[Governing Rights Among Junior Lenders/
Option to Purchase Note]
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made
and entered into as of January ____, 1998, among (i) Genesis Health Ventures,
Inc., a Pennsylvania corporation, in its capacity as the assigning lender
hereunder ("Genesis"), (ii) ET Capital Corp., a Delaware corporation ("ET
Capital", together with Genesis and their successors and assigns, the
"Lenders") and in its capacity as agent for the Lenders (the "Agent") and
(iii) Age Institute of Florida, Inc., a Florida non-profit corporation
(together with its successors and assigns, the "Borrower").
WHEREAS, Genesis and the Borrower entered into that certain Working
Capital Loan and Security Agreement, dated as of August 31, 1996 (as may be
amended or assigned from time to time, the "Loan Agreement"), pursuant to
which Genesis agreed to make a loan to the Borrower in the aggregate principal
amount of $10,000,000 (the "Loan") and the Borrower granted Genesis a security
interest in certain collateral to secure its obligations in connection with
the Loan;
WHEREAS, the Loan was evidenced by that certain Promissory Note,
dated August 31, 1996 (the "Note"), payable to the order of Genesis in the
principal amount of $10,000,000;
WHEREAS, simultaneously with the execution and delivery of the Loan
Agreement, the Borrower and Genesis entered into that certain Security
Agreement, dated as of August 31, 1996 (the "Security Agreement"), whereby the
Borrower granted Genesis a security interest in all of its accounts,
inventory, equipment and general intangibles to secure the obligations of the
Borrower in connection with, among other things, the Loan;
WHEREAS, ET Capital has agreed to purchase, and Genesis has agreed to
sell, a portion of the principal amount of the Note equal to $7,500,000 on the
terms and conditions set forth herein;
WHEREAS, ET Capital wishes to become a party to the Loan Agreement as
a lender and is willing to assume the rights and obligations of a lender
therein contained;
WHEREAS, Genesis and ET Capital, as lenders, wish to appoint ET
Capital to act as their Agent under the Loan Agreement, the Security Agreement
and the other agreements, instruments and documents executed and delivered in
connection therewith;
WHEREAS, Genesis has agreed to grant ET Capital an option to purchase
the remaining principal amount of the Note on the terms and conditions set
forth herein; and
WHEREAS, in connection with this Agreement, (i) the Lenders and the
Borrower are entering into an Amendment to Working Capital Loan Agreement,
dated as of the date hereof, (ii) the Lenders and the Borrower are entering
into an Assignment and Amendment to Security Agreement, dated as of the date
hereof; and (iii) the Borrower is granting a mortgage and security interest in
the Facilities (as defined in the Loan Agreement) and related property
pursuant to a Second Mortgage, Assignment of Rents and Security Interest,
dated as of the date hereof (the "Mortgage").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the
following meanings:
"$2,500,000 Amended and Restated Note" means the Amended and Restated
Promissory Note executed by the Borrower payable to the order of Genesis in
the principal amount of $2,500,000, in substantially the form attached hereto
as Exhibit A.
"$7,500,000 Amended and Restated Note" means the Amended and Restated
Promissory Note executed by the Borrower payable to the order of ET Capital in
the principal amount of $7,500,000, in substantially the form attached hereto
as Exhibit B.
"Amended and Restated Notes" means, collectively, the $2,500,000
Amended and Restated Note and the $7,500,000 Amended and Restated Note.
"Collateral" means, collectively, the "Collateral" as defined in the
Loan Agreement, the "Collateral" as defined in the Security Agreement and the
"Property" as defined in the Mortgage.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the date hereof, among Genesis, in its capacity as senior lender,
junior lender and agent, ET Capital and the Borrower.
"Loan Documents" means the Loan Agreement, the Amended and Restated
Notes, the Security Agreement, the Mortgage and all other agreements,
instruments and documents executed in connection therewith, as such documents
may be amended, renewed, modified, extended, assigned, refinanced or replaced
from time to time.
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Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Loan Agreement.
2. ASSIGNMENT AND ASSUMPTION.
2.1 At or before 12:00 noon on January 30, 1998, ET Capital shall pay
to Genesis, in immediately available funds, an amount equal to Seven Million
Five Hundred Thousand Dollars ($7,500,00.00) (the "Purchase Price"). Effective
upon the date of receipt by Genesis of the Purchase Price (the "Transfer
Effective Date"), Genesis hereby irrevocably sells, assigns and transfers to
ET Capital, without recourse, and ET Capital hereby irrevocably purchases,
takes and assumes from Genesis a portion of the outstanding principal amount
under the Loan equal to seventy-five percent (75%). Genesis shall retain a
twenty-five percent (25%) portion of such outstanding principal amount of the
Loan.
