PARTICIPATION AGREEMENT
dated as of December 11, 1996
among
THE MULTICARE COMPANIES, INC.,
as Guarantor,
VARIOUS SUBSIDIARIES OF THE MULTICARE COMPANIES, INC.
IDENTIFIED HEREIN,
as Lessees,
SELCO SERVICE CORPORATION,
as Lessor,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Tranche A Lenders,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Tranche B Lenders,
NATIONSBANK, N.A.,
as Lease Agent for the Lenders,
and
NATIONSBANK, N.A.,
as Collateral Agent for the Secured Parties.
____________________________________
Lease Financing of
Long-Term Care Facilities
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated
as of December 11, 1996, is entered into by and among THE MULTICARE
COMPANIES, INC., a Delaware corporation, as Guarantor (together with its
permitted successors and assigns, the "Company" or the "Guarantor");
ACADEMY NURSING HOME, INC., a Massachusetts corporation, NURSING AND
RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation,
PRESCOTT NURSING HOME, INC., a Massachusetts corporation, WILLOW MANOR
NURSING HOME, INC., a Massachusetts corporation, ADS/MULTICARE, INC., a
Delaware corporation, and each other Subsidiary of the Company that may
from time to time become a Lessee under the Master Lease and the other
Operative Documents pursuant to the terms of Section 14.2, each as a Lessee
(together with its permitted successors and assigns, each a "Lessee" and
collectively, the "Lessees"); SELCO SERVICE CORPORATION, an Ohio
corporation, as Lessor (together with its successors and assigns, the
"Lessor"); TORONTO-DOMINION (NEW YORK), INC., BANQUE PARIBAS, CREDITANSTALT
CORPORATE FINANCE, INC., MELLON BANK, N.A., and the other various financial
institutions as are or may from time to time become Tranche A Lenders
(collectively, the "Tranche A Lenders") under the Loan Agreement; FBTC
LEASING CORP. and the other various financial institutions as are or may
from time to time become Tranche B Lenders (collectively, the "Tranche B
Lenders" and, together with the Tranche A Lenders, the "Lenders") under the
Loan Agreement; and NATIONSBANK, N.A., as Lease Agent for the Lenders (in
such capacity, the "Lease Agent") and as Collateral Agent for the Secured
Parties (as defined below) (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, on each Acquisition Date, the Lessor will purchase a
Property or Properties or the Equity Interest or Equity Interests related
thereto from one or more third parties designated by the Company as agent
for the Lessees;
WHEREAS, on or after each Acquisition Date on which the Lessor
acquires an Equity Interest, the Lessor will dissolve the entity related to
such Equity Interest and, thereafter, directly own fee title to the
applicable Property;
WHEREAS, the Lessees have appointed the Company to act as their agent
with respect to certain matters set forth in this Participation Agreement
and the Company has accepted such appointment;
WHEREAS, the Lessor desires to lease to the Lessees, and the Lessees
desire to lease from the Lessor, the Properties;
WHEREAS, the Lessor is willing to provide from time to time on each
Acquisition Date a portion of the funding of the costs of the acquisition
directly or indirectly of the Property (or Equity Interest related thereto)
to be acquired on such Acquisition Date;
WHEREAS, the Lessor wishes to obtain, and the Lenders are willing to
provide from time to time on each Acquisition Date, financing of the
remaining portion of the costs of the acquisition of the Property (or
Equity Interest related thereto) to be acquired on such Acquisition Date;
WHEREAS, pursuant to the Credit Agreement, the Credit Facility Banks
have extended commitments to make loans and issue letters of credit from
time to time to the Company and the Subsidiary Co-Borrowers from time to
time pursuant to the terms thereof;
WHEREAS, pursuant to the Intercreditor Agreement, the Lenders, the
Lessor, the Credit Facility Banks and the other Secured Parties have agreed
to share ratably in the Collateral;
WHEREAS, to secure the financing transactions contemplated by this
Participation Agreement and the other Operative Documents (the "Lease
Financing"), (a) the Lenders and the Lessor will, together with the Credit
Facility Banks, have the benefit of a Lien on the right, title and interest
of the Company and the Lessees in the Collateral (including the
Properties), subject to the rights and priorities as set forth in the
Intercreditor Agreement, (b) the Lenders will have the benefit of an
assignment of certain of the Lessor's rights against the Lessees under the
Master Lease and (c) the Company and the Subsidiary Guarantors will
guarantee to the Lenders and the Lessor the payment and performance of all
the obligations of the Lessees under the Operative Documents.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used
and not defined herein shall have the meanings assigned thereto in
Appendix A hereto for all purposes hereof; and the rules of interpretation
set forth in Appendix A hereto shall apply to this Participation Agreement.
ARTICLE II
INTENTIONALLY OMITTED
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1. Lessor Acquisition. Subject to the conditions and
terms hereof, the Lessor shall take the following actions at the written
request of the Company, as agent for the Lessees, from time to time on each
Acquisition Date prior to the Commitment Termination Date:
(a) the Lessor shall apply the proceeds of the Loans made by
the Lenders on such Acquisition Date and advance its own funds (not
to exceed the Lessor's Funding Percentage of the Advance to be made
on such Acquisition Date) for the purpose of financing the
acquisition of each Property and/or each Equity Interest to be
acquired on such Acquisition Date, and such proceeds shall be made to
the payees designated in writing by the Company as agent for the
Lessees (each such application of proceeds and funds, an "Advance");
(b) the Lessor shall acquire each Property and/or each Equity
Interest to be acquired on such Acquisition Date (using the Advance);
and
(c) the Lessor shall lease the Properties acquired on such
Acquisition Date to the Lessees under the Master Lease and the
respective Lease Supplements.
Notwithstanding any other provision hereof, the Lessor shall not be
obligated to make any Advance if, after giving effect thereto, the
aggregate outstanding amounts of the Loans and the Lessor Amounts would
exceed the Aggregate Commitment Amount.
SECTION 3.2. Lessor's Commitment. Subject to the conditions and
terms hereof, the Lessor shall make the Lessor Commitment available to the
Lessees by making available at the request of the Company, as agent for the
Lessees, from time to time on each Acquisition Date prior to the Commitment
Termination Date an amount (each, a "Lessor Amount") in immediately
available funds equal to the Lessor's Funding Percentage of the Advance
being made on such Acquisition Date. Notwithstanding any other provision
hereof, the Lessor shall not be obligated to make available any Lessor
Amount if, after giving effect to the proposed Lessor Amount, the aggregate
outstanding amount of the Lessor Amounts would exceed the Lessor's
Commitment. No amounts paid or prepaid with respect to the Lessor Amount
may be readvanced.
SECTION 3.3. Lenders' Commitments. Subject to the conditions and
terms hereof, each Lender shall make its Loan Commitment available to the
Lessees by making Loans to the Lessor at the request of the Company, as
agent for Lessees, from time to time on each Acquisition Date prior to the
Commitment Termination Date in an amount in immediately available funds
equal to such Lender's Funding Percentage of the Advance being made on such
Acquisition Date. Notwithstanding any other provision hereof, no Lender
shall be obligated to make any Loan if, after giving effect to the proposed
Loan, the aggregate outstanding amount of such Lender's Loans would exceed
such Lender's Commitment. No amounts paid or prepaid with respect to the
Loans may be readvanced.
SECTION 3.4. Procedures for Advances.
(a) With respect to the funding of each Advance, the Company,
as agent for the Lessees, shall give the Lease Agent prior written
notice pursuant to a Funding Request substantially in the form of
Exhibit A (a "Funding Request"), which Funding Request shall be
delivered not later than 12:00 noon (New York City time), three (3)
Business Days prior to the proposed Acquisition Date specifying:
(i) the proposed Acquisition Date, (ii) the amount of Advance
requested, (iii) the Properties and Equity Interests to be acquired
on the proposed Acquisition Date, (iv) the amount of the Advance
allocated to each Property or Equity Interest, as the case may be,
and (v) whether the Loans and Lessor Amounts comprising such Advance
shall be made as ABR Amounts or LIBO Rate Amounts (and, if LIBO Rate
Amounts are selected by the Company, specifying the duration of the
initial Interest Period with respect thereto). The Lease Agent shall
calculate the amounts of the Lessor Amount and the Loans required to
fund each requested Advance as it relates to each Property based on
the respective Funding Percentages of the Participants.
(b) The proceeds of each Advance shall be used to pay the
Property Cost of the Property being acquired on the applicable
Acquisition Date.
(c) All remittances made by the Lessor and the Lenders for the
funding of any Advance shall be made on the applicable Acquisition
Date in immediately available funds by wire transfer to the account
of the Lease Agent, which shall disburse such proceeds as provided in
Section 3.1(a).
SECTION 3.5. Interest Period Selection/Continuation/ Conversion
Elections. By delivering an Interest Period
Selection/Continuation/Conversion Notice in the form of Exhibit B hereto to
the Lease Agent, the Company, as agent for the Lessees, may from time to
time irrevocably (as to the next succeeding Interest Period) elect, on not
less than three (3) nor more than five (5) Business Days' notice, that the
Applicable Rate for all Loans and the Lessor Amount be determined by
reference to either the LIBO Rate (Reserve Adjusted) or the Alternate Base
Rate and, in the case of an election of the LIBO Rate (Reserve Adjusted),
select the duration for the next succeeding Interest Period; provided,
however, that (a) in the absence of delivery of an Interest Period
Selection/Continuation/Conversion Notice with respect to any LIBO Rate
Amount at least three (3) Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Amount shall,
on such last day, automatically continue as a LIBO Rate Amount with an
Interest Period of one month's duration, (b) the outstanding Loans and
Lessor Amount may not be continued as, or converted into, LIBO Rate Amounts
when any Lease Default has occurred and is continuing. Each Interest
Period Selection/Continuation/ Conversion Notice so delivered by the
Company, as agent for the Lessees, shall be deemed an effective election by
the Lessor of the method for computing interest on the Loans under the Loan
Agreement, and (c) LIBO Rate Amounts may be converted only on the last day
of an Interest Period for such LIBO Rate Amounts unless the Company, as
agent for the Lessees, agrees to provide to the Lease Agent for the account
of each Participant compensation in accordance with Section 13.10.
SECTION 3.6. Funding of Certain Modifications; Construction
Financings. The parties hereto contemplate that the Company, as agent on
behalf of the Lessees, may from time to time request that the Participants
make available Lessor Amounts or Loans, as applicable, in an aggregate
amount of not less than $1,000,000 to finance the cost of certain
modifications to the Properties. In such events, the parties anticipate
negotiating amendments to the Operative Documents as necessary to
accommodate such additional Advances. In addition, the Company, as agent
for the Lessees, may request that the Participants finance the acquisition
of certain parcels of land and the construction of improvements on such
parcels and, if the Lessor and the Lenders agree, in their sole discretion,
to finance such construction, the parties contemplate negotiating
amendments to the Operative Documents as necessary to accommodate such
construction financing.
ARTICLE IV
COMPUTATION OF BASIC RENT; INTEREST ON LOANS; FEES
SECTION 4.1. Computation of Basic Rent (Interest/Yield).
