest shall extend to, and the term "Collateral" shall include, each
of the following: (a) any and all proceeds of any asset that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (b) upon obtaining the consent of the other
party to any such contract, agreement or document with respect to any such
otherwise excluded asset, such asset as well as any and all proceeds thereof
that might theretofore have been excluded from such grant of a security interest
and from the term "Collateral"; and (c) any Permit of any Grantor to the extent
that the assignment of such Permit would violate the law applicable to such
Permit, or materially impair the validity of such Permit. Each Grantor shall use
all reasonable efforts (which shall not include the unreasonable expenditure of
funds) to obtain any such required consent.
3. LENDER'S RIGHTS: LIMITATIONS ON LENDER'S OBLIGATIONS.
(a) It is expressly agreed by Grantors that, anything herein to
the contrary notwithstanding, each Grantor shall remain liable under each of its
Contracts and each of its Licenses, to observe and perform in all material
respects all the conditions and obligations to be observed and performed by it
thereunder. Lender shall have no obligation or liability under any Contract or
License by reason of or arising out of this Security Agreement or the granting
herein of a Lien thereon or the receipt by Lender of any payment relating to any
Contract or License pursuant hereto. Lender shall not be required or obligated
in any manner to perform or fulfill any of the obligations of any Grantor under
or pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
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(b) Lender may, at any time after an Event of Default has occurred
and be continuing, notify (i) Account Debtors owing Accounts to Grantors other
than Medicaid/Medicare Account Debtors that their Accounts have been assigned to
Lender and to collect such Accounts directly in its own name and to charge
reasonable collection costs and expenses, including reasonable attorney's fees,
to Grantors, and (ii) Medicaid/Medicare Account Debtors that Grantors have
waived any and all defenses and counterclaims they may have or could interpose
in any such action or procedure brought by Lender to obtain a court order
recognizing the collateral assignment or security interest and lien of Lender in
and to any Account or other Collateral payable by Medicaid/Medicare Account
Debtors and that Lender is seeking or may seek to obtain a court order
recognizing the collateral assignment or security interest and lien of Lender in
and to all Accounts and other Collateral payable by Medicaid/Medicare Account
Debtors. Upon the request of Lender, at any time after an Event of Default has
occurred and is continuing, each Grantor shall so notify Account Debtors and
other Persons obligated on Collateral. Lender's rights under this Section 3(b),
shall be subject to the provisions of the Intercreditor Agreement.
(c) Lender may at any time in Lender's own name or in the name of
any Grantor communicate with Account Debtors, parties to Contracts, obligors in
respect of Instruments and obligors in respect of Chattel Paper and/or payment
intangibles to verify with such Persons, to Lender's satisfaction, the
existence, amount and terms of any such Accounts, Contracts, Instruments or
Chattel Paper and/or payment intangibles.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:
(a) Such Grantor has rights in and the power to transfer each item
of the Collateral upon which it purports to grant a Lien hereunder free and
clear of any and all Liens other than Permitted Liens.
(b) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of Lender pursuant to
this Security Agreement, the other Loan Documents, the Revolving Credit Facility
or the Indenture, each of which are subordinated in right of repayment and
remedies to all of the Debt and to all of Lender's rights, and (ii) in
connection with any other Permitted Lien.
(c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on Schedule I hereto, a perfected Lien in favor of Lender on the
Collateral with respect to which a Lien may be perfected by filing pursuant to
the Code. Such Lien is prior to all other Liens, except Permitted Liens, and is
enforceable as such as against any and all creditors of and purchasers from any
Grantor (other than purchasers (but not creditors of such purchasers) and
lessees in the ordinary course of business). All action by any Grantor necessary
or desirable to protect and perfect such Lien on each item of the Collateral has
been duly taken or shall be promptly taken.
(d) As of the Effective Date, Schedule II hereto lists all
Instruments, Letter of Credit Rights and Chattel Paper constituting Collateral
of each Grantor. All action by any Grantor
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necessary or desirable to protect and perfect the Lien of Lender on each item
set forth on Schedule II (including the delivery of all originals thereof to
Lender and the legending of all Chattel Paper as required by Section 5(b)
hereof) has been duly taken; provided so long as the Intercreditor Agreement
shall be in effect, no Grantor shall be required to deliver such collateral to
Lender under this Section 4(d). The Lien of Lender on the Collateral listed on
Schedule II hereto is prior to all other Liens, except Permitted Liens, and is
enforceable as such against any and all creditors of and purchasers from any
Grantor.
(e) Each Grantor's name as it appears in official filings in the
state of its incorporation or other organization, the type of entity of each
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by each
Grantor's state of incorporation or organization or a statement that no such
number has been issued, each Grantor's state of organization or incorporation,
the location of each Grantor's chief executive office, principal place of
business, offices, all warehouses and premises where Collateral is stored or
located, and the locations of its books and records concerning the Collateral
are set forth on Schedule III hereto.
(f) With respect to the Accounts constituting Collateral, (i)
Accounts represent bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of each Grantor's business and are not
evidenced by a judgment, Instrument or Chattel Paper; and (ii) to each Grantor's
knowledge, there are no facts, events or occurrences which in any way impair the
validity or enforceability thereof or could reasonably be expected to reduce the
amount payable thereunder as shown on any Grantor's books and records and any
invoices, statements with respect thereto. Further with respect to the Accounts
(x) the amounts shown on all invoices and statements are actually and absolutely
owing to such Grantor as indicated thereon and are not in any way contingent;
(y) no payments have been or shall be made thereon except payments immediately
delivered to the applicable Accounts; and (z) to each Grantor's knowledge, all
Account Debtors have the capacity to contract. Notwithstanding anything in this
Section 4(f) to the contrary, the failure of any Account to satisfy the
representations contained in the of this Section 4(f) shall not constitute
misrepresentation unless Accounts having an aggregate face amount of $250,000 or
greater fail to comply with the representations contained in this Section 4(f).