2.2 From and after the Transfer Effective Date, ET Capital shall be a
party to the Loan Agreement as a lender for all purposes thereof.
2.3 All principal payments that would otherwise be payable from and
after the Transfer Effective Date to or for the account of Genesis pursuant to
the Working Capital Loan Agreement or the Note shall instead be payable to
Genesis and ET Capital, on a pari passu basis, in accordance with their
respective interests as reflected in Section 2.1 hereof.
2.4 All interest, fees and other amounts that otherwise accrue for
the account of Genesis from and after the Transfer Effective Date pursuant to
the Loan Agreement and the Note shall, instead, accrue for the account of, and
be payable to, Genesis and ET Capital, as the case may be, on a pari passu
basis, in accordance with their respective interests as reflected in Section
2.1 hereof.
2.5 As a condition to the obligation to purchase, and on or prior to
the Transfer Effective Date, the Borrower shall execute and deliver to the
Agent the Amended and Restated Notes reflecting the interests set forth in
Section 2.1 hereof, and shall have executed and delivered an amendment of the
Loan Documents as contemplated hereby and an amendment of any and all
management agreements pertaining to the Facilities in form satisfactory to the
Lenders which provides for subordination of certain management fees in the
event of default under the Loan Documents as agreed between the parties.
Promptly after the Transfer Effective Date, the Agent will deliver to Genesis
the $2,500,000 Amended and Restated Note and will deliver to ET Capital the
$7,500,000 Amended and Restated Note, and Genesis will surrender the Note to
the Borrower, marked "Canceled by Substitution."
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2.6 Each of the Lenders shall be secured by the security interests
granted under the Security Agreement, the Loan Agreement and the Mortgage to
secure the obligations of the Borrower in connection with the Loan on a pro
rata basis in proportion to the portion of the outstanding principal amount of
the Loan owed to each Lender. Each of the Lenders and the Agent acknowledges
that in accordance with the terms of the Intercreditor Agreement, the security
interests granted under the Loan Agreement, the Security Agreement and the
Mortgage to secure the obligations of the Borrower in connection with the Loan
are subordinated to the security interests granted by the Borrower to secure
the obligations of the Borrower in connection with the Acquisition Loan (as
defined in the Security Agreement).
2.7 Concurrently with the execution of this Agreement, Genesis will
provide to ET Capital conformed copies of all of the Loan Documents.
2.8 By executing and delivering this Agreement, Genesis and ET
Capital confirm and agree as follows:
(a) other than the representation and warranty that it is
the legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim, Genesis makes no representation and warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or any other
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement, the Note or any other
Loan Document;
(b) Genesis makes no representation and warranty and assumes
no responsibility with respect to the financial condition of the Borrower or
the performance or observance by the Borrower of any of its obligations under
any of the Loan Documents;
(c) ET Capital has received a copy of each of the Loan
Documents together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Agreement; and
(d) ET Capital will, independently and without reliance upon
Genesis, continue to make its own credit decisions in taking or not taking
action under the Loan Documents.
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3. AGENCY.
3.1 The Lenders hereby appoint and authorize the Agent to act as
their agent under the Loan Agreement, the Security Agreement, the Mortgage and
each of the other Loan Documents, and the Agent hereby accepts such
appointment and authorization. Each of the Lenders and any subsequent holder
of the Amended and Restated Notes by its acceptance thereof, irrevocably
authorizes the Agent to execute and take such action on its behalf under the
provisions of the Loan Documents and to exercise such powers hereunder and
thereunder as are specifically delegated to the Agent by the terms hereof and
thereof and such powers as are reasonably incidental thereto. The Agent is
hereby expressly authorized on behalf of the Lenders, without limiting any
implied authority, (i) to execute any and all Loan Documents on behalf of the
Lenders, except where Lenders are parties thereto, (ii) to distribute to each
Lender copies of all notices, agreements and other material as provided for in
the Loan Agreement, the Security Agreement or in the other Loan Documents,
(iii) to hold and apply any and all Collateral, and the proceeds thereof, on
behalf of the Lenders on a pari passu basis, subject to the terms of and
rights set forth in the Intercreditor Agreement, (iv) to exercise any and all
rights, powers and remedies of the Lenders under the Loan Documents, (v) to
execute and deliver and file and possess instruments and documents, including
without limitation financing statements, financing statement amendments and
continuation statements, on behalf of any or all of the Lenders; and (vi) in
the event of any acceleration of the Loan or any amounts due under the Amended
and Restated Notes, to use its best efforts to sell or otherwise liquidate or
dispose of the Collateral and otherwise exercise the rights of the Lenders
under the Loan Agreement, the Security Agreement and the Mortgage.
