1
EXHIBIT 10.22
INTERCREDITOR AGREEMENT
This Intercreditor Agreement ("Intercreditor Agreement") is
dated as of December 15, 1997, by and among HCFP FUNDING, INC., a Delaware
corporation ("HCFP"), SUN HEALTHCARE GROUP, INC., a Delaware corporation (the
"Subordinated Lender"), RETIREMENT CARE ASSOCIATES, INC., RETIREMENT MANAGEMENT
CORPORATION, and CAPITOL CARE MANAGEMENT COMPANY, INC., (collectively, the "Sun
Borrowers") ATRIUM NURSING HOME, INC., MID-FLORIDA, INC., SUN COAST RETIREMENT,
INC., WEST TENNESSEE, INC., LAKE FOREST HEALTHCARE CENTER, INC., LIBBIE
REHABILITATION CENTER, INC., BRENT-LOX HALL NURSING HOME, INC., PHOENIX
ASSOCIATES, INC., PINE MANOR REST HOME, INC., STATESBORO HEALTH CARE CENTER,
INC., GARDENDALE HEALTH CARE CENTER, INC., ROBERTA HEALTH CARE CENTER, INC.,
SOUTHSIDE HEALTH CARE CENTER, INC., CRESENT MEDICAL SERVICES, INC., GAINESVILLE
HEALTHCARE CENTER, INC., DUVAL HEALTHCARE CENTER, INC., JEFF DAVIS HEALTHCARE,
INC., CHARLTON HEALTHCARE, INC., BIBB HEALTH REHABILITATION, INC., MAPLEWOOD
HEALTH CARE CENTER OF JACKSON TENNESSEE, INC. and LAKE HEALTH CARE CENTER, INC.,
a Georgia corporation (collectively, the "Atrium Borrowers")(the Sun Borrowers
and the Atrium Borrowers shall be collectively known as the "Borrower").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The term "HCFP Obligations", as used in this Intercreditor
Agreement, shall be deemed to mean and include all of the Borrower's obligations
arising under or in connection with that certain Loan and Security Agreement
dated as of December 15, 1997 by and among the Sun Borrowers and HCFP, as the
same may be amended, replaced, supplemented or otherwise modified from time to
time (the "Sun Loan Agreement"), and that certain Loan and Security Agreement
dated as of December 15, 1997 by and among the Atrium Borrowers and HCFP, as the
same may be amended, replaced, supplemented or otherwise modified from time to
time (the "Atrium Loan Agreement") (the Sun Loan Agreement and the Atrium Loan
Agreement shall be collectively known as the "Loan Agreement") and all
documents and instruments ancillary to the Loan Agreement (the "Loan
Documents"), provided, however, that the HCFP Obligations shall not include any
obligations in excess of an aggregate principal amount of $15 million plus
accrued interest, reasonable fees and expenses applicable thereto as provided
for under the Loan Documents, or any obligations having a final maturity after
December 31, 2000. All capitalized terms used and not otherwise defined in this
Intercreditor Agreement shall have the meanings ascribed to them in the Loan
Agreement.
2. The term "Subordinated Indebtedness", as used in this
Intercreditor Agreement, shall be deemed to mean and include the indebtedness
owed by Retirement Care Associates, Inc., Retirement Management Corporation, and
Capitol Care Management Company, Inc. to the Subordinated Lender, pursuant to
the Promissory Note and the Amended and Restated Promissory Note, each dated
July 10, 1997 and the other loan documents listed on Exhibit A
2
attached hereto, and all other documents related thereto (the "Subordinated
Lender Documents").
3. Subordinated Lender does hereby agree that all of its
rights with respect to the following collateral described in clauses (i) through
(v) immediately below to the extent that it comprises collateral for the
Subordinated Indebtedness (collectively, the "Collateral") shall be in all
respects subject and subordinate to the rights of HCFP with respect to such
Collateral to the extent that it comprises collateral for the HCFP Obligations.
(i) All of the Borrower's now-owned and hereafter
acquired or arising accounts receivable and rights to payment of every kind and
description, and any contract rights, chattel paper, documents and instruments
with respect thereto;
(ii) All of the Borrower's now owned and hereafter
acquired or arising general intangibles of every kind and description pertaining
to its accounts receivable and other rights to payment, including, but not
limited to, all existing and future customer lists, choses in action, claims,
books, records, contracts, licenses, formulae, tax and other types of refunds,
returned and unearned insurance premiums, rights and claims under insurance
policies, and computer information, software, records, and data;
(iii) All of the Borrower's now or hereafter acquired
deposit accounts into which accounts receivable are deposited;
(iv) All of the Borrower's monies and other property of
every kind and nature now or at any time or times hereafter in the possession of
or under the control of Lender or a bailee or Affiliate of Lender; and
(v) The proceeds (including, without limitation,
insurance proceeds) of all of the foregoing.