(g) With respect to any Inventory constituting Collateral, (i)
such Inventory is located as of the Effective Date at one of the applicable
Grantor's locations set forth on Schedule III hereto, (ii) no Inventory is now,
or shall at any time or times hereafter be stored at any other location without
at least thirty (30) days prior written notice to Lender and after Grantors have
completed all reasonable action requested by Lender in connection therewith
required to continue the perfection of any Liens in favor of Lender in any
Collateral; provided that any such new location shall be in the continental
United States, (iii) the applicable Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the Lien granted to
Lender and except for Permitted Liens, (iv) such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties which would require any consent of any third party upon sale
or disposition of that Inventory or the payment of any monies to any third party
as a precondition of such sale or other disposition, and (v) the completion of
manufacture, sale or other disposition of such Inventory by Lender following an
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Event of Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to which any
Grantor is a party or to which such property is subject. Notwithstanding
anything in this Section 4(g) to the contrary, the failure of any Inventory to
satisfy the representations contained in the of this Section 4(g) shall not
constitute misrepresentation unless Inventory having an aggregate face amount of
$250,000 or greater fail to comply with the representations contained in this
Section 4(g).
(h) As of the Effective Date, no Grantor has any interest in, or
title to, any Patent, Trademark or Copyright constituting Collateral except as
set forth in Schedule IV hereto. This Security Agreement is effective to create
a valid and continuing Lien on and, upon filing of the financing statements
listed on Schedule I hereto, and filing of the Copyright Security Agreements
with the United States Copyright Office and filing of the Patent Security
Agreements and the Trademark Security Agreements with the United State Patent
and Trademark Office, perfected Liens in favor of Lender on each Grantor's
material Patents, Trademarks and Copyrights and such perfected Liens are
enforceable as such as against any and all creditors of and purchasers (but not
creditors of such purchasers) from any Grantor. Upon filing of the Copyright
Security Agreements with the United States Copyright Office and filing of the
Patent Security Agreements and the Trademark Security Agreements with the United
State Patent and Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Lender's Lien on each Grantor's material Patents, Trademarks
or Copyrights shall have been duly taken.
5. COVENANTS. Each Grantor covenants and agrees with Lender that
from and after the date of this Security Agreement and until the Termination
Date:
(a) Further Assurances.
(i) At any time and from time to time, upon the written
request of Lender and at the sole expense of Grantors, each Grantor
shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as Lender may
deem desirable to perfect the security interest herein granted,
including (A) using commercially reasonable efforts to secure all
consents and approvals necessary or appropriate for the assignment to
or for the benefit of the Lender of any License or Contract held by
such Grantor, and (B) filing any financing or continuation statements
under the Code.
(ii) Upon written request of Lender, each Grantor shall
deliver to Lender all Collateral consisting of negotiable Documents,
certificated securities, Chattel Paper and Instruments (other than
checks received in the ordinary course of business, which shall be
delivered to Lender or into a lockbox or Deposit Account with respect
to which the Grantor has entered into a control agreement with Lender
and the related bank) (in each case, accompanied by stock powers,
allonges or other instruments of transfer executed in blank) promptly
after such Grantor receives the same.
(iii) If requested by Lender, each Grantor shall obtain or
use commercially reasonable efforts to obtain waivers or subordinations
of Liens from landlords and mortgagees, and each Grantor shall in all
instances obtain signed acknowledgements of
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Lender's Liens from bailees having possession of any Grantor's Goods
that they hold for the benefit of Lender.
(iv) If requested by Lender in writing, each Grantor shall
obtain authenticated Control Letters from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any
Grantor.
(v) Unless otherwise restricted by the Revolving Credit
Facility, upon the occurrence of a Default, each Grantor shall obtain a
blocked account, lockbox or similar agreement, as applicable, with each
bank or financial institution holding a Deposit Account for such
Grantor.
(vi) Unless otherwise restricted by the Revolving Credit
Facility, if requested by Lender, each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly, and in any event
within five (5) Business Days after becoming a beneficiary, notify
Lender thereof and enter into a tri-party agreement with Lender and the
issuer and/or confirmation bank with respect to Letter-of-Credit Rights
assigning such Letter-of-Credit Rights to Lender and directing all
payments thereunder to a Deposit Account, all in form and substance
reasonably satisfactory to Lender.
(vii) Unless otherwise restricted by the Revolving Credit
Facility, if requested by Lender, each Grantor shall take all steps
necessary to grant Lender control of all electronic chattel paper in
accordance with the Code and all "transferable records" as defined in
each of the Uniform Electronic Transactions Act and the Electronic
Signatures in Global and National Commerce Act
(viii) Each Grantor hereby irrevocably authorizes Lender at
any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements
and amendments thereto that (a) indicate the Collateral (i) as all
assets of such Grantor which is used in the conduct of the
pharmaceutical business and the physical therapy business of the
Company and its Subsidiaries, or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within
the scope of Article 9 of the Code or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b)
contain any other information required by part 5 of Article 9 of the
Code for the sufficiency or filing office acceptance of any financing
statement or amendment, including (x) whether such Grantor is an
organization, the type of organization and any organization
identification number issued to such Grantor, and (y) in the case of a
financing statement filed as a fixture filing or indicating Collateral
as as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates. Each
Grantor agrees to promptly furnish any such information as Lender shall
request in writing. Each Grantor also ratifies its authorization for
Lender to have filed in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to
the date hereof.
(ix) Each Grantor shall promptly, and in any event within
five (5) Business Days after the same is acquired by it, notify Lender
of any commercial tort claim (as
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defined in the Code) acquired by it, and if requested by the Lender,
such Grantor shall enter into a supplement to this Security Agreement,
granting to Lender a Lien in such commercial tort claim; provided that
no Grantor shall be in default of this provision for failure to notify
of any commercial tort claims unless the value of all commercial tort
claims of Grantors for which not notice has been given hereunder shall
be $250,000 or more.
