Collateral Agency And Sharing Agreement

EXHIBIT 10.67


COLLATERAL AGENCY AND SHARING AGREEMENT


dated as of December 23, 1998


among


MARINER HEALTH GROUP, INC.,


SUBSIDIARY GUARANTORS,


CERTAIN BANKS AND THEIR AGENTS,


and


PNC BANK, NATIONAL ASSOCIATION,
as Collateral Agent


1. DEFINITIONS; CONSTRUCTION ........................ 2
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1.1 Certain Definitions........................... 2
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1.2 Construction.................................. 7
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2. SECURED PARTY DOCUMENTS........................... 7
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2.1 Subsidiary Guarantors......................... 7
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2.2 Amendments to Loan Documents.................. 7
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2.3 Delivery of Documents......................... 8
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2.4 Termination of a Secured Party................ 8
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2.5 Certain Intercreditor Matters................. 8
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3. SHARED SECURITY ACTIONS........................... 9
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3.1 General Relation to Secured Parties........... 9
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3.2 Directing Party Direction;
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Directing Party Appointment................... 9
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3.3 Form of Directing Party Direction.............10
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3.4 Requested Directions..........................10
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3.5 Release of Collateral;
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Distributions; Waivers; Amendments............10
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4. ACCOUNTS; UNSHARED COLLATERAL.....................10
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4.1 Shared Collateral Account.....................10
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4.2 Investment....................................10
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4.3 Deposits......................................11
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4.4 Distributions.................................11
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4.5 Calculations..................................12
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4.6 Application of Monies.........................12
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4.7 General Provisions Relating to Accounts.......12
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4.8 Unshared Collateral...........................13
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5. THE COLLATERAL AGENT..............................14
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5.1 Appointment...................................14
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5.2 General Nature of Collateral Agent's Duties...14
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5.3 Exercise of Powers............................15
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5.4 General Exculpatory Provisions................15
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5.5 Administration by the Collateral Agent........16
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5.6 Collateral Agent in its Individual Capacity...18
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5.7 Facility Parties..............................18
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5.8 Successor Collateral Agent....................18
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5.9 Calculations..................................19
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5.10 Collateral Agent's Fee.......................19
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5.11 Expenses; Indemnity..........................19
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5.12 Monies Held As Collateral Agent..............20
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6. MISCELLANEOUS.....................................20
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6.1 Notices.......................................20
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6.2 No Implied Waiver; Cumulative Remedies........21
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6.3 Severability..................................21
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6.4 Prior Understandings..........................21
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6.5 Counterparts..................................22
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6.6 Termination of Liens;.........................22
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Termination of this Agreement.
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6.7 Successors and Assigns........................22
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6.8 Governing Law; Submission to Jurisdiction;
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Waiver of Jury Trial; Limitation of Liability.22
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COLLATERAL AGENCY AND SHARING AGREEMENT


THIS COLLATERAL AGENCY AND SHARING AGREEMENT is dated as of December 23, 1998, among Mariner Health Group, Inc., a Delaware corporation ("Mariner"), the Guarantors (as defined herein), the Term Loan Agent (as defined herein) on behalf of the Term Loan Banks (as defined herein), the Revolving Credit Agent (as defined herein) on behalf of the Revolving Credit Banks (as defined herein), and PNC Bank, National Association, as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent").


W I T N E S S E T H
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WHEREAS, Mariner has entered into a Term Loan Agreement, dated as of December 23, 1998, with and among the banks from time to time parties thereto, First Union National Bank, as syndication agent, and PNC Bank, National Association, in its capacity as administrative agent for such banks (in such capacity, the "Term Loan Agent") (such agreement, as amended, restated, modified, or supplemented from time to time, being referred to herein as the "Term Loan Agreement"), with the obligations of Mariner under the Term Loan Agreement being guarantied by certain Mariner subsidiaries (the "Term Loan Guarantors") pursuant to and as more fully set forth in an Agreement of Guaranty and Suretyship, dated as of December 23, 1998, given by the Term Loan Guarantors to the Term Loan Agent for the benefit of such banks (Mariner and the Term Loan Guarantors are collectively referred to herein as the "Term Loan Parties");


