EXHIBIT 10.6
ASSIGNMENT OF CONTRACTS
AS COLLATERAL SECURITY
FOR VALUE RECEIVED, FSQC FUNDING CO., LLC (the "Assignor"), hereby
grants a security interest in and assigns and transfers to HFG HEALTHCO-4 LLC,
as the Collateral Agent, for the benefit of the Lenders (the "Assignee"), all
right, title and interest of the Assignor in and to, all benefits of the
Assignor under, and all monies due or to become due to the Assignor under or in
connection with, each of the agreements more particularly described as follows:
(i) that certain Receivables Purchase and Transfer Agreement,
dated as of October 24, 2002, among Five Star Quality Care, Inc. ("Five
Star"), as Primary Servicer, certain parties named therein, as
Providers, and the Assignor, as Purchaser (as such agreement may be
amended, restated, modified or supplemented from time to time in
accordance with the terms thereof and hereof, the "Transfer
Agreement");
(ii) that certain Guaranty, dated as of October 24, 2002, made
by Five Star, FSQ, Inc., Five Star Quality Care Trust and Five Star
Quality Care Holding Co., Inc. (collectively, "Guarantors") in favor of
the Assignor (as such agreement may be amended, restated, modified or
supplemented from time to time in accordance with the terms thereof and
hereof, the "Guaranty"); and
(iii) that certain Pledge Agreement, dated as of October 24,
2002, among the Guarantors, as Pledgors, and the Assignor, as Pledgee
(as such agreement may be amended, restated, modified or supplemented
from time to time in accordance with the provisions thereof and hereof,
the "Pledge Agreement" and, collectively with the Transfer Agreement
and the Guaranty, the "Documents"),
as collateral security for any and all Lender Debt as arising under, and defined
in, that certain Loan and Security Agreement, dated as of October 24, 2002,
among the Assignor, the Lenders party thereto, Dresdner Kleinwort Wasserstein
LLC, as a Program Manager, Syndication Agent and Lead Arranger, Healthcare
Finance Group, Inc., as a Program Manager, and the Assignee, as Collateral Agent
(as such may be amended, modified or supplemented from time to time, the "Loan
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined), whether at stated maturity, by acceleration or
otherwise (including, without limitation, all interest thereon, whether accruing
prior or subsequent to the commencement of a bankruptcy or similar proceeding
involving the Assignor as a debtor), and all present and future obligations of
the Assignor under this Assignment, whether at stated maturity, by acceleration
or otherwise (all of the foregoing being herein referred to as the
"Obligations").
The Assignor agrees, covenants, represents and warrants that:
1. The Assignor's right, title and interest in each of the
Documents is owned by the Assignor free and clear of all claims,
mortgages, pledges, liens, encumbrances and security interests of every
nature whatsoever, except in favor of the Assignee. Without the
Assignee's prior written consent, the Assignor will not sell, transfer,
assign, pledge or grant a security interest in any Document to any
other person. Any such sale, transfer, assignment, mortgage, pledge or
encumbrance without the Assignee's written consent shall be void and of
no force and effect.
2. Without the Assignee's prior written consent, the Assignor
will not amend (directly or indirectly), modify, supplement, waive
compliance with, seek or grant a waiver under or assent to
non-compliance with any of the Documents.
3. The Assignor specifically acknowledges and agrees that the
Assignee does not assume, and shall have no responsibility for, the
payment of any sums due or to become due under any of the Documents by
the Assignor or the performance of any obligations to be performed
under or with respect to any of the Documents by the Assignor, and the
Assignor hereby agrees to indemnify and hold the Assignee harmless with
respect to any and all claims by any person relating thereto. The
Assignee, in its discretion, may file or record this Assignment.
4. If an Event of Default shall occur and be continuing, in
addition to all other rights and remedies of the Assignee pursuant to
any agreements of the Assignor in favor of or assigned to and held by
the Assignee or pursuant to applicable law or otherwise, the Assignee
or its successor shall have all rights and benefits under the
Documents, including, without limitation, any and all rights to
indemnification, without modifying or discharging any of the
Obligations, except to the extent payment in respect thereof is
received. Upon the occurrence and continuance of an Event of Default,
the Assignor agrees to execute any and all documents requested by the
Assignee in its sole discretion to enable the Assignee to exercise all
of the rights of the Assignor under each of the Documents. The
specified remedies to which the Assignee may resort under the terms of
this Assignment are cumulative and are not intended to be exclusive of
any other remedies or means of redress to which the Assignee may be
lawfully entitled in case of any breach or threatened breach by the
Assignor of any provision hereof or of any of the Obligations. Nothing
contained in this Assignment, and no act or action taken or done by the
Assignee pursuant to the powers and rights granted to it hereunder, or
under any instrument collateral hereto shall be deemed to be a waiver
by the Assignee of any of its rights and remedies against the Assignor
in connection with, or in respect of, any of the Obligations. The right
of the Assignee to collect and enforce collection of the Obligations
and to enforce any security and collateral held by it may be exercised
by the Assignee prior to, simultaneously with, or subsequent to any
action taken by the Assignee hereunder.
