[Governing Rights Among Junior Lenders/
Option to Purchase Note]
FORM OF
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"), and in its capacity as agent for the lenders (the
"Agent"), (ii) ET Capital Corp., a Delaware corporation ("ET Capital", together
with Genesis and their successors and assigns, the "Lenders") 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
Genesis 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:
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 ____, 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) 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 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, 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
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).
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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 irrevocably 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.
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.
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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.
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
________________________, 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. 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," and (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. Notwithstanding any provision herein to the contrary, in the
event an Exercise Notice is not delivered on or before _________________, 1999,
the provisions of this Section 4 shall be of no further force and effect.
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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 has 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.
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:
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(a) If to the Borrower, to:
Age Institute of Florida, Inc.
Professional Arts Building
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
With a copy (which shall not constitute notice) to:
Blank, Rome, Comisky & ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the Agent or to Genesis, to:
Genesis Health Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
With a copy (which shall not constitute notice) to:
Attention:
(c) If to ET Capital, to:
ET Capital Corporation
Attention:
with a copy (which shall not constitute notice) to:
Attention:
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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 Agent
By:__________________________________
Name:________________________________
Title:_______________________________
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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