(b) Maintenance of Records. Grantors shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral.
(c) Covenants Regarding Patent, Trademark and Copyright
Collateral.
(i) Grantors shall notify Lender immediately if they know
or have reason to know that any application or registration relating to
any material Patent, Trademark or Copyright (now or hereafter existing)
may become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court)
regarding any Grantor's ownership of any material Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the
same.
(ii) In no event shall any Grantor, either itself or
through any agent, employee, licensee or designee, file an application
for the registration of any material Patent, Trademark or Copyright
with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency without giving Lender
prior written notice thereof, and, upon request of Lender, Grantor
shall execute and deliver any and all Patent Security Agreements,
Copyright Security Agreements or Trademark Security Agreements as
Lender may request to evidence Lender's Lien on such Patent, Trademark
or Copyright, and the General Intangibles of such Grantor relating
thereto or represented thereby.
(iii) Grantors shall take all actions necessary or
requested by Lender to maintain and pursue each application, to obtain
the relevant registration and to maintain the registration of each of
the material Patents, Trademarks and Copyrights (now or hereafter
existing), including the filing of applications for renewal, affidavits
of use, affidavits of noncontestability and opposition and interference
and cancellation proceedings, each at Grantor's expense.
(iv) In the event that any of the material Patent,
Trademark or Copyright Collateral is infringed upon, or misappropriated
or diluted by a third party, such Grantor shall comply with Section
5(a)(v) of this Security Agreement. Such Grantor shall, unless such
Grantor shall reasonably determine that such Patent, Trademark or
Copyright Collateral is in no way material to the conduct of its
business or operations, promptly sue for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as
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Lender shall deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright Collateral.
(d) Indemnification. In any suit, proceeding or action brought by
Lender relating to any Collateral for any sum owing with respect thereto or to
enforce any rights or claims with respect thereto, each Grantor will save,
indemnify and keep Lender harmless from and against all reasonable expense
(including reasonable attorneys' fees and expenses), loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the Account Debtor or other Person obligated on the
Collateral, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except to the extent such expense, loss, or damage is attributable solely to the
negligence or willful misconduct of Lender as finally determined by a court of
competent jurisdiction. All such obligations of Grantors shall be and remain
enforceable against and only against Grantors and shall not be enforceable
against Lender.
(e) Compliance with Terms of Accounts, etc. Each Grantor will
perform and comply in all material respects with all obligations in respect of
the Collateral and all other agreements to which it is a party or by which it is
bound relating to the Collateral.
(f) Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any material Lien on the
Collateral except Permitted Liens and the Lien granted to the Claims Agent for
the benefit of Claims Agent, Class 10 Holders, Vendor Claim Holders, Trustee and
Noteholders (which Liens are subordinated in right of repayment and remedies to
all of the Debt and to all of Lender's rights), and will defend the right, title
and interest of Lender in and to any of such Grantor's rights under the
Collateral against the material claims and demands of all Persons whomsoever, in
each case defended in accordance with Lender's request and at Grantor's expense.
(g) Limitations on Disposition. No Grantor will sell, license,
lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so, except as permitted by the Mezzanine Loan Agreement.
(h) Further Identification of Collateral. Grantors will, if so
requested by Lender, furnish to Lender, as often as Lender reasonably requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in such detail as Lender may reasonably specify.
(i) Notices. Grantors will advise Lender promptly, in reasonable
detail, (i) of any Lien (other than Permitted Liens) or claim made or asserted
against any of the Collateral, (ii) of the occurrence of any other event which
would have a material adverse effect on the aggregate value of the Collateral or
on the Liens created hereunder and (iii) updates of any of the schedules to this
Security Agreement to the extent necessary to keep them accurate on an ongoing
basis in all material respects.
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(j) No Reincorporation. No Grantor shall reincorporate or
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof or change its
name without providing 30 days prior written notice to Lender and taking all
action necessary to maintain the perfection of the security interests in
accordance with this Security Agreement.
(k) Terminations; Amendments Not Authorized. Each Grantor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Lender and agrees that it will not do so
without the prior written consent of Lender, subject to such Grantor's rights
under Section 9-509(d)(2) of the Code.
(l) Authorized Terminations. Lender will promptly deliver to each
Grantor for filing or authorize each Grantor to prepare and file termination
statements and releases in accordance with the Indenture.
6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date
each Grantor shall execute and deliver to Lender a power of attorney (the "Power
of Attorney") substantially in the form attached hereto as Exhibit A. The power
of attorney granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the termination of this Security
Agreement in accordance with its terms. The powers conferred on Lender under the
Power of Attorney are solely to protect Lender's interests in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. Lender agrees
that (a) except for the powers granted in clause (h) of the Power of Attorney,
it shall not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and (b) Lender shall
account for any moneys received by Lender in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that Lender
shall not have any duty as to any Collateral, and Lenders shall be accountable
only for amounts that it actually receive as a result of the exercise of such
powers. NEITHER LENDER NOR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF
DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
7. REMEDIES: RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it
under this Security Agreement and under any other instrument or agreement
securing, evidencing or relating to any of the Debt, if any Event of Default
shall have occurred and be continuing, Lender may exercise all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, each Grantor expressly agrees that in any such event Lender,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon such Grantor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the
10
maximum extent permitted by the Code and other applicable law), may forthwith
enter upon the premises of such Grantor where any Collateral is located through
self-help, without judicial process, without first obtaining a final judgment or
giving such Grantor or any other Person notice and opportunity for a hearing on
Lender's claim or action and may collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, license, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit risk. Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of Lender, the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption each Grantor hereby
releases. Such sales may be adjourned and continued from time to time with or
without notice. Lender shall have the right to conduct such sales on any
Grantor's premises or elsewhere and shall have the right to use any Grantor's
premises without charge for such time or times as Lender deems necessary or
advisable.