(a) Basic Rent (Interest/Yield) shall be payable with respect
to the sum of (i) the amount of the Loans outstanding from time to
time and (ii) the amount of the Lessor Amount outstanding from time
to time in an amount equal to the Applicable Rate on such sum,
calculated using the actual number of days elapsed and, subject to
Section 3.5 hereof, when the Applicable Rate is based on the LIBO
Rate (Reserve Adjusted), a 360-day year basis and, if calculated at
the Alternate Base Rate, a 360-day year basis if the Alternate Base
Rate is calculated at the Federal Funds Rate, and a 365-, or, if
applicable, 366-, day year basis if the Alternate Base Rate is
calculated at the Prime Rate. If all or any portion of any Loan, the
Lessor Amount, any Basic Rent (Interest/Yield) payable on any Loan or
the Lessor Amount, or any other amount payable hereunder shall not be
paid when due (whether at stated maturity, acceleration thereof or
otherwise), such overdue amount shall bear interest at a rate per
annum which is equal to the Overdue Rate.
(b) During the Term, Basic Rent (Interest/Yield) shall be
payable in arrears with respect to all of the outstanding Loans and
the outstanding Lessor Amount on each Basic Rent Payment Date.
SECTION 4.2. Interest on Loans.
(a) Each Loan shall accrue interest computed and payable in
accordance with the terms of Section 3.5 hereof and the Loan
Agreement.
(b) The Collateral Agent (or, after payment in full of all
obligations of the Company and the Subsidiary Co-Borrowers owing to
the Credit Facility Banks under the Credit Facility Documents and the
permanent termination of all commitments of the Credit Facility Banks
thereunder, the Lease Agent) shall distribute to the Lenders, in
accordance with the terms hereof and the terms of the Loan Agreement,
the interest due on the Loans and all other amounts due with respect
to the Loans, in each case, to the extent received by the Collateral
Agent (or the Lease Agent, as applicable) from the Lessees from time
to time under the Lease as Basic Rent (Interest/Yield).
SECTION 4.3. Yield on Lessor Amount.
(a) The Lessor Amount outstanding from time to time shall
accrue yield ("Yield") equal to the excess of (i) the Basic Rent
(Interest/Yield) payable by the Lessees from time to time under the
Lease minus (ii) the interest due on the Loans from time to time
pursuant to Section 2.4 of the Loan Agreement.
(b) The Lessor shall be entitled to receive, as payment of
Yield, all amounts described in clause (a).
SECTION 4.4. Prepayments of Loans and Lessor Amount. In the event
that a Lessee pays any amount equal to the subject Property Balance or the
Lease Balance to the Lessor in connection with the purchase or sale of a
Property in accordance with Section 15.1, 18.1(a) or 18.1(b) of the Master
Lease, such Property Balance or Lease Balance, as the case may be, will be
used to prepay on a pro rata basis the outstanding principal amount of the
Loans and Lessor Amount related to the Property or Properties purchased or
sold. In addition, in the event that the aggregate Commitments are reduced
to an amount that is less than the aggregate outstanding Loans and Lessor
Amounts as of such date of reduction, then the Company, as agent for the
Lessees, shall prepay the outstanding Loans and Lessor Amounts in an
aggregate amount equal to such excess, with such prepayment to be applied
ratably among all outstanding Loans and Lessor Amounts. Each Lender and
the Lessor hereby acknowledges that its Loans or Lessor Amount, as the case
may be, may be prepaid as set forth inbut may not be readvanced.
SECTION 4.5. Fees. The Company agree to pay the fees referred to in
this Section 4.5.
(a) Facility Fees. The Company agrees to pay to each
Participant for its own account, a non-refundable facility fee
(collectively, the "Facility Fees") equal to 0.125% of such
Participant's Commitment, payable in full on the Initial Acquisition
Date.
(b) Structuring Agent's Fees. The Company agrees to pay the
fees referred to in the Fee Letter.
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. Nature of the Transaction. It is the intent of the
parties that: (a) the Lease constitutes an operating lease from the Lessor
to the Lessees for purposes of the Lessees' financial reporting, (b) the
Lease and other transactions contemplated hereby preserve ownership in the
Properties in the Lessees for Federal and state income tax and bankruptcy
purposes, (c) each Lease Supplement grants to Lessor a Lien on the Property
covered thereby, and (d) the obligations of the Lessees to pay Basic Rent
(Interest/Yield) and any part of any Property Balance (other than Basic
Rent (Interest/Yield)) shall be treated as payments of interest and
principal, respectively, for Federal and state income tax and bankruptcy
purposes. The Lessor shall be deemed to have a valid and binding security
interest in and Lien on the Properties, free and clear of all Liens other
than Permitted Property Liens, as security for the obligations of the
Lessees under the Operative Documents, (it being understood and agreed that
the Lessees do hereby ▇▇▇▇▇ ▇ ▇▇▇▇, and convey, transfer, assign, mortgage
and warrant to Lessor and its successors, transferees and assigns, for the
benefit of the Lessor and its successors, transferees and assigns, the
Properties and any proceeds or products thereof, to have and hold the same
as collateral security for the payment and performance of the obligations
of the Lessees under the Operative Documents). Each of the parties hereto
agrees that it will not, nor will it permit any Affiliate to at any time,
take any action or fail to take any action with respect to the preparation
or filing of any income tax return, including an amended income tax return,
to the extent that such action or such failure to take action would be
inconsistent with the intention of the parties expressed in this
Section 5.1.
Specifically, without limiting the generality of the foregoing, the
parties hereto intend and agree that in the event of any insolvency or
receivership proceedings or a petition under the United States bankruptcy
laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting a Lessee,
the Company, Lessor, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as
loans made by the Participants to the Lessees.
SECTION 5.2. Amounts Due Under Lease. Anything else herein or
elsewhere to the contrary notwithstanding, it is the intention of the
Lessees, the Company, the Lessor and the Lenders that: (i) the amount and
timing of installments of Basic Rent due and payable from time to time from
the Lessees under the Lease shall be equal to the aggregate payments due
and payable as interest on the Loans plus a yield on the Lessor Amount on
each Basic Rent Payment Date; (ii) if a Lessee elects the Purchase Option
or becomes obligated to purchase any of the Properties under the Lease, the
Loans, the Lessor Amount, all interest, Yield and fees thereon and all
other obligations of the Lessees with respect to such Property owing to the
Lessor and the Lenders shall be paid in full by the Lessee; (iii) if any
Lessee elects the Remarketing Option, the Lessee shall only be required to
pay to the Lessor the amounts required pursuant to Article XX of the Master
Lease and any amounts due pursuant to Article XIII hereof; and (iv) upon an
Event of Default resulting in an acceleration of any Lessee's obligation to
purchase the Properties under the Lease, the amounts then due and payable
by the Lessee under the Lease shall include all amounts necessary to pay in
full the Lease Balance, plus all other amounts then due from the Lessee to
the Participants under the Operative Documents.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Documentation Date. The Documentation Date (the
"Documentation Date") shall occur on the earliest date on which the
following conditions precedent shall have been satisfied or waived, in the
reasonable discretion of the Participants:
(a) Participation Agreement. This Participation Agreement
shall have been duly authorized, executed and delivered by the
parties hereto.
(b) Master Lease. The Master Lease shall have been duly
authorized, executed and delivered by the parties thereto.
(c) Loan Agreement. The Loan Agreement shall have been duly
authorized, executed and delivered by the parties thereto.
(d) Assignment of Lease and Rent. The Assignment of Lease and
Rent shall have been duly authorized, executed and delivered by the
Lessor, as assignor, to the Collateral Agent for the benefit of each
of the Secured Parties, as assignee, and the Assignment of Lease and
Rent shall have been consented to and acknowledged by the Company and
each Lessee party to the Operative Documents on the Documentation
Date.
(e) Intercreditor Agreement. The Intercreditor Agreement
shall have been duly authorized, executed and delivered by the
parties thereto.
(f) Security Documents. Each of the Multicare Guaranty, the
Pledge Agreement, the Security Agreement and the PHC/Providence
Mortgages shall have been duly authorized, executed and delivered by
the parties thereto, and the Lessor shall have received an executed
counterpart of each of the foregoing.
(g) [Intentionally Omitted].
(h) Certain Transaction Expenses. Counsel for the Lessor and
the Lenders shall have received, to the extent then invoiced, payment
in full in cash of all Transaction Expenses payable to such counsel
pursuant to Section 9.1.
All documents and instruments required to be delivered pursuant to this
Section 6.1 shall be delivered at the offices of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 1285 Avenue of the Americas, New York, New York, or at
such other location as may be determined by the Lessor, the Lenders and the
Lessee.
SECTION 6.2. Initial Acquisition Date. The occurrence of the
initial Acquisition Date hereunder (the "Initial Acquisition Date") shall
be subject to the prior satisfaction of all of the conditions precedent
thereto set forth in this Section 6.2 (or waiver thereof by the applicable
parties as set forth herein). The parties hereto agree that the Lessor's
obligations to acquire any Property or Equity Interest shall not be subject
to any conditions precedent set forth in this Section 6.2 to the extent
such conditions are actions required of the Lessor. The obligation of the
Lessor to acquire any Property or Equity Interest on the Initial
Acquisition Date and to make the Advance in respect of the Property Costs
on the Initial Acquisition Date, the obligation of the Lessor to fund any
related Lessor Amount on the Initial Acquisition Date and the obligation of
each Lender to make any related Loan on the Initial Acquisition Date, are
subject to satisfaction or waiver of the following conditions precedent:
(a) Lessees' Resolutions and Incumbency Certificate, etc.
Each Lessee shall have delivered to the Lessor and the Lenders a
certificate of its Secretary or an Assistant Secretary attaching and
certifying as to (A) the resolutions of the Board of Directors or
committee thereof duly authorizing the execution, delivery and
performance by it of each Operative Document to which it is or will
be a party, (B) its certificate of incorporation and by-laws, and
(C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party
and (ii) a certificate of good standing with respect to it issued by
the Secretary of State of the jurisdiction of its incorporation no
earlier than thirty (30) days prior to the Initial Acquisition Date
or such earlier date as is acceptable to the Lessor.
(b) Company's Resolutions and Incumbency Certificate, etc.
The Company shall have delivered to the Lessor and the Lenders a
certificate of its Secretary or an Assistant Secretary attaching and
certifying as to (A) the resolutions of the Board of Directors or
committee thereof duly authorizing the execution, delivery and
performance by it of each Operative Document to which it is or will
be a party, (B) its certificate of incorporation and by-laws, and
(C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party
and (ii) a certificate of good standing with respect to it issued by
the Secretary of State of the State of Delaware no earlier than
thirty (30) days prior to the Initial Acquisition Date or such
earlier date as is acceptable to the Lessor.
(c) Opinion of Counsel to the Company and the Lessees. The
Participants shall have received an opinion of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the Company and the Lessees,
which is reasonably acceptable in form and substance to the
Participants.
(d) Fees. The Company, as agent for the Lessees, shall have
paid in full all Facility Fees and the Structuring Agent's fee then
due and payable pursuant to the Participation Agreement and the Fee
Letter.
SECTION 6.3. Conditions Precedent to Each Acquisition Date. Each
Acquisition Date shall occur on the date on which all the conditions
precedent thereto set forth in this Section 6.3 with respect to such
acquisition shall have been satisfied or waived by the applicable parties
as set forth herein. The parties hereto agree that the Lessor's
obligations to acquire any Property or Equity Interest shall not be subject
to any conditions precedent set forth in this Section 6.3 to the extent
such conditions are actions required of the Lessor. The obligation of the
Lessor to acquire any Property or Equity Interest on any Acquisition Date
and to make the Advance in respect of the Property Costs for such Property
or Equity Interest on the applicable Acquisition Date, the obligation of
the Lessor to fund any related Lessor Amount on the applicable Acquisition
Date and the obligation of each Lender to make any related Loan on the
applicable Acquisition Date, are subject to satisfaction or waiver of the
following conditions precedent:
(a) Funding Request. The Lessor and the Lease Agent shall
have received a fully executed counterpart of the applicable Funding
Request in accordance with Section 3.4. The delivery of a Funding
Request shall constitute a representation and warranty by all of the
Lessees and the Company that on such Acquisition Date (both
immediately before and after giving effect to the making of such
Advance and the application of the proceeds thereof), the statements
made in Section 8.2 are true and correct in all material respects.