WHEREAS, Mariner has entered into a Credit Agreement dated as of May 18, 1994, as amended, with and among the banks from time to time parties, First Union National Bank, as syndication agent, and PNC Bank, National Association, in its capacity as Administrative Agent for such banks (in such capacity, the "Revolving Credit Agent") (such agreement, as amended, restated, modified, or supplemented from time to time, being referred to herein as the "Revolving Credit Agreement"), with the obligations of Mariner under the Revolving Credit Agreement being guarantied by certain Mariner subsidiaries (the "Revolving Credit Guarantors") pursuant to and as more fully set forth in that certain Guaranty and Suretyship Agreement, dated as of May 18, 1994, given by the Revolving Credit Guarantors to the Revolving Credit Agent for the benefit of such banks (Mariner and the Revolving Credit Guarantors are collectively referred to herein as the " Revolving Credit Loan Parties");


WHEREAS, to secure the obligations of the Term Loan Parties in connection with the Term Loan Agreement, the Term Loan Parties have entered into, and may continue to grant security in certain of their assets pursuant to, various security documents in favor of the Collateral Agent or the Term Loan Agent for the benefit of the Term Loan Agent and the Term Loan Banks; and


WHEREAS, to secure the obligations of the Revolving Credit Loan Parties in connection with the Revolving Credit Agreement, the Revolving Credit Loan Parties have entered into, and may continue to grant security in certain of their assets pursuant to, various security documents


in favor of the Collateral Agent or the Revolving Credit Agent for the benefit of the Revolving Credit Agent and the Revolving Credit Banks.


NOW, THEREFORE, intending to be legally bound hereby, incorporating the above-defined terms herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


1. DEFINITIONS; CONSTRUCTION
------------------------- 1.1 Certain Definitions.
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All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Revolving Credit Agreement. In addition to other words and terms defined elsewhere in this Agreement, as used herein the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:


"Bankruptcy Proceeding" shall mean any bankruptcy, insolvency, reorganization, receivership, dissolution (but excluding any dissolution permitted pursuant to Section 8.02(f)(ii) of the Revolving Credit Agreement or Section 8.20(f)(ii) of the Term Loan Agreement) or similar proceeding or the assignment for the benefit of creditors or any other marshalling of assets and liabilities.


"Business Day" shall mean any day other than a Saturday, Sunday, public holiday under the laws of the Commonwealth of Pennsylvania or other day on which banking institutions are authorized or obligated to close in the city in which is located the Collateral Agent's Office.


"Collateral Agent Obligations" shall mean all obligations from time to time of any of the Revolving Credit Loan Parties or of any of the Term Loan Parties to the Collateral Agent in its capacity as such, including but not limited to amounts payable pursuant to Sections 5.10 and 5.11 of this Agreement, in each case whether such obligations are direct or indirect, otherwise secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (specifically including but not limited to obligations arising or accruing after the commencement of any bankruptcy, insolvency or similar proceedings with respect to any such Loan Party, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such obligation is not allowed in such proceeding under applicable Law).


"Collateral Agent's Office" shall mean the office of the Collateral Agent located at One PNC Plaza, Pittsburgh, Pennsylvania, or at such other domestic office or offices of the Collateral Agent as may be designated in writing from time to time by the Collateral Agent to Mariner, the Term Loan Agent and the Revolving Credit Agent.


"Contingent Indemnification Obligations" shall mean collectively the Contingent Indemnification Revolving Credit Obligations and the Contingent Indemnification Term Loan Obligations.


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"Contingent Indemnification Revolving Credit Obligations" at any time shall mean Revolving Credit Obligations which at such time are contingent obligations under indemnification provisions of the Revolving Credit Loan Documents, which survive indefinitely; provided, that a Revolving Credit Obligation under such an
-------- indemnification provision shall not constitute a Contingent Indemnification Revolving Credit Obligation to the extent that (a) an unsatisfied claim for payment of such Revolving Credit Obligation has been made, or (b) an action, suit or proceeding is pending or threatened at such time which may give rise to a claim under such indemnification provision.