3.2 Each Lender agrees (a) to reimburse the Agent in the amount of
such Lender's pro rata share based on its percentage of the outstanding
principal amount of the Loan for any expenses incurred by the Agent for the
benefit of the Lenders, including counsel fees and compensation of agents and
employees, and all other amounts paid by the Agent respectively, for services
rendered on behalf of the Lenders and (b) to indemnify and hold harmless the
Agent and any of its directors, officers, employees or agents, on demand, in
the amount of its pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against it in its capacity as the Agent or
any of its directors, officers, employees or agents in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Agent
or any of its directors, officers, employees or agents under the Loan
Documents, to the extent not reimbursed by the Borrower; provided, however,
that no Lender shall be liable to the Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgment,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of the Agent, or any of its directors, officers, employees
or agents.
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3.3 Neither the Agent nor any of its officers, directors, employees
or agents will be liable to the Lenders for any action taken or omitted
hereunder or in connection herewith or in connection with any document or
instrument now or hereafter executed in connection herewith unless caused by
its gross negligence or willful misconduct. The Agent will not be responsible
for any recitals, warranties or representations in the Loan Agreement, the
Mortgage or any other Loan Document. The Lenders acknowledge that they have
reviewed the Loan Agreement, the Amended and Restated Notes, the Security
Agreement, the Mortgage and all of the other Loan Documents and are fully
aware of the terms hereof and thereof. The Agent may execute any of its duties
by or through agents or employees and will be entitled to advice of counsel,
accountants or other professionals of its selection concerning all matters
pertaining to the Loan Documents and its duties hereunder and thereunder. The
Agent will be entitled to rely upon any writing or other document, telegram or
telephone conversation believed by it to have been signed, sent or made by the
proper person or persons and, in respect of legal matters, upon the advice of
counsel selected by the Agent. The Agent shall be fully justified in failing
or refusing to take any action under the Loan Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of all the
Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action except for its own gross negligence or willful misconduct. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of all the Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders
of the Amended and Restated Notes.
3.4 Each Lender acknowledges that the Agent has not made any
representation or warranty to it and that no act taken by the Agent will be
deemed to constitute a representation or warranty by the Agent to any Lender.
Each Lender further acknowledges that it has taken and will continue to take
such action and to make such investigation as it deems necessary to inform
itself of the affairs of the Borrower and that it has made and will continue
to make its own independent investigation of the creditworthiness and the
business and operations of the Borrower. In making an advance hereunder, each
Lender represents that it has not relied and will not rely upon any
information or representations furnished or given by the Agent. The Agent will
be under no duty or responsibility to the Lenders to ascertain or to inquire
into the performance or observance by the Borrower of any of the provisions of
this Agreement or any document or instrument now or hereafter executed in
connection herewith. The Agent will not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrower or any affiliate
thereof which may come into the possession of the Agent. The Lenders
understand and agree that the Agent will not be deemed to have knowledge of
the existence, occurrence or continuance of any event of default under any of
the Loan Documents, unless the officers of the Agent immediately responsible
for matters concerning this Agreement will have actual knowledge of such
occurrence or will have been notified in writing by any Lender or Borrower
that the Lender or the Borrower, as applicable, considers that such event of
default has occurred and is continuing and specifying the nature thereof.
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3.5 Upon the occurrence and during the continuation of an Event of
Default (as defined in the Loan Agreement), and following a declaration by a
Lender that a Amended and Restated Note is due and payable, the Agent upon the
request of the Lender, will proceed to enforce the rights of the Lender under
the Amended and Restated Note by such proceedings as the Agent may deem
appropriate, whether at law or in equity. The Agent, on behalf of all the
Lenders, will hold in accordance with the Loan Agreement, the Security
Agreement and the Mortgage, subject to the provisions of the Intercreditor
Agreement, all items of Collateral received or held by the Agent. Subject to
the Agent's rights to reimbursement for its costs and expenses hereunder and,
subject to the provisions of the Intercreditor Agreement, each Lender will
have an interest in any Collateral in the same proportions that the aggregate
outstanding principal obligations owed such Lender pursuant to the Loan
Agreement bear to the aggregate outstanding principal obligations owed to all
the Lenders, without priority or preference among the Lenders.
3.6 The Agent, in all cases, will be fully protected in acting, or in
refraining from acting, hereunder or in connection with any other documents or
instruments now or hereafter executed in connection herewith in accordance
with written instructions of the Lenders.