(b) Transfer Documents. In the case of the acquisition of an
Equity Interest, on or prior to such Acquisition Date, each of the
Equity Interests to be acquired on such Acquisition Date shall have
been transferred to the Lessor pursuant to appropriate instruments of
transfer in form and substance reasonably satisfactory to the Lessor.
(c) Deed; ▇▇▇▇ of Sale for Certain Properties. In the case of
the acquisition of a direct fee ownership interest in any Property,
on or prior to such Acquisition Date, the Lessor shall have received
(i) a Deed with respect to such Property in form and substance
reasonably satisfactory to it and (ii) if such Property includes
personal property, a warranty ▇▇▇▇ of sale (a "▇▇▇▇ of Sale"),
conveying title to the Lessor in any Improvements and other personal
property (other than inventory) comprising part of such Property (and
the parties hereto acknowledge that the Properties to be acquired on
the Initial Acquisition Date do not include any personal property).
(d) Supplement to Assignment of Lease and Rent. On or prior
to such Acquisition Date, the Lessor shall have delivered to the
Collateral Agent one or more Supplements to the Assignment of Lease
and Rent substantially in the form of Exhibit A thereto covering each
Property to be acquired on such Acquisition Date (or, in the case of
an acquisition of an Equity Interest, covering the Property relating
to such Equity Interest), together with a consent to and
acknowledgement of such Supplement duly executed by the applicable
Lessee.
(e) Lease Supplement/Memorandum of Lease. On or prior to such
Acquisition Date, for each Property the applicable Lessee and the
Lessor shall have delivered the original counterpart of the Lease
Supplement, in recordable form, executed by the Lessee and the Lessor
with respect to such Property to the Lenders.
(f) Responsible Officer's Certificate. On or prior to such
Acquisition Date, the Lessor and the Lenders shall each have received
(x) a Responsible Officer's Certificate of the Company and (y) a
Responsible Officer's Certificate of each Lessee of a Property being
acquired on such Acquisition Date (or, in the case of an acquisition
of an Equity Interest, the Lessee of the Property relating to such
Equity Interest), each in substantially the form of Exhibit C
attached hereto, dated as of the applicable Acquisition Date, stating
that (i) to such Responsible Officer's actual knowledge, without
investigation, each and every representation and warranty of each of
the Company or the applicable Lessee, as applicable, contained in
each Operative Document to which it is a party is true and correct in
all material respects on and as of the applicable Acquisition Date,
(ii) to such Responsible Officer's actual knowledge, without
investigation, no Default or Event of Default has occurred and is
continuing under any Operative Document to which either of the
Company or the applicable Lessee, as applicable, is a party, (iii) to
such Responsible Officer's actual knowledge, without investigation,
each Operative Document to which either the Company or the applicable
Lessee, as applicable, is a party is in full force and effect with
respect to it, and (iv) to such Responsible Officer's actual
knowledge, each of the Company or the applicable Lessee, as
applicable, has duly performed and complied with all conditions
contained herein or in any other Operative Document required to be
performed or complied with by it on or prior to the Acquisition Date.
(g) Lease Facility Mortgage. On or prior to such Acquisition
Date, the applicable Lessee shall have delivered to the Collateral
Agent (with a copy thereof delivered to the Lessor) a Lease Facility
Mortgage covering the Property to be leased by such Lessee under the
Master Lease and applicable Lease Supplement, in form and substance
reasonably satisfactory to the Participants.
(h) Lease Facility Financing Statements. On or prior to such
Acquisition Date, for each Property the applicable Lessee shall have
delivered to the Lessor all Lease Facility Financing Statements
relating to such Property as the Lessor or any Participant reasonably
may request in order to protect the security interest of the
Collateral Agent for the benefit of the Secured Parties.
(i) Recordation of Mortgages and Filing of Lease Facility
Financing Statements. Each of the Lessor and the Participants shall
have received evidence reasonably satisfactory to it that each of
(i) the Lease Facility Mortgages, (ii) the Assignment of Lease and
Rent and (iii) the Lease Facility Financing Statements, in each case
relating to the applicable Property, has been, or will be promptly,
recorded or filed, as applicable, in a manner sufficient to properly
secure each of their interests therein.
(j) Evidence of Property Insurance. The Lessor shall have
received evidence that the insurance obtained by the Lessees with
respect to the applicable Property satisfies the requirements set
forth in Article XIII of the Master Lease, setting forth the
respective coverage, limits of liability, carrier, policy number and
period of coverage.
(k) Environmental Audit. The Lessor and the Lease Agent shall
have received an Environmental Audit with respect to the applicable
Property in form and substance reasonably satisfactory to the Lessor
and the Lease Agent.
(l) Property Survey. On or prior to such Acquisition Date,
each Lessee or the Company shall have delivered to the Lessor, on
behalf of the Lenders, an American Land Title Association ("ALTA")/1992
(Urban) Survey of the applicable Property certified to the
title company and otherwise in form reasonably acceptable to the
Participants.
(m) Title Insurance. On or prior to such Acquisition Date,
the Lessor and the Lease Agent shall have received from a title
company satisfactory to them a commitment to deliver an ALTA extended
owners and lenders title insurance policy covering the applicable
Property in favor of the Lessor and the Lenders, respectively, such
policy in an amount not less than the related Property Cost and to be
reasonably satisfactory to the Lessor and the Lease Agent with such
customary endorsements issued by the title company as a routine
matter, if reasonably requested by the Lessor.
(n) Appraisal. On or prior to such Acquisition Date, the
Lessor and the Lenders shall have received an Appraisal of the
applicable Property, in form and substance reasonably satisfactory to
the Lessor and the Lenders, which Appraisal shall show that, as of
such Acquisition Date and the Expiration Date, the Fair Market Sales
Value of each Property being acquired on such Acquisition Date (or,
in the case of an acquisition of an Equity Interest, the Property
relating to such Equity Interest) shall not be less than 100% of the
Property Cost for such Property.
(o) Opinion of Local Counsel. If the Property being acquired
on the applicable Acquisition Date (or, in the case of an acquisition
of an Equity Interest, the Property relating to such Equity Interest)
is located in a state in which there exists no other Property already
covered by any Lease Supplement, then on or prior to such Acquisition
Date, the Lessor and each Lender shall have received an opinion, in
form and substance satisfactory to them, of counsel qualified with
respect to the laws of the jurisdiction in which the applicable
Property is located.
(p) Fees. All Facility Fees then due and payable pursuant to
this Participation Agreement and all fees due and payable pursuant to
the Fee Letter shall have been paid.
(q) Representations and Warranties. On the applicable
Acquisition Date, the representations and warranties of each Lessee
and the Company contained in Section 8.2 and in each of the other
Operative Documents shall be true and correct in all material
respects as though made on and as of such date, except to the extent
such representations or warranties relate solely to an earlier date,
in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier
date.
(r) Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of
the Operative Documents shall have been paid or provisions for such
payment shall have been made by the applicable Lessee to the
reasonable satisfaction of the Lessor and the Lenders.
(s) Governmental Approvals. All necessary Governmental
Actions required by any Requirement of Law or any Property Legal
Requirements for the purpose of authorizing the Lessor to acquire the
applicable Property (and, if applicable, the Equity Interest related
thereto) shall have been obtained or made and be in full force and
effect.
(t) Litigation. No action or proceeding shall have been
instituted, nor, to the actual knowledge (without investigation) of
any Lessee or the Company, shall any action or proceeding be
threatened, before any Governmental Authority, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority either (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, any
other Operative Document or any transaction contemplated hereby or
thereby, (ii) which is reasonably likely to Materially adversely
affect any Lessee, the Company or the Property, or (iii) that
question the validity in a material sense of the Operative Documents
or the rights or remedies of the Lessor or the Lenders with respect
to any Lessee, the Company or any Property under the Operative
Documents.
(u) Requirements of Law. In the reasonable opinion of the
Lessor and the Lenders and their respective counsel, the transactions
contemplated by the Operative Documents do not and will not violate
in any material respect any Requirement of Law and do not and will
not subject the Lessor or the Lenders to any adverse regulatory
prohibitions or constraints.
(v) No Default. There shall not have occurred and be
continuing any Default or Event of Default under any of the Operative
Documents, and no Default or Event of Default under any of the
Operative Documents will have occurred after giving effect to the
acquisition of the Properties.
All documents and instruments required to be delivered pursuant to this
Section 6.2 shall be delivered at the offices of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 1285 Avenue of the Americas, New York, New York, or at
such other location as may be determined by the Lessor, the Lenders, the
Company and the Lessee.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1. Basic Rent (Interest/Yield). The Collateral Agent or
the Lease Agent (as specified in Section 10.4) shall distribute to the
Lenders, from each payment of Basic Rent (Interest/Yield) received by the
Collateral Agent or the Lease Agent, as applicable (and from any payment of
interest on overdue installments of Basic Rent (Interest/Yield) received by
the Lessor), an amount equal to the interest due on the Loans in accordance
with Section 2.4 of the Loan Agreement as well as any overdue interest due
to the Lenders (to the extent permitted by applicable law). The Collateral
Agent or the Lease Agent, as applicable shall distribute to the Lessor, as
payment of Yield on the Lessor Amount (as well as payment of any overdue
Yield due to the Lessor, to the extent permitted by applicable law), all
payments of Basic Rent (Interest/Yield) received by the Collateral Agent or
the Lease Agent, as applicable (and all payments of interest on overdue
installments of Basic Rent (Interest/Yield) received by the Collateral
Agent or the Lease Agent, as applicable), to the extent such payments
exceed amounts then due and payable by the Lessor with respect to interest
on the Loans.
SECTION 7.2. Purchase Payments by the Lessees.
(a) Any payment received by the Collateral Agent or the Lease
Agent, as applicable, as a result of:
(i) the purchase of all of the Properties in connection
with the exercise of the Purchase Option under Section 18.1(a)
of the Master Lease, or
(ii) compliance with the obligation to purchase (or
cause its designee to purchase) all of the Properties in
accordance with Section 18.2 of the Master Lease, or
(iii) compliance with the obligation to purchase all
unsold Properties in accordance with Section 16.2(e) of the
Master Lease, or
(iv) failure to fulfill one or more of the conditions to
exercise of the Remarketing Option with respect to any Property
pursuant to Section 20.1 of the Master Lease and the Lessor's
receipt of the Lease Balance pursuant to the provisions of
Section 20.1 of the Master Lease,
shall be distributed by the Collateral Agent or the Lease Agent, as
applicable, to pay in full the Participant Balance of each Lender and
the Lessor.
(b) Any payment received by the Collateral Agent or the Lease
Agent, as applicable, as a result of the payment of the Property
Balance with respect to any Property in accordance with Section 15.1
or 18.1(b) of the Master Lease shall be distributed by the Collateral
Agent or the Lease Agent, as applicable, among the Lenders and the
Lessor pro rata without priority of one over the other, in the
proportion that the Participant Balance of each of the Lenders and
the Lessor bears to the aggregate of all of the Participant Balances.