"Contingent Indemnification Term Loan Obligations" at any time shall mean Term Loan Obligations which at such time are contingent obligations under indemnification provisions of the Term Loan Documents, which survive indefinitely; provided, that a Term Loan Obligation under such an
-------- indemnification provision shall not constitute a Contingent Indemnification Term Loan Obligation to the extent that (a) an unsatisfied claim for payment of such Term Loan Obligation has been made, or (b) an action, suit or proceeding is pending or threatened at such time which may give rise to a claim under such indemnification provision.


"Directing Party" at any time shall mean the Revolving Credit Agent, unless all Revolving Credit Obligations (other than Contingent Indemnification Revolving Credit Obligations) have been paid in full and all commitments to extend credit under the Revolving Credit Loan Documents have terminated, in which case "Directing Party" shall mean the Term Loan Agent.


"Facility Parties" shall mean the Term Loan Agent on behalf of the Term Loan Banks, and each of the Term Loan Banks, and the Revolving Credit Agent on behalf of the Revolving Credit Banks, and each of the Revolving Credit Banks.


"Foreclosure Action" shall mean any Revolving Credit Bank or the Revolving Credit Agent or any Term Loan Bank or the Term Loan Agent (i) takes any action to foreclose upon, collect, or otherwise realize upon the Shared Collateral or any portion thereof or takes any other action with respect to the Shared Collateral or any portion thereof, (ii) receives any amount on account of the Obligations through the exercise of any set-off, banker's lien or similar right, and/or (iii) makes any demand under or institutes any action, suit or proceeding against any party to any of the Shared Security Documents with respect to the Shared Collateral.


"Guarantors" shall mean collectively the Term Loan Guarantors and the Revolving Credit Guarantors.


"Guaranty Agreements" shall mean collectively the Revolving Credit Guaranty Agreement and the Term Loan Guaranty Agreement.


"Loan Documents" shall mean collectively the Revolving Credit Loan Documents and the Term Loan Documents.


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"Loan Party" shall mean any of the Revolving Credit Loan Parties or any of the Term Loan Parties.


"Obligations" shall mean all Revolving Credit Obligations, Term Loan Obligations and Collateral Agent Obligations.


"Restricted Investments" shall mean: (a) readily marketable obligations backed by the full faith and credit of the United States of America, maturing not later than 90 days from the date of acquisition; (b) overnight dollar- denominated deposits in, overnight certificates of deposit in, or overnight repurchase agreements with, a United States commercial bank having shareholders' equity of at least $1,000,000,000 which has outstanding general unsecured short- term debt rated "A-1" or better, and general unsecured short-term debt rated "P- 1," in each case by Moody's Investors Service, Inc.; (c) readily marketable commercial paper maturing not later than 90 days from the date of acquisition and rated "P-1" by Moody's Investors Service, Inc.; and (d) freely redeemable shares of stock or beneficial interest in a money market mutual fund, substantially all of the assets of which consist of obligations described in the foregoing clauses (a) through (c).


"Revolving Credit Agent" is defined in the Preamble.


"Revolving Credit Bank" shall mean each Person which is defined as a Bank under the Revolving Credit Agreement.


"Revolving Credit Collateral" shall mean all real and personal property now and hereafter in or upon which a Revolving Credit Loan Party or other third Person has granted to any Revolving Credit Bank or to the Revolving Credit Agent for the benefit of the Revolving Credit Banks a lien, security interest, mortgage, encumbrance, or the like to secure one or more of the Revolving Credit Obligations, or any guaranty which is in favor of any Revolving Credit Bank or the Revolving Credit Agent for the benefit of the Revolving Credit Banks, but excluding any Shared Collateral.


"Revolving Credit Collateral Documents" shall mean collectively the Guaranty Agreements given or to be given in connection with the Revolving Credit Agreement and all other documents, instruments and agreements that now or hereafter grant a Lien on any Collateral to the Revolving Credit Agent for the benefit of any of the Revolving Credit Banks, as any of the foregoing may be restated, supplemented, modified, or amended from time to time in accordance therewith.


"Revolving Credit Guarantors" are defined in the Preamble.


"Revolving Credit Guaranty Agreement" shall mean any Guaranty Agreement as such term is defined in the Revolving Credit Agreement.


"Revolving Credit Loan Documents" shall mean those documents which are defined as Loan Documents in the Revolving Credit Agreement.