If any Event of Default shall have occurred and be continuing, each
Grantor further agrees, at Lender's request, to assemble the Collateral and make
it available to Lender at a place or places designated by Lender which are
reasonably convenient to Lender and such Grantor, whether at such Grantor's
premises or elsewhere. Until Lender is able to effect a sale, lease or other
disposition of Collateral, Lender shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Lender. Lender shall have no obligation to any Grantor to
maintain or preserve the rights of such Grantor as against third parties with
respect to Collateral while Collateral is in the possession of Lender. Lender
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Lender's remedies with respect to
such appointment without prior notice or hearing as to such appointment. Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Debt as provided in the Mezzanine Loan
Agreement, and only after so paying over such net proceeds, and after the
payment by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any, to any Grantor. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the negligence or willful
misconduct of Lender as finally determined by a court of competent jurisdiction.
Each Grantor agrees that ten (10) days' prior notice by Lender to Grantor of the
time and place of any public sale or of the time after which a private sale may
take place is reasonable notification of such matters. Grantors shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Debt, including any reasonable attorneys'
fees and other expenses incurred by Lender to collect such deficiency.
(b) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
11
(c) Lender shall not be required to make any demand upon, or
pursue or exhaust any of their rights or remedies against, any Grantor, any
other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Debt or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof.
Lender shall not be required to marshal the Collateral or any guarantee of the
Debt or to resort to the Collateral or any such guarantee in any particular
order, and all of its and their rights hereunder or under any other Security
Document shall be cumulative. To the extent it may lawfully do so, each Grantor
absolutely and irrevocably waives and relinquishes the benefit and advantage of,
and covenants not to assert against Lender, any valuation, stay, appraisement,
extension, redemption or similar laws and any and all rights or defenses it may
have as a surety now or hereafter existing which, but for this provision, might
be applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For
the purpose of enabling Lender to exercise rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to
take possession of, hold, preserve, process, assemble, prepare for sale, market
for sale, sell or otherwise dispose of Collateral) at such time as Lender shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Lender, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.
9. LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender
shall use reasonable care with respect to the Collateral in its possession or
under its control. Lender shall have no other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.
10. REINSTATEMENT. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Debt, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Debt, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Debt shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11. NOTICES. Except as otherwise provided herein, all notices,
demands, consents, approvals and requests required or permitted hereunder shall
be given in writing and shall be
12
effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a notice to the other parties hereto in the manner provided for in this
Section 11):
If to Lender: CapitalSource Finance LLC
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Healthcare Finance
Group, Portfolio
Manager
Facsimile No. (301) 841-2380
with a copy to: Skadden, Arps, Slate, Meagher &
Flom LLP
4 Times Square
New York, New York 10036
Attention: David L. Nagler
Facsimile No. (917) 777-2369
If to Company or Grantors: c/o Fountain View, Inc.
27442 Portola Parkway, Suite 200
Foothill Ranch, California 92610
Attention: Bill Scott
Facsimile No.: (949) 282-5889
With a copy to: Latham & Watkins LLP
650 Tower Center Drive, Suite 2000
Costa Mesa, California 92626-1925
Attention: David C. Meckler, Esq.
Facsimile No.: (714) 755-8290
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender's receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming.
12. SEVERABILITY. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the other instruments or agreements securing, evidencing or relating to any
of the Debt which, taken together, set forth
13
the complete understanding and agreement of Lender and Grantors with respect to
the matters referred to herein and therein.
13. NO WAIVER: CUMULATIVE REMEDIES. Lender shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Lender and then only to the extent therein set forth. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Lender any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Lender and
Grantors.
14. LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.
(a) Subject to Section 10 hereof, this Security Agreement shall
terminate and the Collateral shall be released from the Lien created hereby upon
payment and performance in full of the Debt (other than contingent
indemnification obligations for which no claims have been asserted). Upon such
termination, and at the request and sole expense of the Grantors, Lender shall
execute and deliver such documents as the Grantors shall reasonably request to
evidence such termination.
(b) If any Collateral shall be sold, conveyed, or disposed of in
compliance with the provisions of the this Security Agreement, the Lien of the
Lender pursuant to this Security Agreement on such Collateral shall be released
automatically. Lender shall execute deliver such documents as any Grantor shall
reasonably request at the cost of Grantor to evidence such release.
(c) If any Grantor (other than the Company) shall cease to be a
Subsidiary of the Company in a transaction that complies with the provisions of
the Indenture, then such Grantor shall automatically cease to be a Grantor under
this Security Agreement and shall be released from all of its obligations under
this Security Agreement and the Collateral of such Grantor shall be release from
the created hereby. Lender shall execute deliver such documents as the
14
Company or such Grantor shall reasonably request at the cost of Grantor to
evidence such release.
16. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of such
Grantor) and shall, together with the rights and remedies of Lender, inure to
the benefit of Lender, all future holders of any instrument evidencing any of
the Debt and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Debt or any portion thereof or
interest therein shall in any manner affect the Lien granted to Lender
hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any
interest in or obligation under this Security Agreement.
17. COUNTERPARTS. This Security Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE
OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
GRANTORS AND LENDER PERTAINING TO THIS SECURITY AGREEMENT OR THE INDENTURE OR
ANY OF THE OTHER INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR RELATING TO
ANY OF THE DEBT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT OR ANY OF THE OTHER INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR
RELATING TO ANY OF THE DEBT, PROVIDED, THAT LENDER AND GRANTORS ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY NEW YORK COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT
15
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON SCHEDULE
III TO THE SECURITY AGREEMENT OR AT SUCH OTHER ADDRESS AS SUCH GRANTEE SHALL
STATE IN NOTICES DELIVERED PURSUANT TO THIS SECURITY AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LENDER AND GRANTORS
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER
INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR RELATING TO ANY OF THE DEBT OR
THE TRANSACTIONS RELATED HERETO OR THERETO.
20. SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
21. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
22. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and, Section 19. with its counsel.
23. BENEFIT OF HOLDERS. All Liens granted or contemplated hereby
shall be for the benefit of Lender and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Debt in accordance
with the terms of the Mezzanine Loan Agreement.
* * *
16
IN WITNESS WHEREOF, the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
"COMPANY" FOUNTAIN VIEW, INC.
"GRANTORS" ALEXANDRIA CARE CENTER, INC.
ALTA CARE CENTER, LLC
ANAHEIM TERRACE CARE CENTER, LLC
BAY CREST CARE CENTER, LLC
BRIER OAK ON SUNSET, INC.
CARSON SENIOR ASSISTED LIVING, LLC
ELMCREST CARE CENTER, INC.
FOUNTAIN VIEW SUBACUTE AND NURSING CENTER, INC.
HALLMARK INVESTMENT GROUP, INC.
HALLMARK REHABILITATION GP, LLC
HALLMARK REHABILITATION LP
By: Hallmark Rehabilitation LLC, its general
partner
HANCOCK PARK REHABILITATION CENTER, INC.
HANCOCK PARK SENIOR ASSISTED LIVING, INC.
HEMET SENIOR ASSISTED LIVING, LLC
LEASEHOLD RESOURCE GROUP, LLC
MONTEBELLO CARE CENTER, LLC
RIO HONDO SUBACUTE AND NURSING CENTER, INC.
ROYALWOOD CARE CENTER, LLC
SHARON CARE CENTER, LLC
SHG PROPERTY RESOURCES, LLC
SHG INVESTMENTS, LLC
SKILLED HEALTHCARE, LLC
SUMMIT CARE CORPORATION
SUMMIT CARE TEXAS MANAGEMENT, LLC
SUMMIT CARE PHARMACY, INC.
SUMMIT CARE TEXAS, L.P.
By: Summit Care Texas Management, LLC, its
general partner
SYCAMORE PARK CARE CENTER, INC.
WOODLAND CARE CENTER, LLC
By: \s\ Roland G. Rapp
--------------------------------------------
Name: Roland G. Rapp
Title: Secretary
17
Address for Notices:
-------------------
Fountain View, Inc.
27442 Portola Parkway, Suite 200
Foothill Ranch, California 92610
Attention: General Counsel
Telephone: (949) 282-5822
Facsimile: (949) 282-5820
E-Mail: rrapp@fountainviewinc.net
18
CAPITALSOURCE FINANCE LLC
By: \s\ James J. Pieczynski
-----------------------------------
Name: James J. Pieczynski
Title: Director
19
SCHEDULE A
"Account Debtor" means any Person who may become obligated to any
Grantor under, with respect to, or on account of, an Account, Chattel Paper or
General Intangibles (including a payment intangible).
"Accounts" shall mean all "accounts" (as defined in the Code) of any
Grantor, including without limitation, accounts, accounts receivables, monies
due or to become due and obligations in any form (whether arising in connection
with contracts, contract rights, Instruments, General Intangibles or Chattel
Paper), in each case whether arising out of goods sold or services rendered or
from any other transaction and whether or not earned by performance, now or
hereafter in existence, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
GAAP. The Stated Maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CapitalSource" shall mean CapitalSource Finance LLC, a Delaware
limited liability company.
"Chattel Paper" means any "chattel paper" as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Grantor.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term in the Security Agreement and
such term is defined differently in different Articles or Divisions of the Code,
the definition of such term contained in Article or Division 9 shall govern;
provided, further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, the Lender's Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term "Code" shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.
1
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, in any event, including
all contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any Grantor may now
or hereafter have any right, title or interest, including any agreement relating
to the terms of payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Lender and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Grantor, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Grantor,
(iii) a futures commission merchant or clearing house with respect to commodity
accounts and commodity contracts held by any Grantor, whereby, among other
things, the issuer, securities intermediary or futures commission merchant
disclaims any security interest in the applicable financial assets, acknowledges
the Lien of Lender, on such financial assets, and agrees to follow the
instructions or entitlement orders of Administrative Agent without further
consent by the affected Grantor.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Grantor under any written agreement granting any right
to use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyrights and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registration and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, the Mezzanine Loan Agreement and the Mezzanine Note together with
all interest accrued and unpaid thereon and all other sums due to Lender in
respect of the Mezzanine Loan under the Mezzanine Note, the Mezzanine Loan
Agreement and the other Mezzanine Loan Documents.
"Deposit Account" shall mean all bank or other depository accounts of
any Grantor.
"Documents" means all "documents" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, wherever located.
"Equipment" means all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, wherever located and, in any
event, including all such Grantor's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together-
2
with all additions and accessions thereto, replacements therefor, all parts
therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor.
"General Intangibles" means all "general intangibles" as such term is
defined in the Code, now owned or hereafter acquired by any Grantor, including
all right, title and interest that such Grantor may now or hereafter have in or
under any Contract, all payment intangibles, customer lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Grantor or any computer bureau or
service company from time to time acting for such Grantor.
"Goods" means all "goods" as such term is defined in the Code, now
owned or hereafter acquired by any Grantor, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Government Accounts" shall be defined to mean all Accounts arising out
of or with respect to any Government Contract.
"Government Contracts" shall be defined to mean all contracts with any
Government Authority, and all amendments thereto.
"Governmental Authority" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
3
"Highbridge" shall mean Highbridge/Zwirn Opportunity Fund LP .