SECTION 7.3. Payment of Lease Recourse Amount. The payment of the
Lease Recourse Amount to the Collateral Agent or the Lease Agent, as
applicable, in accordance with Section 20.1(j) of the Master Lease upon the
exercise of the Remarketing Option shall be distributed to the Tranche A
Lenders for application to pay in full the Participant Balance of each
Tranche A Lender.
SECTION 7.4. Sales Proceeds of Remarketing of Properties. Any
payments received by the Collateral Agent or the Lease Agent, as
applicable, as proceeds from the sale of the Properties sold pursuant to
the exercise of the Remarketing Option pursuant to Article XX of the Master
Lease, together with any payment made as a result of an appraisal pursuant
to Section 13.2, shall be distributed in the funds so received in the
following order of priority:
first, among the Tranche B Lenders and the Lessor pro rata
without priority of one over the other, in the proportion that the
Participant Balance of each of the Tranche B Lenders and the Lessor
bears to the aggregate of all of the Participant Balances of the
Tranche B Lenders and the Lessor, and
second, the balance, if any, after payment in full of the
Participant Balances of the Tranche B Lenders and the Lessor shall be
promptly distributed to the Company as agent for the Lessees.
SECTION 7.5. Supplemental Rent. All payments of Supplemental Rent
received by the Collateral Agent or the Lease Agent, as applicable
(excluding any amounts payable pursuant to the preceding provisions of this
Article VII) shall be promptly distributed upon receipt thereof to the
Persons entitled thereto pursuant to the Operative Documents.
SECTION 7.6. Reserved.
SECTION 7.7. Distribution of Payments after Lease Event of Default.
(a) Prior to the payment in full of all obligations of the Company and the
Subsidiary Co-Borrowers owing to the Credit Facility Banks under the Credit
Facility Documents and the permanent termination of all commitments of the
Credit Facility Banks thereunder, all amounts received by the Collateral
Agent during the continuance of a Lease Event of Default (including without
limitation all amounts received from any sale of any Property and all
amounts realized in connection with any Casualty or Condemnation affecting
any Property) shall be distributed in accordance with the provisions of
Section 2.14 of the Intercreditor Agreement (and each party hereto hereby
acknowledges and agrees that all such payments shall be distributed as
aforesaid).
(b) After payment in full of all obligations of the Company and the
Subsidiary Co-Borrowers owing to the Credit Facility Banks under the Credit
Facility Documents and the permanent termination of all commitments of the
Credit Facility Banks thereunder, all payments received and amounts
realized by the Collateral Agent or the Lease Agent during the continuance
of a Lease Event of Default shall be turned over to the Lease Agent (if
received by the Collateral Agent) and distributed by the Lease Agent as
follows:
(x) All payments received and amounts realized in connection
with any Casualty or Condemnation shall be distributed as follows:
(i) in the event that the Lease Agent, at the direction
of the Required Participants, elects to pay all or a portion of
such amounts to the applicable Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with
Section 14.1(a) of the Master Lease, then such amounts shall be
distributed to the applicable Lessee, and
(ii) in the event that the Lease Agent, at the direction
of the Required Participants, elects to apply all or a portion
of such amounts to the purchase price of the related Property
in accordance with Section 14.1(a) of the Master Lease, then
such amounts shall be distributed in accordance with clause
(y).
(y) All other payments received and amounts realized shall be
distributed in the following order of priority:
first, so much of such payment or amount as shall be
required to reimburse the Lease Agent for any tax, expense or
other loss incurred by the Lease Agent (to the extent not
previously reimbursed and to the extent incurred in connection
with any duties as the Lease Agent) and any unpaid ongoing fees
of the Lease Agent shall be distributed to the Lease Agent for
its own account;
second, so much of such payments or amounts as shall be
required to pay the then existing or prior Lenders and the
Lessor the amounts payable to them pursuant to any expense
reimbursement or indemnification provisions of the Operative
Documents shall be distributed to each such Participant without
priority of one over the other in accordance with the amount of
such payment or payments payable to each such Person;
third, to the Lenders and the Lessor pro rata in
accordance with, and for application to, the Participant
Balance of each Lender and the Lessor; and
fourth, after payment in full of the Participant Balance
of each Lender and the Lessor and all other amounts due and
owing to any Lender or the Lessor, the balance, if any, of such
payment or amounts remaining thereafter shall be promptly
distributed to, or as directed by, the Company as agent for the
Lessees.
(c) All amounts received or realized by the Collateral Agent or the
Lease Agent and otherwise distributable pursuant to Sections 7.1 and 7.2
shall be distributed by the Collateral Agent or the Lease Agent, as
applicable, in accordance with this Section 7.7.
SECTION 7.8. Other Payments.
(a) Except as otherwise provided in Sections 7.1, 7.2, 7.7 and
clause (b) below, any payment received by the Collateral Agent or the Lease
Agent for which no provision as to the application thereof is made in the
Operative Documents or elsewhere in this Article VII shall be distributed
pro rata among the Lenders and the Lessor without priority of one over the
other, in the proportion that the Participant Balance of each bears to the
aggregate of all the Participant Balances, to be applied to the outstanding
Loans and Lessor Amounts, with any balance payable in accordance with the
Operative Documents.
(b) Except as otherwise provided in Sections 7.1, 7.2 and 7.7, all
payments received and amounts realized by the Collateral Agent or the Lease
Agent under the Master Lease or otherwise with respect to the Properties to
the extent received or realized at any time after indefeasible payment in
full of the Participant Balances of all of the Lenders and the Lessor and
any other amounts due and owing to the Lenders or the Lessor, shall be
distributed in accordance with the provision of Section 2.14 of the
Intercreditor Agreement.
(c) Except as otherwise provided in Sections 7.1 and 7.2, any
payment received by the Collateral Agent or the Lease Agent for which
provision as to the application thereof is made in an Operative Document
but not elsewhere in this Article VII shall be distributed forthwith to the
Person and for the purpose for which such payment was made in accordance
with the terms of such Operative Document.
SECTION 7.9. Casualty and Condemnation Amounts. Subject to Sections
7.7 and 7.8(b), any amounts payable to the Collateral Agent or the Lease
Agent, as applicable, as a result of a Casualty or Condemnation pursuant to
Section 14.1 of the Master Lease and the Assignment of Lease and Rent shall
be distributed as follows:
(a) all amounts payable to a Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with Section
14.1(a) of the Master Lease shall be distributed to such Lessee, and
(b) all amounts that are to be applied to the purchase price
of the related Property in accordance with Section 14.1(a) and
Article XV of the Master Lease shall be distributed to the Lenders
and the Lessor pro rata without priority of one over the other, in
the proportion that the Participant Balance of each bears to the
aggregate of all of the Participant Balances. Section 13.10 shall
not apply to any distribution or prepayment made pursuant to this
Section 7.9(b).
SECTION 7.10. Order of Application. To the extent any payment made
to any Lender or the Lessor pursuant to Section 7.2, 7.3, 7.4 or 7.7 is
insufficient to pay in full the Participant Balance of such Lender or the
Lessor, then each such payment shall first be applied to accrued interest
or Yield and then to the principal of the Loans or the Lessor Amount, as
applicable.
SECTION 7.11. Deemed Receipt. Receipt by the Collateral Agent or
the Lease Agent, as applicable, of any amount paid by the Lessees
distributable to the Lenders or other Persons pursuant to this Article VII
shall be deemed to be receipt by each such party to the extent allocable to
such party and upon payment of any such amount by the Lessees to the
Collateral Agent or the Lease Agent, as the case may be, the Lessees shall
have no further obligations to make such payment.
SECTION 7.12. Agreement of Collateral Agent and Participants.
Pursuant to the Assignment of Lease and Rent, all of the payments (other
than amounts expressly excluded from the assignment contained therein) have
been assigned to the Collateral Agent for the benefit of each of the
Secured Parties. The Collateral Agent hereby agrees that it shall
distribute all such payments pursuant to the requirements of this Article
VII and the Intercreditor Agreement to each Participant or other Person
entitled thereto as promptly as possible (it being understood that any such
payment received on a timely basis in accordance with the provisions of the
Master Lease, this Participation Agreement and the other Operative
Documents shall be distributed by the Collateral Agent on the same Business
Day as received to the extent practicable).
ARTICLE VIII
REPRESENTATIONS
SECTION 8.1. Representations of the Participants. Each Participant
represents and warrants to each other Participant, the Company and the
Lessees that:
(a) ERISA. Such Participant is purchasing its interest in its
Lease Facility Note or funding its Lessor Amount, as the case may be,
with assets that are not assets of any Employee Benefit Plan (or its
related trust) which is subject to Title I of ERISA or Section 4975
of the Code; and it is not a "Benefit Plan Investor" as defined in 29
C.F.R. S 2510.3-101, and is not purchasing its interest in its
Lease Facility Note or funding its Lessor Amount, as the case may be,
with any assets of any Benefit Plan Investor.
(b) Status. Such Participant is a commercial bank, savings
and loan association, savings bank, depository institution, insurance
company, branch or agency of a foreign bank or other similar
financial institution, or an Affiliate thereof.
(c) Organization, Good Standing and Due Qualification. Such
Participant is duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation or organization, has the corporate power and authority
to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required for the
consummation of the transactions contemplated hereby.
(d) Power and Authority, No Conflicts. The execution,
delivery and performance by such Participant of the Operative
Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (i) require any
consent or approval of its stockholders, partners or members that has
not been obtained; (ii) contravene its charter or by-laws or
partnership or operating agreement; (iii) violate in any material
respect any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to it; (iv) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which it is
a party or by which it or its properties may be bound or affected if
such breach, default or failure to obtain consent could reasonably be
expected to adversely effect the transactions contemplated hereby;
(v) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of the properties now owned or hereafter
acquired by it; or (vi) cause it to be in default under any such law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award or, if such default could reasonably be
expected to adversely effect the transactions contemplated hereby.
(e) No Affiliation With Lessor. It is not an Affiliate of the
Lessor (or if it is the Lessor it is not an Affiliate of any Lender)
and will not in the future become such an Affiliate unless it has
provided the Company, as agent for the Lessees, sixty (60) days'
prior written notice and upon the determination of the Company, as
agent for the Lessees, that such affiliation will cause a Rate
Setting Commission Trigger Event to occur, it will, upon payment in
full of all amounts owed to such Participant, assign its interests
hereunder to a third party designated by the Company, as agent of the
Lessees.
(f) Legally Enforceable Agreements. Each Operative Document
to which such Participant is a party is, or when delivered under this
Agreement will be, a legal, valid and binding obligation of such
Person enforceable against such Person in accordance with its terms,
except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
The making of any Loan or the advancing of any Lessor Amount on any
Acquisition Date shall constitute an affirmation by the subject Participant
of the preceding representations and warranties.
SECTION 8.2. Representations of the Company and the Lessees. The
Company and each Lessee hereby represent and warrant to each Participant
that:
(a) Organization, Good Standing and Due Qualification. It is
duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization, has the corporate, partnership or limited liability
company power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is
duly qualified as a foreign corporation, partnership or limited
liability company and in good standing under the laws of each other
jurisdiction in which such qualification is required and where such
failure to qualify could reasonably be expected to have a Material
Adverse Effect.
