ASSIGNMENT AND ASSUMPTION AGREEMENT
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THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement")
is made and entered into as of January 30, 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."
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
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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.
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
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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.
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
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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.
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
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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
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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.
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: /s/ Ira C. Gubernick
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Name: Ira C. Gubernick
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Title: General Counsel -Corporate and Secretary
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ET CAPITAL CORPORATION
as a Lender and as Agent
By: /s/ Edward B. Romanov, Jr.
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Name: Edward B. Romanov, Jr.
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Title: President & CEO
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AGE INSTITUTE OF FLORIDA
Borrower
By: /s/ Carol A. Tschop
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Name: Carol A. Tschop
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Title: President
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