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"Revolving Credit Obligations" shall mean all obligations from time to time of any Revolving Credit Loan Party to any Revolving Credit Bank or the Revolving Credit Agent from time to time arising under or in connection with or related to or evidenced by or secured by the Revolving Credit Agreement or any other Revolving Credit Loan Document, whether such obligations are direct or indirect, otherwise secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (specifically including but not limited to obligations arising or accruing after the commencement of any bankruptcy, insolvency reorganization or similar proceedings with respect to any Revolving Credit Loan Party, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such obligation is not allowed in such proceeding under applicable Law). Without limitation of the foregoing, such obligations include (i) the principal amount of Revolving Credit Loans, interest, letter of credit reimbursement obligations, and fees, indemnities or expenses under or in connection with any Revolving Credit Loan Document and all refinancings or refundings thereof; (ii) all obligations arising from any extensions of credit under or in connection with the Revolving Credit Loan Documents from time to time, regardless of whether any such extensions of credit are in excess of the amount committed under or contemplated by the Revolving Credit Loan Documents or are made in circumstances in which any condition to extension of credit is not satisfied; and (iii) with respect to Revolving Credit Guarantors, their guarantee and suretyship obligations under the Revolving Credit Guaranty Agreement. Revolving Credit Obligations shall remain such notwithstanding any assignment or transfer or any subsequent assignment or transfer of any of the Revolving Credit Obligations or any interest therein.


"Secured Party" shall mean each of the Collateral Agent and Facility Parties.


"Secured Party Documents" shall mean the Revolving Credit Loan Documents, the Term Loan Documents, and the Shared Security Documents.


"Shared Collateral" shall mean all real and personal property now and hereafter in or upon which a Term Loan Party, Revolving Credit Loan Party, or other third Person has granted to all of the Secured Parties or to the Collateral Agent for the benefit of all Secured Parties or to both the Revolving Credit Banks and the Term Loan Banks or to both the Revolving Credit Agent for the benefit of the Revolving Credit Banks and to the Term Loan Agent for the benefit of the Term Loan Banks, a lien, security interest, mortgage, encumbrance, or the like to secure all of the Obligations (or all Obligations other than those to the Collateral Agent) or any guaranty which is in favor of all of the Secured Parties or the Collateral Agent for the benefit of all Secured Parties or both the Revolving Credit Banks and the Term Loan Banks or both the Revolving Credit Agent for the benefit of the Revolving Credit Banks and the Term Loan Agent for the benefit of the Term Loan Banks.


"Shared Collateral Account" shall have the meaning given that term in Section 4.1 of this Agreement.


"Shared Obligations" shall mean those Obligations secured by the Shared Collateral.


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"Shared Security Documents" shall mean (i) this Agreement and any document, instrument, or agreement that now or hereafter grants a lien, security interest, mortgage, encumbrance, or the like on any Shared Collateral, and (ii) any Term Loan Guaranty Agreement or Revolving Credit Guaranty Agreement or other guaranty that guaranties payment or performance of all of the Revolving Credit Obligations and the Term Loan Obligations.


"Term Loan Agent" is defined in the Preamble.


"Term Loan Bank" shall mean each Person which is defined as a Bank under the Term Loan Agreement.


"Term Loan Collateral" shall mean all real and personal property now and hereafter in or upon which a Term Loan Party or other third Person has granted to any Term Loan Bank or to the Term Loan Agent for the benefit of the Term Loan Banks, a lien, security interest, mortgage, encumbrance, or the like to secure one or more of the Term Loan Obligations, or any guaranty which is in favor of any Term Loan Bank or the Term Loan Agent for the benefit of the Term Loan Banks, but excluding any Shared Collateral.


"Term Loan Collateral Documents" shall mean collectively the Guaranty Agreements given or to be given in connection with the Term Loan Agreement and all other documents, instruments and agreements that now or hereafter grant a Lien on any Collateral (as such term is defined in the Term Loan Agreement) to the Term Loan Agent for the benefit of any of the Term Loan Banks, as any of the foregoing may be restated, supplemented, modified, or restated from time to time in accordance therewith.


"Term Loan Documents" shall mean those documents which are defined as Loan Documents in the Term Loan Agreement.


"Term Loan Guarantors" are defined in the Preamble.