(b) Power and Authority, No Conflicts. The execution,
delivery and performance of the Operative Documents to which it is a
party have been duly authorized by all necessary corporate,
partnership or limited liability company action and do not and will
not: (i) require any consent or approval of its stockholders,
partners or members that has not been obtained; (ii) contravene its
charter or by-laws or partnership or operating agreement;
(iii) violate any provision of, or require any filing (other than the
recordation of the Lease Facility Mortgages, the Lease Facility
Financing Statements, the Lease Supplements, the Assignment of Lease
and Rent and the Supplements to the Assignment of Lease and Rent),
registration, consent or approval under, any law, rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it; (iv) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which it is
a party or by which it or its properties may be bound or affected if
such breach, default or failure to obtain consent could reasonably be
expected to have a Material Adverse Effect; (v) result in, or
require, the creation or imposition of any Lien (other than Permitted
Property Liens and as created under the Security Documents), upon or
with respect to any of the properties now owned or hereafter acquired
by it; or (vi) cause it to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award or, if such default could reasonably be expected to have a
Material Adverse Effect, any such indenture, agreement, lease or
instrument.
(c) Legally Enforceable Agreements. Each Operative Document
to which it is a party is, or when delivered under this Agreement
will be, a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms, except
to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors'
rights generally.
(d) Litigation. Except as disclosed in Item 8.2(d) of
Schedule II hereto, there are no actions, suits or proceedings
pending or, to its actual knowledge without investigation,
threatened, against or affecting it before any court, Governmental
Authority or arbitrator which could reasonably be expected to have a
Material Adverse Effect.
(e) Financial Statements. The consolidated balance sheets of
the Consolidated Entities as at December 31, 1995, 1994, 1993, 1992
and 1991, and the related consolidated income statements and
statements of cash flows and changes in stockholders' equity of the
Consolidated Entities, for the fiscal years then ended, and the
accompanying footnotes, together with the opinion on the consolidated
statements of KPMG Peat Marwick L.L.P., independent certified public
accountants, and the interim unaudited consolidated balance sheet of
the Consolidated Entities as at September 30, 1996, and the related
consolidated income statement and statements of cash flows and
changes in stockholders' equity of the Consolidated Entities, for the
three month period then ended, copies of which have been furnished to
each of the Participants, are complete and correct and fairly present
the financial condition of the Consolidated Entities at such dates
and the results of the operations of the Consolidated Entities for
the periods covered by such statements, all in accordance with GAAP
consistently applied. Except as set forth on the consolidated
balance sheet of the Consolidated Entities as at September 30, 1996,
there are no liabilities of any Consolidated Entity, fixed or
contingent, which are material but are not reflected in the financial
statements or in the notes thereto and which would be required to be
recorded in such financial statements or notes in accordance with
GAAP. No written information, exhibit or report furnished by the
Company or any Lessee to the Participants in connection with the
negotiation of this Agreement (after giving effect to information so
furnished that corrects, supplements or supersedes information
previously furnished) contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading in each case
as determined as of the date of the provision of such information,
exhibit or report. Since September 30, 1996, there has been no
change which could reasonably be expected to have a Material Adverse
Effect.
(f) ERISA. Each Plan and, to the best knowledge of the
Company and each Lessee, Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material
respects in compliance with, the applicable provisions of ERISA, the
Code and any other applicable Federal or state law, and no event or
condition is occurring or exists concerning which the Company or any
Lessee would be under an obligation to furnish a report to the Credit
Facility Banks in accordance with Section 7.08(g) of the Credit
Agreement. As of the most recent valuation date for each Plan, each
Plan other than The Breyut Convalescent Center, Inc. Pension Fund was
"fully funded", which for purposes of this Section 8.2(f) shall mean
that the fair market value of the assets of the Plan is not less than
the present value of the accrued benefits of all participants in the
Plan, computed on a Plan termination basis. To the best knowledge of
the Company and each Lessee, no such Plan has ceased being fully
funded as of the date these representations are made with respect to
any Loan under this Agreement. With respect to The Breyut
Convalescent Center, Inc. Pension Fund, benefit accruals were frozen
as of December 31, 1990 and the Unfunded Benefit Liabilities as
projected by such Plan's enrolled actuary as of August 1, 1993 were
$1,139,854.
(g) Hazardous Materials. To its actual knowledge, each Lessee
is in compliance in all material respects with all Environmental
Laws. No Lessee has received any (i) notice, demand letters,
inquiry, or requests for information from any Governmental Authority
or any third party alleging any actual or threatened injury or damage
to any person or property or the environment arising from any Release
or threatened Release of Hazardous Materials at or from such Lessee's
present or previously-owned or leased real properties or (ii) notice
of any Lien held by any Governmental Authority under any
Environmental Law that has attached to any revenues of, or to, any
real properties owned or leased by such Lessee.
(h) Governmental Regulation. Neither the Company nor any
Lessee is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the
Interstate Commerce Act, the Federal Power Act or any statute or
regulation limiting its ability to incur indebtedness for money
borrowed as contemplated hereby.
(i) Solvency.
(i) The present fair saleable value of the assets of the
Company and each Lessee after giving effect to all the
transactions contemplated by the Operative Documents and the
funding of the Commitments hereunder exceeds the amount that
will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities)
of such Person as they mature.
(ii) The Property of the Company and each Lessee does
not constitute unreasonably small capital for such Person to
carry out its business as now conducted and as proposed to be
conducted including the capital needs of such Person.
(iii) The Company and each Lessee does not intend to,
nor does such Person believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by such
Person, and of amounts to be payable on or in respect of
indebtedness of such Person). The cash available to such
Person after taking into account all other anticipated uses of
the cash of such Person, is anticipated to be sufficient to pay
all such amounts on or in respect of debt of such Person when
such amounts are required to be paid.
(iv) The Company and each Lessee does not believe that
final judgments against it in actions for money damages will be
rendered at a time when, or in an amount such that, such Person
will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum
reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be
rendered). The cash available to such Person after taking into
account all other anticipated uses of the cash of such Person
(including the payments on or in respect of debt referred to in
paragraph (iii) of this Section 8.2(i)), is anticipated to be
sufficient to pay all such judgments promptly in accordance
with their terms.
(j) Lessees. Each Lessee is an indirect wholly-owned
Subsidiary of the Company.
(k) Property. Each Property, and the contemplated use thereof
by each Lessee and its agents, assignees, employees, lessees,
licensees and tenants, will comply with all Material Requirements of
Law (including, without limitation, all zoning and land use laws and
Environmental Laws) and Material Insurance Requirements, except for
such Requirements of Law as such Lessee shall be contesting in good
faith by appropriate proceedings. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent
domain or under any Environmental Law) pending or, to the best of the
Company's and the applicable Lessee's actual knowledge, threatened
with respect to the Company, such Lessee or any Property which
Materially adversely affects the title to, or the use, operation or
value of, any Property.
(l) Condition of Property. All water, sewer, electric, gas,
telephone and drainage facilities and all other utilities required to
adequately service the applicable Improvements for each Property's
intended use are available pursuant to adequate permits (including
any that may be required under applicable Environmental Laws). No
fire or other casualty with respect to any Property has occurred
which fire or other casualty has had a Material adverse effect on any
such Property. All Material services of public facilities and other
utilities necessary for use and operation of each Property and the
other Improvements for their primary intended purposes are available,
including, without limitation, adequate water, gas and electrical
supply, storm and sanitary sewerage facilities, telephone, other
required public utilities and means of access between such
Improvements and public highways for pedestrians and motor vehicles.
All utilities serving each Property are located in either public
rights-of-way abutting each Property or Appurtenant Rights. All
Material licenses, approvals, authorizations, consents, permits
(including building, demolition and environmental permits, licenses,
approvals, authorizations and consents), easements and rights-of-way,
including proof and dedication, required for the use, treatment,
storage, transport, disposal or disposition of any Hazardous
Substance on, at, under or from each Property have either been
obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be.
(m) [Intentionally Omitted].
(n) Insurance. Each Lessee has obtained, or will timely
obtain, insurance coverage covering the applicable Property which
meets the requirements of the Master Lease, and such coverage is in
full force and effect.
(o) Flood Hazard Areas. If any Property is located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance
has been obtained for such Property in accordance with Article XIII
of the Lease and in accordance with the National Flood Insurance Act
of 1968, as amended.
SECTION 8.3. Representation of Lessor. In addition to its
representations and warranties set forth in Section 8.1 hereof, the Lessor
represents and warrants to the Company and the Lessees that as of the
Initial Acquisition Date it is a wholly-owned subsidiary of Key Bank, N.A.,
and that it is not financing its acquisition of the Equity Interests or any
Property with non-recourse debt representing more than 97% of the
acquisition cost of such Equity Interests or Property. The Lessor further
represents and warrants that it will use reasonable commercial efforts with
respect to itself to accommodate accounting pronouncements issued from time
to time by the Financial Accounting Standards Board and reasonable
interpretations thereof so that the Lessees may continue to treat the Lease
as an operating lease under GAAP from the Lessor to the Lessees for
purposes of the Lessees' financial reporting.
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
The Lessees agree, for the benefit of the Lessor and the Lenders,
that:
SECTION 9.1. Transaction Expenses.
(a) The Lessees shall pay, or cause to be paid, from time to
time, all Transaction Expenses on the Documentation Date, or, to the
extent not due and payable on the Documentation Date, on each
Acquisition Date; provided, however, that, if the Lessees have not
received written invoices therefor prior to such date, such
Transaction Expenses shall be paid within thirty (30) days after the
Lessees have received written invoices therefor.
(b) The Lessees shall pay or cause to be paid (i) the fees set
forth in the Fee Letter as provided therein, (ii) all Transaction
Expenses incurred by the Lessor or any Lender in entering into any
future amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, in each case which have been requested by
or approved by the Lessees, (iii) all Transaction Expenses incurred
by the Lessor, the Lessees or the Lenders in connection with any
purchase of the Property by any Lessee or other Person pursuant to
Articles XVIII and XXI of the Master Lease and (iv) all Transaction
Expenses incurred by any of the other parties hereto in respect of
the successful enforcement of any of their rights or remedies against
any Lessee in respect of the Operative Documents.
SECTION 9.2. Brokers' Fees and Stamp Taxes. The Lessees shall pay
or cause to be paid any brokers' fees and any and all stamp, transfer and
other similar taxes, fees and excises, if any, including any interest and
penalties, which are payable in connection with the transactions
contemplated by this Participation Agreement and the other Operative
Documents.
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of the Company and each Lessee. The Company
and each Lessee hereby agree, for the benefit of the Lenders and the
Lessor, to comply in full with all of their respective obligations under
Articles 7, 8 and 9 (and successor provisions thereto) of the Credit
Agreement, as such Credit Agreement may be amended from time to time in
accordance with Section 3.01 of the Intercreditor Agreement, and to deliver
(a) to each Participant a copy of each notice required to be delivered to
any Credit Facility Bank pursuant to the provisions of such Articles of the
Credit Agreement and (b) to the Lessor and the Lease Agent a copy of each
notice required to be delivered to the Credit Facility Agent pursuant to
the provisions of such Articles of the Credit Agreement, in each case
within the time period specified in the Credit Agreement for delivery to
the Credit Facility Banks or Credit Facility Agent, as applicable. If on
any date (x) the Credit Agreement shall cease to be in effect or (y) all
obligations of the Company and the Subsidiary Co-Borrowers shall have been
paid in full and the commitments of the Credit Facility Banks thereunder
shall be terminated in their entirety, then the provisions of Articles 7, 8
and 9 (and successor provisions thereto) of the Credit Agreement (as in
effect immediately prior to such date) and all ancillary definitions
related thereto shall automatically and without further action be
incorporated by reference herein and made a part hereof as if originally
set forth herein in full.