"Instruments" means all "instruments" as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located, and, in
any event, including all certificated securities, all certificates of deposit,
and all promissory notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of the date hereof by and among CapitalSource Finance LLC, a
Delaware limited liability company, as agent for itself and the other lenders
under the Revolving Credit Agreement and the Mezzanine Loan Agreement, the
Collateral Agent, AmerisourceBergen Drug Corporation, the Company and each of
the obligors signatory thereto.
"Inventory" shall mean all "inventory" (as defined in the Code) of any
Grantor now owned or hereafter acquired, and all documents of title or other
documents representing any of the foregoing, and all collateral security and
guaranties of any kind, now or hereafter in existence, given by any Person with
respect to any of the foregoing.
"Investment Property" means all "investment property" as such term is
defined in the Code, now owned or hereafter acquired by any Grantor, wherever
located, including (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Grantor, including the rights of any Grantor to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Grantor; (iv) all commodity contracts of any
Grantor; and (v) all commodity accounts held by any Grantor.
"Letter-of-Credit Rights" means all "letter-of-credit rights" as such
term is defined in the Code, now owned or hereafter acquired by any Grantor,
including rights to payment or performance under a letter of credit, whether or
not such Grantor, as beneficiary, has demanded or is entitled to demand payment
or performance.
"License" shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Grantor.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
4
"Mezzanine Borrower" means, collectively, SHG Property Resources, LLC,
a Delaware limited liability company and SHG Investments, LLC a Delaware limited
liability company, jointly and severally.
"Mezzanine Loan Documents" means, collectively, the Loan Agreement, the
Mezzanine Note, the Pledge Agreement, the Environmental Indemnity, the Guaranty,
the Pledgor Guaranty, the Mezzanine Cash Management Agreement, the Intercreditor
Agreement, the Subordination of Management Agreement, and all other documents
executed and/or delivered in connection with the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Mezzanine Loan Facility" means a $23,000,000 aggregate principal
amount term loan facility, pursuant to the Mezzanine Loan Agreement, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such may be amended, modified, renewed,
refunded, replaced (within 2 Business Days) or refinanced, but not increased,
from time to time.
"Mezzanine Loan Agreement" shall mean that certain Loan Agreement
between CapitalSource, as agent for the Mezzanine Lenders (as defined therein)
and the Mezzanine Borrower thereunder, in an outstanding aggregate principal
amount not to exceed $23,000,000, including any related guarantees, collateral
documents, instruments and agreements, as such may be amended, modified,
renewed, refunded, replaced (within 2 Business Days) or refinanced, but not
increased, from time to time.
"Mezzanine Note" shall mean that certain Promissory Note, dated as of
the date hereof, in the principal amount of Twenty Three Million Dollars
($23,000,000.00) made by Mezzanine Borrower in favor of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Patent License" shall mean rights under any written agreement now
owned or hereafter acquired by any Grantor granting any right with respect to
any invention on which a patent is in existence.
"Patents" shall mean all of the following in which any Grantor now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"Permits" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.
"Proceeds" means "proceeds" as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Grantor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to any Grantor from time to time in connection with any requisition,
5
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Grantor against third parties (i)
for past, present or future infringement of any Patent or Patent License or (ii)
for past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Grantor against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.
"Revolving Credit Facility" means the revolving credit facilities in an
outstanding aggregate principal amount not to exceed $32,000,000.00 evidenced by
the Revolving Credit and Security Agreement dated as of ______, 2003, by and
among the Guarantors, the Company and CapitalSource Finance LLC and the
Revolving Credit and Security Agreement dated as of _________, 2003, by and
among the borrowers thereunder, and CapitalSource, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such may be amended, modified, renewed, refunded,
replaced (within 2 Business Days) or refinanced, but not increased, from time to
time.
"Senior Mortgage Loan" means that certain loan issued pursuant to that
certain Loan Agreement between Column Financial, Inc., a Delaware corporation
and the borrowers thereunder, in an outstanding aggregate principal amount not
to exceed $95,000,000, including any related guarantees, collateral documents,
instruments and agreements, as such may be amended, modified, renewed, refunded,
replaced (within 2 Business Days) or refinanced, but not increased, from time to
time.
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, other than software embedded in
any category of goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subordination of Management Agreement" shall mean that certain
Subordination of Interim Management Agreement and Interim Subleases (Mezzanine)
dated as of August 19, 2003, by Summit Care Corporation, Fountainview Senior
Assisted Living, LLC, Spring Senior
6
Assisted Living, LLC, Carson Senior Assisted Living, LLC, Hemet Senior Assisted
Living, LLC and CapitalSource Finance LLC.
"Summit Care Pharmacy" means Summit Care Pharmacy, Inc., a Restricted
Subsidiary of the Company.
"Supporting Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments or Investment Property.
"Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Grantor granting any right to use any
Trademark.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.
"Uniform Commercial Code Jurisdiction" means any jurisdiction that had
adopted all or substantially all of Article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.
7
SCHEDULE I
TO
SECURITY AGREEMENT
FILING JURISDICTIONS
Delaware
California
Texas
1
SCHEDULE II
TO
SECURITY AGREEMENT
INSTRUMENTS
AND
CHATTEL PAPER
None.
2
SCHEDULE III
TO
SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL AND RECORDS
I. Grantor's official name, type of entity, organizational identification
number, and state of organization/incorporation:
STATE OF
ORGANIZATIONAL ORGANIZATION/
OFFICIAL NAME TYPE OF ENTITY ID # INCORPORATION
- -----------------------------------------------------------------------------
Fountain View, Inc. corporation 2772638 Delaware
- -----------------------------------------------------------------------------
Alexandria Care Center, corporation C1714192 California
Inc.