"Term Loan Guaranty Agreement" shall mean any Guaranty Agreement as such term is defined in the Term Loan Agreement.


"Term Loan Obligations" shall mean all obligations from time to time of any Term Loan Party to any Term Loan Bank or the Term Loan Agent from time to time arising under or in connection with or related to or evidenced by or secured by the Term Loan Agreement or any other Term Loan Document, whether such obligations are direct or indirect, otherwise secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (specifically including but not limited to obligations arising or accruing after the commencement of any bankruptcy, insolvency reorganization or similar proceedings with respect to any Term Loan Party, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such obligation is not allowed in such proceeding under applicable Law). Without limitation of the foregoing, such obligations include (i) the principal amount of Term Loans (as defined in the Term Loan Agreement), interest, and fees, indemnities or expenses under or in connection with


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any Term Loan Document and all refinancings or refundings thereof; (ii) all obligations arising from any extensions of credit under or in connection with the Term Loan Documents from time to time, regardless of whether any such extensions of credit are in excess of the amount committed under or contemplated by the Term Loan Documents or are made in circumstances in which any condition to extension of credit is not satisfied; and (iii) with respect to the Term Loan Guarantors, their guarantee and suretyship obligations under the Term Loan Agreement Guaranty Agreement. Term Loan Obligations shall remain such notwithstanding any assignment or transfer or any subsequent assignment or transfer of any of the Term Loan Obligations or any interest therein.


1.2 Construction.
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In this Agreement, unless the context otherwise clearly requires, references to the plural include the singular, the singular the plural, and the part the whole; the neuter case includes the masculine and feminine cases; and "or" is not exclusive. In this Agreement, any references to property (or similar terms) include any interest in such property (or other item referred to); "include," "includes," "including" and similar terms are not limiting; "hereof," "herein," "hereunder" and similar terms refer to this Agreement as a whole and not to any particular provision; and "expenses," "costs," "out-of- pocket expenses" and similar terms include the charges of in-house counsel, auditors and other professionals of the relevant Person to the extent that such charges are routinely identified and charged under such Person's cost accounting system. Section and other headings in this Agreement, and any table of contents herein, are for reference purposes only and shall not affect the interpretation of this Agreement in any respect. Section and other references in this Agreement are to this Agreement unless otherwise specified. This Agreement has been fully negotiated between the applicable parties, each party having the benefit of legal counsel, and accordingly neither any doctrine of construction of security documents in favor of a borrower, nor any doctrine of construction of ambiguities against the party controlling the drafting, shall apply to this Agreement.


2. SECURED PARTY DOCUMENTS
----------------------- 2.1 Subsidiary Guarantors.
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As provided in the Term Loan Documents and the Revolving Credit Loan Documents, each Person which now or hereafter becomes a Term Loan Party or a Revolving Credit Loan Party as a Term Loan Guarantor or a Revolving Credit Guarantor shall, by such act, become a party to this Agreement and shall be subject to and bound by all of the provisions hereof.


2.2 Amendments to Loan Documents.
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This Agreement shall remain in full force and effect in accordance with its terms regardless of any amendment, modification, restatement, or supplement to, or refinancing of, the Revolving Credit Agreement or the Term Loan Agreement or any other Term Loan Document or Revolving Credit Loan Document, and no consent of any party hereto shall be required in connection therewith. Without limitation of the foregoing, this Agreement shall apply in


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accordance with its terms notwithstanding any increase, decrease, addition or change in the amount, nature, type or purpose of any of the Obligations or any execution or delivery of any Term Loan Document or any Revolving Credit Loan Document from time to time.


2.3 Delivery of Documents.
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Mariner shall, promptly upon the execution thereof, deliver to the Collateral Agent a true and complete copy of any and all Shared Security Documents and all amendments, modifications, restatements, and supplements to any of the Shared Security Documents, the Revolving Credit Loan Documents and all amendments, modifications, restatements, and supplements to any of the Revolving Credit Loan Documents, and the Term Loan Documents and all amendments, modifications, restatements, and supplements to any of the Term Loan Documents.


2.4 Termination of a Secured Party.
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In the event there is delivered to the Collateral Agent at any time written notice from any Facility Party, referring specifically to this Section 2.4 ...