SECTION 10.2. Right of Inspection. At any reasonable time and from
time to time, but not more often than once per calendar year, and upon
reasonable advance written notice but no advance notice shall be required
if a Lease Default or a Lease Event of Default then exists, permit the
Lessor or any Lender or any agent or representative thereof, to examine its
records and books of account, and to discuss the affairs, finances and
accounts of each Lessee, as applicable, with any of their respective
officers and directors and independent accountants. Information not
otherwise publicly available obtained in any such examination and
identified as confidential shall be maintained in confidence by the Lessor
or such Lender, as the case may be, and utilized only in connection with
the transactions contemplated hereby.
SECTION 10.3. Further Assurances. The Lessees and the Company
hereby agree that so long as this Participation Agreement is in effect the
Lessees and the Company shall take or cause to be taken from time to time
all action reasonably necessary to assure that the intent of the parties
pursuant to the Operative Documents is given effect as contemplated by this
Participation Agreement and that the Collateral Agent holds a perfected
Lien on each Property securing the obligations of the Company, the Lessees
and the Lessor owing to the Secured Parties. The Lessees shall execute and
deliver, or cause to be executed and delivered, to the Lessor from time to
time, promptly upon request therefor, any and all other and further
instruments (including correction instruments and supplemental mortgages,
deeds of trust and security agreements) that may be reasonably requested by
the Lessor to cure any deficiency in the execution and delivery of the
Master Lease or any Operative Document to which it is a party.
SECTION 10.4. Agreement of Parties With Respect to Assignment of
Payments. Each of the parties hereto acknowledges and agrees that, after
payment in full of all obligations of the Company and the Subsidiary Co-
Borrowers owing to the Credit Facility Banks under the Credit Facility
Documents and the permanent termination of all commitments of the Credit
Facility Banks thereunder, the assignment of payments and rights made under
the Assignment of Lease and Rent shall inure to the benefit of the Lease
Agent on behalf of the Lenders and, in furtherance of the foregoing, all
payments to be made under the Master Lease or any other Operative Document
to the Collateral Agent shall instead be made to the Lease Agent for
distribution by the Lease Agent in accordance with Article VII.
SECTION 10.5. Removal of Liens. (a) The Lessor hereby agrees that
so long as this Participation Agreement is in effect, (i) it will not
create, incur, assume or suffer to exist any Lessor Lien upon the Master
Lease, the Lease Supplements or any of the Properties and (ii) it will, at
its own cost and expense, promptly take such action as may be necessary
duly to discharge, or to cause to be discharged, all Lessor Liens on the
Properties (and its rights under the Operative Documents) attributable to
it.
(b) Each of the Lease Agent and the Collateral Agent hereby
severally agrees that so long as this Participation Agreement is in effect,
(i) it will not create, incur, assume or suffer to exist any Agent Lien
attributable to it upon the Master Lease, the Lease Supplements or any of
the Properties and (ii) it will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge, or to cause to be
discharged, all Agent Liens on the Properties (and its rights under the
Operative Documents) attributable to it.
SECTION 10.6. Massachusetts Circular Letter. Each of the Lessees
intends to fully comply with the requirements of Circular Letter DHCQ 4-95-351
of the Department of Public Health of the Commonwealth of Massachusetts.
Each of the Lenders and the Lessor hereby acknowledges that the Lessees shall
be deemed to be owners of the long-term care facility business for the purpose
of Circular Letter DHCQ 4-95-351.
SECTION 10.7. Cure Rights of Lessees. So long as no Lease Event of
Default shall have occurred and be continuing, upon the occurrence of any
Loan Agreement Event of Default, the Lessees shall have the right, but not
the obligation, to take any such action in order to cure such Loan
Agreement Event of Default upon written notice to the Lessor or to
terminate the Loan Agreement and the Lease and purchase the Properties.
SECTION 10.8. Non-Disturbance of Lessees. Notwithstanding any other
provision herein or in any other Operative Document to the contrary, so
long as no Event of Default (as defined in the Intercreditor Agreement)
shall have occurred and be continuing, the Lenders shall not terminate the
Master Lease (except pursuant to the terms thereof), accelerate any Rent or
other amounts payable by any Lessee thereunder, demand the purchase of any
or all of the Properties by any Lessee (whether pursuant to Section 16.2(e)
of the Master Lease or otherwise), foreclose on any or all of the
Properties (except as to the Lessor's interest therein), or disturb any
Lessee's use, enjoyment and possession of the Properties, or take any
action in violation of or inconsistent with the "non-disturbance"
provisions of any Lease Facility Mortgage; provided, however, that nothing
contained in this Section 10.8 shall in any way limit, restrict or impair
any of the rights or remedies of the Lenders and the Lease Agent with
respect to the Lessor under the Loan Agreement (except to the extent the
exercise of such rights and remedies would be inconsistent with any of the
foregoing provisions of this Section 10.8) and the Assignment of Lease and
Rent.
ARTICLE XI
LESSEE DIRECTIONS
SECTION 11.1. Lessee Directions. The Lessor, the Lenders, and the
Lessees hereby agree that, so long as no Lease Event of Default exists, the
Company, as agent for the Lessees, shall have the exclusive right to
exercise any right of the Lessor under the Loan Agreement at any time, and
the Lessor shall not exercise any right under the Loan Agreement without
giving notice to the Company, as agent for the Lessees, at least two (2)
Business Days' prior written notice, and following such notice, shall take
such action or forebear from taking such action, as the Company, as agent
for the Lessees, shall direct. The Lessor and the Lenders hereby
acknowledge that Conversion/Continuation Notices given by the Company, as
agent for the Lessees, to the Lessor shall be deemed, and considered as,
notices given by the Lessor under the Loan Agreement.
ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1. Assignments. All or any part of the interest of any
Participant in, to or under this Participation Agreement, the other
Operative Documents, the Properties or the Lease Facility Notes may be
assigned or transferred by such Participant at any time; provided, however,
that (a) each assignment or transfer shall comply with all applicable
securities laws, (b) any assignment or transfer to a Person that is not an
Affiliate of the transferor thereof shall, so long as no Lease Event of
Default has occurred and is continuing, be subject to the prior written
consent of the Company acting on behalf of the Lessees and the Lessor
(which consent shall not be unreasonably withheld), and (c) any assignee or
transferee acknowledges that the obligations to be performed from and after
the date of such transfer or assignment under this Participation Agreement
and all other Operative Documents are its obligations, including the
obligations imposed by this Section 12.1 (and the transferor and transferee
Participant shall deliver to the Lessees and the Lessor an Assignment
Agreement, in substantially the form of Exhibit D (an "Assignment
Agreement"), executed by the assignee or transferee; and provided, further,
that (i) the Lessor may assign all or part of its interest in any of the
foregoing without the prior written consent of the Company, as agent for
the Lessees, if the retention of such interest constitutes a violation of
Applicable Law or is contrary to the policy of SELCO Service Corporation,
and the Lessor causes to be delivered to the Company, at the time of such
assignment, a certificate of an officer of SELCO Service Corporation to
such effect,) and (ii) any assignee or transferee further represents and
warrants to the Lessor, each Participant and the Lessees that:
(A) it is a commercial bank, savings and loan association,
savings bank, depository institution, insurance company, branch or
agency of a foreign bank or other similar financial institution, in
each case, having a minimum capital and surplus of $50,000,000;
(B) it has the requisite power and authority to accept such
assignment or transfer;
(C) it will not take any action with respect to such Lease
Facility Note or the Properties, as the case may be, that would
violate any applicable securities laws;
(D) it will not assign or transfer any interest in such Lease
Facility Note or its interest in the Properties, as the case may be,
except in compliance with this Section 12.1;
(E) it is purchasing its interest in its Lease Facility Note
or funding its Lessor Amount, as the case may be, with assets that
are not assets of any Employee Benefit Plan (or its related trust)
which is subject to Title I of ERISA or Section 4975 of the Code; and
it is not a "Benefit Plan Investor" as defined in 29 C.F.R. S 2510.3-101,
and is not purchasing its interest in its Lease Facility Note or
funding its Lessor Amount, as the case may be, with any assets of any
Benefit Plan Investor;
(F) it is not an Affiliate of the Lessor (or if it is the
Lessor it is not an Affiliate of any Lender) and will not in the
future become such an Affiliate unless it has provided the Company,
as agent for the Lessees, sixty (60) days' prior written notice and
upon the determination of the Company, as agent for the Lessees, that
such affiliation will cause a Rate Setting Commission Trigger Event
to occur, it will, upon payment in full of all amounts owed to such
Participant, assign its interests hereunder to a third party
designated by the Company, as agent of the Lessees; and
(G) it will not transfer such Lease Facility Note or its
interest in the Properties, as the case may be, unless the proposed
transferee makes the foregoing representations and covenants.
No assignment or transfer by a Participant prior to the Initial
Acquisition Date will relieve such Participation from its obligation to
fund an Advance hereunder if such Participant's assignee or transferee
wrongfully fails to fund such Advance. Each assigning or transferring
Participant shall remain liable under the Operative Documents, to the
extent provided therein, for its acts and omissions occurring prior to any
such assignment or transfer.
SECTION 12.2. Participations. Any Participant may at any time sell
to one or more commercial banks or other Persons (each of such commercial
banks and other Persons being herein called a "Sub-Participant"),
participating interests in all or a portion of its rights and obligations
under this Participation Agreement, the other Operative Documents, the
Properties or its Lease Facility Notes (including, without limitation, all
or portion of the Rent owing to it); provided, however, that
(a) no participation contemplated in this Section 12.2 shall
relieve such Participant from its obligations hereunder or under any
other Operative Document;
(b) such Participant shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Lessees shall continue to deal solely and directly
with such Participant in connection with such Participant's rights
and obligations under this Participation Agreement and each of the
other Operative documents;
(d) no Sub-Participant shall be entitled to require such
Participant to take or refrain from taking any action hereunder or
under any other Operative Document except with respect to any change
in the amount or timing of the payment of any interest, principal or
other amounts payable under the Loan Agreement or this Agreement; and
(e) no Sub-Participant shall be an Affiliate of the Lessor (or
if it is a Sub-Participant of the Lessor it is not an Affiliate of
any Lender) and will not in the future become such an Affiliate
unless it has provided the Company, as agent for the Lessees, sixty
(60) days' prior written notice and upon the determination of the
Company, as agent for the Lessees, that such affiliation will cause a
Rate Setting Commission Trigger Event to occur, it will, upon payment
in full of all amounts owed to such Sub-Participant, sell its
interests hereunder to a third party designated by the Company, as
agent of the Lessees.
Each Participant agrees that it will notify the Lessees promptly of the
identity of each Sub-Participant to which it sells a participating interest
hereunder and the amount of such participating interest. Each Lessee
acknowledges and agrees that each Sub-Participant, for purposes of Article
XIII, shall be considered a Participant. Notwithstanding anything to the
contrary herein, no Sub-Participant shall be entitled to receive any
greater amount than the transferor Participant would have been entitled to
receive in respect of the amount of the participation transferred by such
Participant had no such transfer occurred.