The parties hereby acknowledge and agree that the
subordination of the Subordinated Lender's rights to the rights of HCFP as set
forth in this Section 3 shall be irrespective of:
(i) The time, order, manner or method of creation,
attachment or perfection of the respective security interests, liens and/or
other rights granted to the Subordinated Lender or HCFP;
(ii) The time or manner of the filing of their respective
financing statements;
(iii) Whether the Subordinated Lender or HCFP or any bailee
or agent thereof holds possession of any or all of the property or assets of the
Borrower;
(iv) The dating, execution or delivery of any agreement,
document or
2
3
instrument granting the Subordinated Lender or HCFP security interests and/or
liens in or on any or all of the property or assets of the Borrower;
(v) The giving or failure to give notice of the
acquisition or expected acquisition of any purchase money or other security
interest; and
(vi) Any provision of the UCC or any other applicable law
to the contrary.
4. Notwithstanding anything to the contrary in this
Intercreditor Agreement, the Subordinated Indebtedness may be evidenced and/or
secured by one or more UCC-1 financing statements, a security agreement or other
agreements, provided that any liens of Subordinated Lender with respect to the
Collateral shall be subject and subordinate to the lien of HCFP to the extent
provided in this Intercreditor Agreement.
5. Without affecting the rights of HCFP under this
Intercreditor Agreement, the Subordinated Lender agrees and consents that any
Collateral for the HCFP Obligations, in whole or in part, may be exchanged, sold
or surrendered by HCFP for other Collateral as it may deem advisable and that
any balance or balances of funds with HCFP at any time outstanding to the credit
of the Borrower may, from time to time, in whole or in part, be surrendered or
released by HCFP as it may deem advisable, subject, however, to the terms of the
HCFP Obligations and Subordinated Lender's subordinated security interest in the
Collateral.
6. The Subordinated Lender hereby agrees to furnish HCFP with
a copy of any default notice sent to the Borrower under the Subordinated Loan
Documents or any document relating thereto simultaneously with giving such
notice to the Borrower. In respect of any default under the Subordinated Lender
Documents, for a period from the date of such notice through and including the
period ending on the later to occur of (i) the 20th day thereafter or (ii) July
31, 1998, without HCFP's prior written consent, the Subordinated Lender (a)
shall take no action to assert, sue upon, set off against, collect, or enforce
all or any part of the Subordinated Indebtedness, including without limitation
outstanding principal and interest; and (b) shall not initiate a collection suit
or exercise set-off against the Borrower with respect to the Subordinated
Indebtedness.
7. HCFP and each Borrower hereby agree to furnish the
Subordinated Lender with a copy of any notice sent by it to any other party
under the Loan Documents or any documents relating thereto simultaneously with
giving such notice to such other party. Notwithstanding any other provision of
this Intercreditor Agreement, if an Event of Default has occurred under the Loan
Documents, and HCFP shall have given the Subordinated Lender written notice
thereof in a notice (a "Blockage Notice") invoking the provisions of this
Section 7 by identifying itself as a "Blockage Notice" hereunder, then until
such Event of Default has been cured and the Subordinated Lender has been
notified in writing of such cure by HCFP, the HCFP Obligations have been paid in
full, or HCFP shall have consented in writing, the Borrower shall not pay, and
the Subordinated Lender shall not receive, whether directly or indirectly by way
of
3
4
setoff or otherwise, any payments, or accelerated payments on account of any of
the Subordinated Indebtedness; provided, however, that (i) this Section 7 (but
not Section 6 or any other Section of this Agreement) shall cease to be
effective on the later to occur of the (i) 45th day following HCFP's delivery of
any Blockage Notice , or (ii) July 31, 1998, unless prior to such 45th day (or
July 31, 1998, as the case may be) the HCFP Obligations shall have been
accelerated or otherwise become due and payable in full and (ii) any Blockage
Notice delivered within twelve (12) months of any earlier Blockage Notice shall
be of no effect hereunder.
8. In the event of any distribution or payment to the
Subordinated Lender on the Subordinated Indebtedness, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, that is a
contravention of any provision of this Intercreditor Agreement (including
specifically but without limitation Sections 6 and 7) then, and in any such
event, any such payment or distribution with respect to the Subordinated
Indebtedness, whether due or not due and whether secured or unsecured, shall
immediately be delivered to HCFP in the form of its receipt (except for the
addition of any endorsement or assignment necessary to effect a transfer of all
rights therein to HCFP), and HCFP is irrevocably authorized to supply any
endorsement or assignment which may have been omitted or insufficient. Until so
delivered, any such distribution or payment shall be held in trust by the
Subordinated Lender for the benefit of HCFP.
10. This Intercreditor Agreement shall be governed by and
construed in accordance with the laws of the State of New York, and shall be
binding upon the undersigned and the respective successors and assigns of the
undersigned.
11. No finding of invalidity of any provision of this
Intercreditor Agreement shall affect the continuing validity of all other
provisions of this Intercreditor Agreement.
12. This Intercreditor Agreement shall terminate and be of no
further force or effect upon the payment in full of the HCFP Obligations.