- -----------------------------------------------------------------------------
Alta Care Center, LLC limited liability 3677854 Delaware
company
- -----------------------------------------------------------------------------
Anaheim Terrace Care limited liability 3677853 Delaware
Center, LLC company
- -----------------------------------------------------------------------------
Bay Crest Care Center, limited liability 3677857 Delaware
LLC company
- -----------------------------------------------------------------------------
Brier Oak On Sunset, corporation C1459020 California
Inc.
- -----------------------------------------------------------------------------
Carson Senior Assisted limited liability 3677859 Delaware
Living, LLC company
- -----------------------------------------------------------------------------
Elmcrest Care Center, corporation C1477539 California
Inc.
- -----------------------------------------------------------------------------
Fountain View Subacute corporation C0529092 California
And Nursing Center, Inc.
- -----------------------------------------------------------------------------
Hallmark Investment corporation 2772640 Delaware
Group, Inc.
- -----------------------------------------------------------------------------
Hallmark Rehabilitation limited liability 3678206 Delaware
GP, LLC company
- -----------------------------------------------------------------------------
Hallmark Rehabilitation, limited partnership 3677880 Delaware
LP
- -----------------------------------------------------------------------------
Hancock Park corporation C1222398 California
Rehabilitation Center,
Inc.
- -----------------------------------------------------------------------------
Hancock Park Senior corporation C1222399 California
Assisted Living, Inc.
- -----------------------------------------------------------------------------
1
Hemet Senior Assisted limited liability 3677860 Delaware
Living, LLC company
- ----------------------------------------------------------------------------
Leasehold Resource limited liability 3677795 Delaware
Group, LLC company
- ----------------------------------------------------------------------------
Montebello Care Center, limited liability 3677862 Delaware
LLC company
- ----------------------------------------------------------------------------
Rio Hondo Subacute And corporation C1482166 California
Nursing Center, Inc.
- ----------------------------------------------------------------------------
Royalwood Care Center, limited liability 3677863 Delaware
LLC company
- ----------------------------------------------------------------------------
Sharon Care Center, LLC limited liability 3677865 Delaware
company
- ----------------------------------------------------------------------------
Skilled Healthcare, LLC limited liability 3675398 Delaware
company
- ----------------------------------------------------------------------------
Summit Care Corporation corporation C1080507 California
- ----------------------------------------------------------------------------
Summit Care Texas limited liability 3678960 Delaware
Management, LLC company
- ----------------------------------------------------------------------------
Summit Care Pharmacy, corporation C1151693 California
Inc.
- ----------------------------------------------------------------------------
Summit Care Texas, L.P. limited partnership 9948910 Texas
- ----------------------------------------------------------------------------
Sycamore Park Care corporation C0495471 California
Center, Inc.
- ----------------------------------------------------------------------------
Woodland Care Center, limited liability 3677866 Delaware
LLC company
- ----------------------------------------------------------------------------
SHG Property Resources, limited liability 3677918 Delaware
LLC company
- ----------------------------------------------------------------------------
SHG Investments, LLC limited liability 3677832 Delaware
company
- ----------------------------------------------------------------------------
II. Chief Executive Office and principal place of business:
27442 Portola Parkway, Suite 200, Foothill Ranch, California
92610
For Summit Care Texas, L.P.: 19365 FM 2252, Suite 5, Garden
Ridge, TX 78266
2
III. Corporate Offices:
27442 Portola Parkway, Suite 200, Foothill Ranch, California
92610
For Summit Care Texas, L.P.: 19365 FM 2252, Suite 5, Garden
Ridge, TX 78266
IV. Warehouses:
None
V. Other Premises at which Collateral is Stored or Located:
1. 27442 Portola Parkway, Suite 200, Foothill Ranch, CA 92610
2. 2600 W. Magnolia Blvd., Burbank, CA 91505
3. 1515 N. Alexandria Avenue, Los Angeles, CA 90027
4. 5154 Sunset Blvd., Los Angeles, CA 90027
5. 3111 Santa Anita Avenue, Los Angeles, CA 91733
6. 505 N La Brea Avenue, Los Angeles, CA 90036
7. 515 N. La Brea Avenue, Los Angeles, CA 90036
8. 5310 Fountain Avenue, Los Angeles, CA 90029
9. 273 E. Beverly Blvd., Montebello, CA 90640
10. 4585 N. Figueroa Street, Los Angeles, CA 90065
11. 1036 W. Beverly Blvd., Montebello, CA 90640
12. 141 S. Knott Avenue, Anaheim, CA 92804
13. 3750 Garnet Street, Torrance, CA 90503
14. 13075 Blackbird, Garden Grove, CA 92643
15. 22520 Maple Avenue, Torrance, CA 90505
16. 8167 W. Third Street, Los Angeles, CA 90048
17. 7120 Corbin Avenue, Reseda, CA 91335
18. 345 East Carson St., Carson, CA 90745
19. 1353 E. Devonshire Avenue, Hemet, CA 92544
20. 19365 FM 2252, Suite 5, Garden Ridge, TX 78266
21. 222 E. Huntington Drive #111, Monrovia, CA 91016
22. 22607 Old Canal Road, Yorba Linda, CA 92887
23. 19365 FM 2252, Suite 5, Garden Ridge, TX 78266
3
VI. Locations of Records Concerning Collateral:
27442 Portola Parkway, Suite 200, Foothill Ranch, California 92610
19365 FM 2252, Suite 5, Garden Ridge, TX 78266
2721 Michelle Drive, Tustin, California 92780
26862 Vista Terrace, Lake Forest, California 92630
4
PATENTS
None.
5
TRADEMARKS
TRADEMARK OR SERVICE MARK HOLDER REGISTRATION DATE REGISTRATION NO.