SECTION 12.3. Withholding Taxes; Disclosure of Information; Pledge
Under Regulation A. (a) If any Participant (or the assignee of or
Sub-Participant in any Lease Facility Note of a Participant, each a
"Transferee") is organized under the laws of any jurisdiction other than
the United States or any State thereof, then such Participant or the
Transferee of such Participant, as applicable, shall (as a condition
precedent to acquiring or participating in such Loan and as a continuing
obligation to the Lessor and the Lessee) (i) furnish to the Lessor and the
Lessees in duplicate, for each taxable year of such Participant or
Transferee during the term of the Lease, a properly completed and executed
copy of either Internal Revenue Service Form 4224 or Internal Revenue
Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue
Service Form W-9 and any additional form (or such other form) as is
necessary to claim complete exemption from United States withholding taxes
(wherein such Transferee claims entitlement to complete exemption from
United States withholding taxes on all payments hereunder), and
(ii) provide to the Lessor and the Lessees a new Internal Revenue Service
Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue
Service Form W-8 or Internal Revenue Service Form W-9 and any such
additional form (or any successor form or forms) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and
amendments duly executed and completed by such Participant or Transferee,
and to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption. By its
acceptance of a participation or assignment of a Participant's Lease
Facility Note or interest in the Properties, as the case may be, each
Transferee shall be deemed bound by the provisions set forth in this
Article XII.
(b) Any Participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Article XII, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the applicable Lessee, subject
to any confidentiality requirements relating to such information.
(c) Anything in this Article XII to the contrary notwithstanding,
any Participant may without the consent of the Lessees assign and pledge
all or any portion of the Lease Facility Notes held by it to any Federal
Reserve Bank, the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of the F.R.S.
Board and any operating circular issued by the Federal Reserve System
and/or the Federal Reserve Bank or otherwise; provided, any payment by any
Lessee for the benefit of the assigning or pledging Participant shall be
deemed to satisfy such Lessee's obligations with respect thereto.
(d) Anything in this Article XII to the contrary notwithstanding,
each participation described herein shall be at the sole expense of the
Participant engaging in such participation and shall not be subject to
reimbursement by any Lessee or the Company.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1. General Indemnification. The Lessees, jointly and
severally, agree to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee, on an After Tax Basis, from
and against, any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way
relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in
respect thereof;
(b) the Properties or any part thereof or interest therein or
any transfer of the Equity Interests to the Lessor or the dissolution
of the Equity Interests by the Lessor (as is contemplated by the
parties hereto);
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance,
rejection, ownership, management, possession, operation, rental,
lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, transfer of title,
redelivery, use, financing, refinancing, disposition, operation,
condition, sale (including, without limitation, any sale pursuant to
Section 16.2(c), 16.2(e) or 18.2 of the Master Lease or any sale
pursuant to Article XV, XVIII or XX of the Master Lease), return or
other disposition of all or any part or any interest in the
Properties or the imposition of any Lien other than Lessor Liens or
Agent Liens (or incurring of any liability to refund or pay over any
amount as a result of any Lien) thereon, including, without
limitation: (1) Claims or penalties arising from any violation of
law or in tort (strict liability or otherwise), (2) latent or other
defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction,
easement, condition or covenant or other matter affecting title to
the Properties, (4) the making of any Modifications in violation of
any standards imposed by any insurance policies required to be
maintained by the applicable Lessee pursuant to the Lease which are
in effect at any time with respect to the Properties or any part
thereof, (5) any Claim for patent, trademark or copyright
infringement arising from the Lessor's ownership of the Properties or
the Equity Interests, and (6) Claims arising from any public
improvements with respect to the Properties resulting in any change
or special assessments being levied against the Property or any plans
to widen, modify or realign any street or highway adjacent to any of
the Properties, or any Claim for utility "tap-in" fees;
(d) the breach by the Company or any Lessee of any covenant,
representation or warranty made by it or deemed made by it in any
Operative Document or any certificate required to be delivered by any
Operative Document;
(e) the retaining or employment of any broker, finder or
financial advisor by the Company or any Lessee to act on its behalf
in connection with this Participation Agreement;
(f) the existence of any Lien on or with respect to the
Properties, the Improvements, any Basic Rent or Supplemental Rent,
title thereto, or any interest therein including any Liens which
arise out of the possession, use, occupancy, construction, repair or
rebuilding of the Property or by reason of labor or materials
furnished or claimed to have been furnished to any Lessee, or any of
its contractors or agents or by reason of the financing of any
personalty or equipment purchased or leased by any Lessee or
Modifications constructed by any Lessee, except Lessor Liens, Agent
Liens and Liens in favor of the Collateral Agent, the Lease Agent,
the Lenders or the Lessor; or
(g) subject to the accuracy of any Participant's
representation set forth in Section 8.1(a), as to such Participant,
the transactions contemplated by the Lease or by any other Operative
Document, in respect of the application of Parts 4 and 5 of Subtitle
B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code;
provided, however, that the Lessees shall not be required to indemnify any
Indemnitee under this Section 13.1 for any of the following: (1) any Claim
to the extent resulting from the willful misconduct or gross negligence of
such Indemnitee or any member of its Indemnitee Group (it being understood
that the Lessees shall be required to indemnify an Indemnitee even if the
ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any
Claim resulting from Lessor Liens which the Lessor or the Lenders is
responsible for discharging under the Operative Documents, (3) any Claim to
the extent attributable to acts or events occurring after the expiration of
the Term or the return or remarketing of the Property so long as the Lessor
and the Lenders are not exercising remedies against the Lessees or any of
them in respect of the Operative Documents, (4) any Claim arising from a
breach or alleged breach by the Lenders or the Lessor of any agreement
entered into in connection with the assignment or participation of any Loan
or Lessor Amount, and (5) any Claim indemnified against in Section 13.2,
13.3 or 13.5. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of and
shall be separate and independent from any remedy under the Lease or any
other Operative Document. Without limiting the express rights of any
Indemnitee under this Section 13.1, this Section 13.1 shall be construed as
an indemnity only and not a guaranty of residual value of the Properties or
as a guaranty of the Lease Facility Notes.
SECTION 13.2. End of Term Indemnity. (a) If the Lessees elect the
Remarketing Option and there would, after giving effect to the proposed
remarketing transactions, be a Shortfall Amount, then prior to the
Expiration Date and as a condition to the Lessees' right to complete the
remarketing of the Properties pursuant to Section 20.1 of the Lease, the
Lessees shall cause to be delivered to the Lessor at least one hundred
twenty (120) days prior to the Expiration Date, at the Lessees' sole cost
and expense, a report from the Person that delivered the Appraisal in form
and substance satisfactory to the Participants (the "End of the Term
Report") which shall state the appraiser's conclusions as to the reason for
any decline in the Fair Market Sales Value of any of the Property from that
anticipated for such date in the Appraisal delivered on the applicable
Acquisition Date.
(b) If the Lessees exercise the Remarketing Option, then on or prior
to the Expiration Date the Lessees shall pay to the Lessor an amount (not
to exceed the Shortfall Amount) equal to the portion of the Shortfall
Amount that the End of the Term Report demonstrates was the result of a
decline in the Fair Market Sales Value of the applicable Property due to
(i) failure to maintain, to repair, to restore, to rebuild or
to replace, failure to comply with all applicable laws, failure to
use, workmanship, method of installation or removal or maintenance,
repair, rebuilding or replacement, (excepting in each case ordinary
wear and tear), in each case as required under the Lease, or
(ii) any Modification made to, or any rebuilding of, the
applicable Properties or any part thereof by the applicable Lessee
not meeting the criteria required under the Lease, or
(iii) the existence of any Hazardous Activity, Hazardous
Materials or Environmental Violations as prohibited under the Lease,
the indemnity for which shall not exceed the cost of the remediation
thereof, or
(iv) any use of any of the applicable Properties or any part
thereof by the applicable Lessee or any sublessee other than as a
long-term care or similar or related facility, or
(v) any grant, release, dedication, transfer, annexation or
amendment of the type referred to in Section 11.2 of the Master Lease
other than those permitted under Section 11.2 of the Master Lease, or
(vi) the failure of the Lessor to have good and marketable
title to any of the applicable Properties free and clear of all Liens
(excluding Permitted Property Liens), or
(vii) the existence of any sublease relating to any of the
applicable Properties that shall survive the Expiration Date.
SECTION 13.3. Environmental Indemnity. Without limitation of the
other provisions of this Article XIII, each Lessee hereby agrees to
indemnify, defend and hold each Indemnitee harmless from and against any
and all claims (including without limitation third party claims for
personal injury or real or personal property damage), losses, damages,
liabilities, fines, penalties, administrative and judicial proceedings
(including informal proceedings) and orders, judgments and enforcement
actions of any kind, and all reasonable and documented costs and expenses
incurred in connection therewith (including reasonable and documented
attorneys' and/or paralegals' fees and expenses), including all costs
incurred in connection with any investigation or monitoring of
environmental conditions or any clean-up, remedial, removal or restoration
work by any federal, state or local government agency, arising in whole or
in part, out of
(a) the presence on or under any of the Properties of any
Hazardous Materials, or any Release of any Hazardous Materials on,
under, from or onto any of the Properties, or
(b) any violation of or non-compliance with any Environmental
Laws by any Lessee or any of its agents, or contractors;
provided, however, no Lessee shall be required to indemnify any Indemnitee
under this Section 13.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee or (2) any Claim
to the extent attributable to acts or events occurring after the expiration
of the Term or the return or remarketing of any such Property so long as
the Lessor and the Lenders are not exercising remedies against the
applicable Lessee in respect of the Operative Documents. It is expressly
understood and agreed that the indemnity provided for herein shall survive
the expiration or termination of and shall be separate and independent from
any remedy under the Lease or any other Operative Document.
SECTION 13.4. Proceedings in Respect of Claims. With respect to any
amount that a Lessee is requested by an Indemnitee to pay by reason of
Section 13.1 or 13.3, such Indemnitee shall, if so requested by the Lessee
and prior to any payment, submit such additional information to the Lessee
as the Lessee may reasonably request and which is in the possession of such
Indemnitee to substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, or if any Indemnitee becomes aware of a Claim or potential
Claim, such Indemnitee promptly shall notify the applicable Lessee in
writing of the commencement or existence thereof. If the Indemnitee fails
to notify the applicable Lessee promptly, the applicable Lessee's
obligation to indemnify such Indemnitee shall be relieved to the extent
such failure limits the ability of the Lessee to contest such Claim. The
applicable Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the
defense of any such Claim; provided, however, that such Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee
in respect of such action, suit or proceeding, and the Lessee shall keep
such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with
respect to such action, suit or proceeding as such Indemnitee shall
reasonably request, and provided, further, that the applicable Lessee shall
not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of
such Indemnitee, (x) such action, suit or proceeding involves any risk of
imposition of criminal liability or will involve a risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Property Lien) on the Property or any part thereof unless, in the case of
civil liability, the applicable Lessee shall have posted a bond or other
security satisfactory to the relevant Indemnitees in respect to such risk
or (y) the control of such action, suit or proceeding would involve an
actual or potential conflict of interest between such Indemnitee and the
applicable Lessee, (B) such proceeding involves Claims not fully
indemnified by the applicable Lessee which the applicable Lessee and the
Indemnitee have been unable to sever from the indemnified claim(s), or
(C) an Event of Default under the Lease has occurred and is continuing.
The Indemnitee will join in the applicable Lessee's efforts to sever such
action. The Indemnitee may participate in a reasonable manner at its own
expense and with its own counsel in any proceeding conducted by the
applicable Lessee in accordance with the foregoing. The applicable Lessee
shall not enter into any settlement or other compromise with respect to any
Claim which is entitled to be indemnified under Section 13.1 or 13.3
without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld or delayed in the case of a money settlement
not involving an admission of liability of such Indemnitee; provided,
however, that in the event that such Indemnitee withholds consent to any
settlement or other compromise, the applicable Lessee shall not be required
to indemnify such Indemnitee to the extent that the applicable Claim (x) is
for legal fees and expenses incurred after the date of the proposed
settlement or (y) results in a judgment in excess of such offered money
settlement.