13. This Intercreditor Agreement defines the relative rights
of the Subordinated Lender and HCFP only. Without limiting the generality of the
foregoing, this Intercreditor Agreement shall not impair, as between the
Borrowers and the Subordinated Lender, the obligation of the Borrowers to pay
the Subordinated Indebtedness in accordance with the terms of the Subordinated
Lender Documents or the Subordinated Lender's right to exercise available
remedies upon or in respect of any default under the Subordinated Lender
Documents.
14. This Intercreditor Agreement may be executed in one or
more counterparts, each of which for all purposes shall be deemed an original.
15. Any notice or other communication required or permitted
hereunder shall be in writing and personally delivered, mailed by registered or
certified mail (return receipt requested and postage prepaid), sent by facsimile
(with a confirming copy sent by regular mail), or sent by prepaid overnight
courier service, and addressed to the relevant party at its address set
4
5
forth below, or at such other address as such party may, by written notice,
designate as its address for purposes of notice hereunder:
(a) If to Lender at:
HCFP Funding, Inc.
2 Wisconsin Circle, Suite 320
Chevy Chase, Maryland 20815
Attention: Ethan D. Leder, President
Telephone: (301) 961-1640
Facsimile: (301) 664-9860
(b) If to Borrower at:
Retirement Care Associates, Inc.
6000 Lake Forrest Drive
Suite 200
Atlanta, GA 30328
Telephone: (404) 255-7500
Facsimile: (404) 255-5789
With a copy to:
Gregory P. Youra, Esq.
Vincent, Berg, Stalzer & Menendez
The Lenox Building
3399 Peachtree Road, Ste 1400
Atlanta, GA 30326
Telephone: (404) 812-5680
Facsimile: (404) 812-5699
(c) If to Subordinated Lender at:
Sun Healthcare Group, Inc.
101 Sun Lane, NE
Albuquerque, New Mexico 87109
Attention: Robert F. Murphy
Telephone: (505) 821-3355
Facsimile: (505) 856-0747
with copy to:
Brobeck Phleger & Harrison LLP
One Market Street
5
6
Spear Street Tower
San Francisco, CA 94105
Attention: Michael J. Kennedy
Telephone: (415) 442-0900
Facsimile: (415) 442-1010
If mailed, notice shall be deemed to be given five (5) days after being sent, if
sent by personal delivery or facsimile, notice shall be deemed to be given when
delivered, and if sent by prepaid courier, notice shall be deemed to be given on
the next Business Day following deposit with the courier.
6
7
IN WITNESS WHEREOF, the parties have executed or caused this
Intercreditor Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
HCFP FUNDING, INC.
a Delaware corporation
By:
------------------------------------
Name:
Title:
SUN HEALTHCARE GROUP, INC.
a Delaware corporation
By:
------------------------------------
Name:
Title:
RETIREMENT CARE ASSOCIATES, INC.
a Colorado corporation
By:
------------------------------------
Name:
Title:
RETIREMENT MANAGEMENT
CORPORATION
a Georgia corporation
By:
------------------------------------
Name:
Title:
7
8
CAPITOL CARE MANAGEMENT
COMPANY, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
ATRIUM NURSING HOME, INC.
a Florida corporation
By:
------------------------------------
Name:
Title:
MID-FLORIDA, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
SUN COAST RETIREMENT, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
WEST TENNESSEE, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
8
9
LAKE FOREST HEALTHCARE CENTER,
INC.,
a Georgia corporation
By:
------------------------------------
Name:
Title:
LIBBIE REHABILITATION CENTER, INC.
a Virginia corporation
By:
------------------------------------
Name:
Title:
BRENT-LOX HALL NURSING HOME, INC.
a Virginia corporation
By:
------------------------------------
Name:
Title:
PHOENIX ASSOCIATES, INC.
a Virginia corporation
By:
------------------------------------
Name:
Title:
PINE MANOR REST HOME, INC.
a North Carolina corporation
By:
------------------------------------
Name:
Title:
9
10
STATESBORO HEALTH CARE CENTER,
INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
GARDENDALE HEALTH CARE CENTER,
INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
ROBERTA HEALTH CARE CENTER, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
SOUTHSIDE HEALTH CARE CENTER, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
10
11
CRESENT MEDICAL SERVICES, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
GAINESVILLE HEALTHCARE CENTER,
INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
JEFF DAVIS HEALTHCARE, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
DUVAL HEALTHCARE CENTER, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
11
12
CHARLTON HEALTHCARE, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
BIBB HEALTH REHABILITATION, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
MAPLEWOOD HEALTH CARE CENTER OF
JACKSON TENNESSEE, INC.
a Tennessee corporation
By:
------------------------------------
Name:
Title:
LAKE HEALTH CARE CENTER, INC.
a Georgia corporation
By:
------------------------------------
Name:
Title:
12
13
EXHIBIT A
Subordinated Lender Documents
13