3.7 Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Lenders will have the right to
appoint a successor Agent. If no successor Agent will have been so appointed
by the Lenders and will have accepted such appointment within thirty (30) days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor, such
successor will thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent
will be discharged from its duties and obligations hereunder and under the
Loan Documents. After any Agent's resignation hereunder, the provisions of
this Section 3 will continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
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4. PURCHASE OPTION
At any time prior to the close of business on January 30, 1999, ET
Capital shall have the right to purchase from Genesis all, but not part, of
the outstanding principal amount of the Loan held by Genesis evidenced by the
$2,500,000 Amended and Restated Note (the "Option Asset") by delivering to
Genesis written notice (the "Exercise Notice") on or prior to said date. The
Exercise Notice shall state ET Capital's intention to exercise the purchase
option pursuant to this Section 4 and shall further specify the closing date
of such purchase (the "Closing Date"); provided, however, that such Closing
Date shall not be sooner than five (5) business days nor later than twenty
(20) business days after the date of delivery of the Exercise Notice. The
purchase price for the Option Asset shall be an amount (the "Purchase Price")
equal to the outstanding principal amount of the $2,500,000 Amended and
Restated Note on the date of such purchase, together with any accrued and
unpaid interest thereon. On the Closing Date, (i) ET Capital shall deliver the
Purchase Price to Genesis in immediately available funds, (ii) Genesis shall
deliver the $2,500,000 Amended and Restated Note to the Agent, the Borrower
shall issue a new promissory note in favor of ET Capital in the amount of the
outstanding principal amount of the Loan being purchased and the Agent shall
surrender the $2,500,000 Amended and Restated Note to the Borrower marked
"Canceled by Substitution," (iii) ET Capital, Genesis and the Borrower shall
execute and deliver an Assignment and Assumption Agreement containing
provisions substantially similar to the provisions contained in Section 2
hereof; and the agency relationship hereunder shall terminate. Notwithstanding
any provision herein to the contrary, in the event an Exercise Notice is not
delivered on or before January 30, 1999, the provisions of this Section 4
shall be of no further force and effect.
5. MISCELLANEOUS.
5.1 This Agreement shall be binding and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors
and assigns.
5.2 If any of the provisions or terms of this Agreement shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any of the other terms hereof, and this
Agreement shall be construed as if such unenforceable term had never been
contained herein.
5.3 This Agreement may be executed in one or more counterparts, each
of which shall constitute an original Agreement but all of which together
shall constitute one and the same instrument.
5.4 The descriptive headings herein are for convenience only and
shall not affect the meaning or construction of any of the provisions hereof.
Words used herein, regardless of the number and gender specifically used shall
be deemed and construed to include any other number, singular, or plural, and
any other gender, masculine, feminine or neuter, as the context requires.
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5.5 All notices, requests, consents, demands, approvals and other
communications hereunder shall be deemed to have been duly given, made or
served if in writing and when delivered personally (including without
limitation by means of telex, telecopies or telefax systems), or the day
following delivery to a nationally recognized, reputable overnight courier
service which guarantees delivery within twenty-four hours, charges prepaid,
to the respective parties to this Agreement as follows:
(a) If to the Borrower, to:
Age Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, Pennsylvania 17201
Attention: Carol A. Tschop, President
With a copy (which shall not constitute notice) to:
Blank, Rome, Comisky & McCauley
1 Logan Square
Philadelphia, Pennsylvania 19103
Attention: Harry A. Madonna, Esq.
(b) If to Genesis, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: President
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: George P. Barsness, Esq.
(c) If to the Agent or to ET Capital, to:
ET Capital Corporation
415 McFarlan Road
Suite 202
Kennett Square, Pennsylvania 19348
Attention: President
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
555 Thirteenth Street, N.W.
Washington, D. C. 20004
Attention: George P. Barsness, Esq.
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The designation of the person to be so notified or the address of
such person for the purposes of such notice may be changed from time to time
by similar notice in writing, except that any communication with respect to a
change of address shall be deemed to be given and made when received by the
party to whom such communication was sent.
5.6 The validity, meaning and effect of this Agreement shall be
determined in accordance with the laws of the State of Florida without regard
to conflicts of laws principles thereof.
5.7 No provision of this Agreement may be amended, modified,
terminated or waived except by a writing duly executed by each party sought to
be bound by such amendment, modification, termination or waiver.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each party hereto has duly executed or caused
this Assignment and Assumption Agreement to be duly executed on such party's
behalf as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
as a Lender
By:___________________________________
Name:_________________________________
Title:________________________________
ET CAPITAL CORPORATION
as a Lender
By:___________________________________
Name:_________________________________
Title:________________________________
AGE INSTITUTE OF FLORIDA
Borrower
By:___________________________________
Name:_________________________________
Title:________________________________
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