5. Upon the payment and satisfaction in full of all of the
Obligations and the termination of any commitment by the Assignee to
make loans or other financial
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accommodations to or for the benefit of the Assignor under the Loan
Agreement, this Assignment shall be terminated by the Assignee and
shall be of no further force or effect, but the affidavit, certificate,
letter or statement of any officer, agent or attorney of the Assignee
showing that any part of the Obligations remains unpaid or unsatisfied
shall be and constitute prima facie evidence of the validity,
effectiveness and continuing force of this Assignment and any person
may, and is hereby authorized to, rely thereon.
6. The Assignee may take, or release, in whole or in part,
other security which it may hold for the payment of the Obligations,
may release any party primarily or secondarily liable therefor, and may
apply any other security held by it to the satisfaction, or partial
satisfaction, of such Obligations, without prejudice to any of its
rights under this Assignment.
7. This Assignment shall inure to the benefit of the Assignee
and its successors, assigns and designees, and shall be binding upon
any subsequent owner of the Assignor's interest in and to the
Documents.
8. The Assignor covenants to execute and deliver to the
Assignee, upon demand, such additional assurances, writings or other
instruments as may be reasonably required by the Assignee to effectuate
the purpose hereof. This Assignment may not be changed orally and is to
be governed by the internal laws of the State of New York applicable to
contracts executed and to be performed in such State.
9. The Assignor hereby irrevocably designates and appoints the
Assignee as attorney-in-fact of the Assignor with power of
substitution, and with authority from and after and during the
continuance of an Event of Default: to execute and deliver for and on
behalf of the Assignor any and all instruments, documents, agreements
and other writings necessary or advisable for the exercise on behalf of
the Assignor pursuant hereto of any rights, benefits or options created
or existing under or pursuant to the Documents and in this regard; to
endorse the name of the Assignor on its behalf on any and all notes,
acceptances, checks, drafts, money orders, instruments or other
evidences of collateral, that may come into the Assignee's possession;
to execute proofs of claim and loss; to execute endorsements,
assignments or other instruments of conveyance and transfer; to execute
releases; and, to do all other acts and things necessary and advisable
in the discretion of the Assignee to carry out and enforce this
Assignment or the Obligations. All acts done by the Assignee under the
foregoing authorization are hereby ratified and approved, and neither
the Assignee or its successors nor any designee or agent thereof shall
be liable for any acts of commission or omission (other than acts
committed or omitted through bad faith, gross negligence or willful
misconduct), for any error of judgment or for mistake of facts or law.
This power of attorney being coupled with an interest is irrevocable
while any of the Obligations shall remain unpaid and unperformed.
10. If an Event of Default shall occur and be continuing, the
Assignee may, in its discretion, in its name or the Assignor's, notify
any obligor under the Documents to make payment to the Assignee of all
amounts due or to become due under the Documents.
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11. If an Event of Default shall occur and be continuing, the
Assignee may, in its discretion, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of
or in exchange for the Documents, or, with respect to payments which
have become due and payable under the Documents, make any compromise or
settlement deemed desirable by the Assignee.
12. The Assignor agrees that any copy of this Assignment
signed by the Assignor and transmitted by telefax for delivery to the
Assignee shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is
in existence.
13. This Assignment may be executed in counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
executed this 24th day of October, 2002.
FSQC FUNDING CO., LLC
By: /s/ Bruce J. Mackey Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer
HFG HEALTHCO-4 LLC, as Collateral Agent
By: HFG Healthco-4, Inc., a member
By: /s/ Orlando Figueroa
Name: Orlando Figueroa
Title: Vice President
Acknowledged:
PRIMARY SERVICER: FIVE STAR QUALITY CARE, INC.
By: /s/ Bruce J. Mackey Jr.
Bruce J. Mackey Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary
[Signature page continued]
PROVIDERS: FIVE STAR QUALITY CARE-AZ, LLC
FIVE STAR QUALITY CARE-CA, LLC
FIVE STAR QUALITY CARE-COLORADO, LLC
FIVE STAR QUALITY CARE-CT, LLC
FIVE STAR QUALITY CARE-GA, LLC
FIVE STAR QUALITY CARE-IA, LLC
FIVE STAR QUALITY CARE-KS, LLC
FIVE STAR QUALITY CARE-MI, LLC
FIVE STAR QUALITY CARE-MO, LLC
FIVE STAR QUALITY CARE-NE, LLC
FIVE STAR QUALITY CARE-WI, LLC
FIVE STAR QUALITY CARE-WY, LLC
FIVE STAR QUALITY CARE - CA, INC.
FIVE STAR QUALITY CARE - IA, INC.
FIVE STAR QUALITY CARE - MI, INC.
FIVE STAR QUALITY CARE - NE, INC.
By: /s/ Bruce J. Mackey Jr.
Bruce J. Mackey, Jr.
Chief Financial Officer, Treasurer
and Assistant Secretary