------------------------- ------ ----------------- ----------------
Design of man with outstretched Summit Care Corporation 10/20/98 2197216
arms standing on top of a
medicinal tablet
- ---------------------------------------------------------------------------------------------------
"Innovative Solutions In Health Summit Care Corporation 10/06/98 2193214
Care"
- ---------------------------------------------------------------------------------------------------
"RXPertise" Summit Care Corporation 03/03/98 2140771
- ---------------------------------------------------------------------------------------------------
"SCP Systems" Summit Care Corporation 03/20/01 2436075
- ---------------------------------------------------------------------------------------------------
"Skilled Care Pharmacy" Summit Care Corporation 03/07/00 2325082
- ---------------------------------------------------------------------------------------------------
"SkilledCare Pharmacy" (including Summit Care Corporation 03/07/00 2325083
design of man with outreached
arms standing on top of a
medicinal tablet)
- ---------------------------------------------------------------------------------------------------
6
LICENSED INTELLECTUAL PROPERTY
None.
7
COPYRIGHTS
None.
8
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by [FOUNTAIN VIEW,
INC., A DELAWARE CORPORATION OR INSERT SUBSIDIARY NAME] ("Grantor"), to
__________ (hereinafter referred to as "Attorney"), as Lender under that certain
Security Agreement, dated as of __________, 2003, and other related documents
(as amended from time to time, the "Security Documents"). No person to whom this
Power of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below (but Lender shall be required to request to such Person that it
is entitled to take such action pursuant to the Security Agreement), or as to
the existence of or fulfillment of any condition to this Power of Attorney,
which is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and Grantor irrevocable waives any
right to commence any suit or action, in law or equity, against any person or
entity which acts in reliance upon or acknowledges the authority granted under
this Power of Attorney. [The power of attorney granted hereby is subject to that
certain Intercreditor Agreement dated as of ___________ ____, 2003 by and among
CapitalSource Finance LLC, a Delaware limited liability company, as agent for
itself and the other lenders under that certain Revolving Loan Agreement, as
defined therein, the Collateral Agent, Amerisourcebergen Drug Corporation, the
Company and each of the obligors signatory thereto, and to the extent that any
provisions contained herein are inconsistent, the Intercreditor Agreement shall
control.] The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Grantor without Attorney's written consent.
Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to perfect the
Lien of Attorney granted pursuant to the Security Agreement, and without
limiting the generality of the foregoing, Grantor hereby grants to Attorney the
power and right, on behalf of Grantor, without notice to or assent by Grantor,
and at any time, to do the following: (a) change the mailing address of Grantor,
open a post office box on behalf of Grantor, open mail for Grantor, and ask,
demand, collect, give acquittances and receipts for, take possession of, endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, and notices in
connection with any property of Grantor; (b) effect any repairs to any asset of
Grantor, or continue or obtain any insurance and pay all or any part of the
premiums therefor and costs thereof, and make, settle and adjust all claims
under such policies of insurance, and make all determinations and decisions with
respect to such policies; (c) pay or discharge any taxes, liens, security
interests, or other encumbrances levied or placed on or threatened against
Grantor or its property other than those being contested by Grantor in
accordance with the Security Agreement; (d) defend any suit, action or
proceeding brought against Grantor if Grantor does not defend such suit, action
or proceeding or if Attorney believes that Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise
or adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the purpose of collecting any and
all such moneys due to Grantor whenever payable and to enforce any other right
in respect of Grantor's property; (f) communicate in its own name with any party
to any Contract with regard to the assignment of the right, title and interest
of such Grantor in and under the Contracts and other matters relating thereto;
(g) to file such financing statements and amendments thereto and continuation
statements with respect to the Security Agreement, as Lender may deem
appropriate to perfect the security interest in the collateral granted pursuant
to the Security Agreement; and (h) execute, in connection with any sale provided
for in any Security Document, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral and to otherwise direct
such sale or resale, all as though Attorney were the absolute owner of the
property of Grantor for all purposes, and to do, at Attorney's option and
Grantor's expense, at any time or from time to time, all acts and other things
that Attorney reasonably deems necessary to perfect, preserve, or realize upon
Grantor's property or assets and Attorney's Liens thereon, all as fully and
effectively as Grantor might do. Grantor hereby ratifies, to the extent
permitted by law, all that said Attorney shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and
Grantor has caused its seal to be affixed pursuant to the authority of its board
of directors this ____day of __________, 2003.
[INSERT NAME]
By:__________________________________
Name:
Title:
2
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2003, [OFFICER'S NAME] who is
personally known to me appeared before me in his/her capacity as the [TITLE] of
[_______________] ("Grantor") and executed on behalf of Grantor the Power of
Attorney in favor of [__________] to which this Certificate is attached.
_____________________________________
Notary Public
SCHEDULE 1
Subsidiaries of the Company
1. SHG Property Resources, LLC
2. SHG Investments, LLC
3. Fountain View, Inc.
4. Summit Care Corporation
5. Summit Care Pharmacy, Inc.
6. Alexandria Care Center, Inc.
7. Brier Oak on Sunset, Inc.
8. Elmcrest Care Center, Inc.
9. Hancock Park Rehabilitation Center, Inc.
10. Hancock Park Senior Assisted Living, Inc.
11. Fountain View Subacute and Nursing Center, Inc.
12. Rio Hondo Subacute and Nursing Center, Inc.
13. Sycamore Park Care Center, Inc.
14. Anaheim Terrace Care Center, LLC
15. Bay Crest Care Center, LLC
16. Alta Care Center, LLC
17. Royalwood Care Center, LLC
18. Sharon Care Center, LLC
19. Woodland Care Center, LLC
20. Carson Senior Assisted Living, LLC
21. Hemet Senior Assisted Living, LLC
22. Montebello Care Center, LLC
23. Summit Care Texas, L.P.
24. Summit Care Texas Management, LLC
25. Hallmark Investment Group, Inc.
26. Hallmark Rehabilitation GP, LLC
27. Hallmark Rehabilitation, LP
28. Leasehold Resource Group, LLC
29. Skilled Healthcare, LLC
2