Each Indemnitee shall at the expense of the applicable Lessee supply
the applicable Lessee with such information and documents reasonably
requested by the applicable Lessee as are necessary or advisable for such
Lessee to participate in any action, suit or proceeding to the extent
permitted by Section 13.1 or 13.3. Unless an Event of Default under the
Lease shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 13.1 or 13.3 without the prior
written consent of the applicable Lessee, which consent shall not be
unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under Section 13.1 or 13.3 with respect to such Claim.
Upon payment in full of any Claim by the applicable Lessee pursuant
to Section 13.1 or 13.3 to or on behalf of an Indemnitee, the applicable
Lessee, without any further action, shall be subrogated to any and all
claims that such Indemnitee may have relating thereto (other than claims in
respect of insurance policies maintained by such Indemnitee at its own
expense), and such Indemnitee shall execute such instruments of assignment
and conveyance, evidence of claims and payment and such other documents,
instruments and agreements as may be necessary to preserve any such claims
and otherwise cooperate with the applicable Lessee and give such further
assurances as are necessary or advisable to enable the applicable Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable and, if requested by the applicable
Lessee, such determination shall be verified by a nationally recognized
independent accounting firm mutually acceptable to the Lessee and the
Indemnitee at the expense of the applicable Lessee; provided, however, that
if the applicable Lessee has assumed the defense of the related Claim or is
paying the costs of the Indemnitee's defense of the related Claim on an
ongoing basis, the Lessee shall not be required to pay such amount to the
applicable Indemnitee until such time as a judgment is entered with respect
to such Claim, the enforcement of which is not stayed or which judgment is
not bonded over, or the Claim is otherwise settled or lost.
SECTION 13.5. General Tax Indemnity.
(a) Indemnification. The Lessees, jointly and severally, shall pay
and assume liability for, and do hereby agree to indemnify, protect and
defend the applicable Property and all Tax Indemnitees, and hold them
harmless against, all Impositions on an After Tax Basis.
(b) Contests. Except as otherwise provided in Section 12.1 of the
Master Lease with respect to Property Taxes, if any claim shall be made
against any Tax Indemnitee or if any proceeding shall be commenced against
any Tax Indemnitee (including a written notice of such proceeding) for any
Imposition as to which the Lessees may have an indemnity obligation
pursuant to this Section 13.5, or if any Tax Indemnitee shall receive
notice that any Imposition to which the Lessees may have an indemnity
obligation pursuant to this Section 13.5 may be payable, such Tax
Indemnitee shall promptly (and, in any event, within 30 days) notify the
Company, as agent for the Lessees, in writing (provided that failure to so
promptly notify the Company within 30 days shall not alter such Tax
Indemnitee's rights under this Section 13.5 except to the extent such
failure precludes or materially adversely affects the ability to conduct a
contest of any indemnified Taxes) and shall not take any action with
respect to such claim, proceeding or Imposition without the written consent
of the Company, as agent for the Lessees, (such consent not to be
unreasonably withheld or unreasonably delayed) for 30 days after the
receipt of such notice by the Company or thereafter if the applicable
Lessee has commenced to take appropriate action; provided, however, that in
the case of any such claim or proceeding, if such Tax Indemnitee shall be
required by law or regulation to take action prior to the end of such 30-day
period, such Tax Indemnitee shall in such notice to the applicable
Lessee, so inform the Company, as agent for the Lessees, and such Tax
Indemnitee shall not take any action with respect to such claim, proceeding
or Imposition without the consent of the Company, as agent for the Lessees,
(such consent not to be unreasonably withheld or unreasonably delayed) for
10 days after the receipt of such notice by the Company or thereafter if
the applicable Lessee has commenced to take appropriate action, unless such
Tax Indemnitee shall be required by law or regulation to take action prior
to the end of such 10-day period.
The Company shall be entitled for a period of 30 days from receipt of
such notice from such Tax Indemnitee (or such shorter period as such Tax
Indemnitee has notified the Lessees is required by law or regulation for
such Tax Indemnitee to commence such contest), to request in writing that
such Tax Indemnitee contest the imposition of such Tax, at the expense of
the applicable Lessee. If (x) such contest can be pursued in the name of
the applicable Lessee and independently from any other proceeding involving
a Tax liability of such Tax Indemnitee for which the applicable Lessee has
not agreed to indemnify such Tax Indemnitee, (y) such contest must be
pursued in the name of such Tax Indemnitee, but can be pursued
independently from any other proceeding involving a Tax liability of such
Tax Indemnitee for which the applicable Lessee has not agreed to indemnify
such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the
applicable Lessee shall be permitted to control the contest of such claim,
provided that in the case of a contest described in clause (y), if such Tax
Indemnitee determines reasonably and in good faith that such contest by the
applicable Lessee could have a material adverse impact on the business or
operations of such Tax Indemnitee and provides a written explanation to
such Lessee of such determination, such Tax Indemnitee may elect to control
or reassert control of the contest, and provided, that by taking control of
the contest, the applicable Lessee acknowledges that it is responsible for
the Imposition ultimately determined to be due by reason of such claim, and
provided, further, that in determining the application of clauses (x) and
(y) above, each Tax Indemnitee shall take any and all reasonable steps to
segregate claims for any Taxes for which the applicable Lessee indemnifies
hereunder from Taxes for which the applicable Lessee is not obligated to
indemnify hereunder, so that the applicable Lessee can control the contest
of the former. In all other claims requested to be contested by the
Company, as agent for the Lessees, such Tax Indemnitee shall control the
contest of such claim, acting through counsel reasonably acceptable to the
Company, as agent for the Lessees. In no event shall the applicable Lessee
be permitted to contest (or such Tax Indemnitee required to contest) any
claim, (A) if such Tax Indemnitee provides the applicable Lessee with a
legal opinion of counsel reasonably acceptable to the applicable Lessee
that such action, suit or proceeding involves a material risk of imposition
of criminal liability or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Lien) on any Property or any part of any thereof unless the applicable
Lessee shall have posted and maintained a bond or other security
satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if
an Event of Default has occurred and is continuing unless the applicable
Lessee shall have posted and maintained a bond or other security
satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject
to such claim and any and all expenses for which the applicable Lessee is
responsible hereunder reasonably foreseeable in connection with the contest
of such claim, (C) unless the applicable Lessee shall have agreed to pay
and shall pay, to such Tax Indemnitee on demand all reasonable out-of-pocket
costs, losses and expenses that such Tax Indemnitee may incur in
connection with contesting such Imposition including all reasonable legal,
accounting and investigatory fees and disbursements, or (D) if such contest
shall involve the payment of the Tax prior to the contest, unless the
applicable Lessee shall provide to such Tax Indemnitee an interest-free
advance in an amount equal to the Imposition that the Indemnitee is
required to pay (with no additional net after-tax costs to such Tax
Indemnitee). In addition for Tax Indemnitee controlled contests and claims
contested in the name of such Tax Indemnitee in a public forum, no contest
shall be required: (A) unless the amount of the potential indemnity
(taking into account all similar or logically related claims that have been
or could be raised in any audit involving such Tax Indemnitee with respect
to any period for which the applicable Lessee may be liable to pay an
indemnity under this Section 13.5(b)) exceeds $25,000 and (B) unless, if
requested by such Tax Indemnitee, the applicable Lessee shall have provided
to such Tax Indemnitee an opinion of counsel selected by the Company (which
may be in-house counsel) (except, in the case of income taxes indemnified
hereunder which shall be an opinion of independent tax counsel selected by
such Tax Indemnitee and reasonably acceptable to the applicable Lessee)
that a reasonable basis exists to contest such claim. In no event shall a
Tax Indemnitee be required to appeal an adverse judicial determination to
the United States Supreme Court.
The party conducting the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for
Taxes (or claim for refund) but the decisions regarding what actions to be
taken shall be made by the controlling party in its sole judgement,
provided, however, that if such Tax Indemnitee is the controlling party and
the applicable Lessee recommends the acceptance of a settlement offer made
by the relevant Governmental Authority and such Tax Indemnitee rejects such
settlement offer then the amount for which the applicable Lessee will be
required to indemnify such Tax Indemnitee with respect to the Taxes subject
to such offer shall not exceed the amount which it would have owed if such
settlement offer had been accepted. In addition, the controlling party
shall keep the noncontrolling party reasonably informed as to the progress
of the contest, and shall provide the noncontrolling party with a copy of
(or appropriate excerpts from) any reports or claims issued by the relevant
auditing agents or taxing authority to the controlling party thereof, in
connection with such claim or the contest thereof.
Each Tax Indemnitee shall at the applicable Lessee's expense supply
the applicable Lessee with such information and documents reasonably
requested by the Company as are necessary or advisable for the applicable
Lessee to participate in any action, suit or proceeding to the extent
permitted by this Section 13.5(b). Notwithstanding anything in this
Section 13.5(b) to the contrary, no Tax Indemnitee shall enter into any
settlement or other compromise or fail to appeal an adverse ruling (which
appeal has been requested in writing by the applicable Lessee) with respect
to any claim which may be entitled to be indemnified under this Section
13.5 without the prior written consent of the applicable Lessee, such
entering into of a settlement or compromise, or such failure to appeal,
without such consent, shall constitute a waiver of all rights to
indemnification under this Section 13.5 with respect to such claim.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest (and the applicable Lessee shall
not be permitted to contest) a claim with respect to the imposition of any
Tax if such Tax Indemnitee shall waive in writing, in a form acceptable to
the Lessees, its right to indemnification under this Section 13.5 with
respect to such claim (and any claim with respect to such year or any other
taxable year the contest of which is materially adversely affected as a
result of such waiver).
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee or any
Affiliate thereof realizes a deduction, offset, credit or refund of any
Taxes or any other savings or benefit (by way of allowance, allocation or
otherwise) as a result of any indemnity paid by the applicable Lessee
pursuant to this Section 13.5 or (y) by reason of the incurrence or
imposition of any Tax (or the circumstances or event giving rise thereto)
for which a Tax Indemnitee is indemnified hereunder or any payment made to
or for the account of such Tax Indemnitee by the applicable Lessee pursuant
to this Section 13.5 or any payment made by a Tax Indemnitee to the
applicable Lessee by reason of this Section 13.5(c), such Tax Indemnitee at
any time actually realizes a reduction in any Taxes, which reduction in
Taxes was not taken into account in computing such payment by the
applicable Lessee to or for the account of such Tax Indemnitee or by such
Tax Indemnitee to the applicable Lessee, then such Tax Indemnitee shall
promptly pay to the applicable Lessee (xx) amount of such deduction,
offset, credit, refund, or other savings or benefit together with the
amount of any interest received by such Tax Indemnitee on account of such
deduction, offset, credit, refund or other savings or benefit or (yy) an
amount equal to such reduction in Taxes, as the case may be, in either case
together with an amount equal to any reduction in Taxes payable by such Tax
Indemnitee as a result of such payment; provided that no such payment shall
be made so long as a Default or Event of Default shall have occurred and be
continuing but shall be paid promptly after cure of such Default or Event
of Default. Each Tax Indemnitee agrees to take such actions as the
applicable Lessee may reasonably request (provided in the good faith
judgment of such Tax Indemnitee, such actions would not result in a
material adverse effect on such Tax Indemnitee for which such Tax
Indemnitee is not entitled to indemnification from the Lessee) and to
otherwise act in good faith to claim such refunds and other available Tax
benefits, and take such other actions as may be reasonable to minimize any
payment due from the applicable Lessee pursuant to this Section 13.5 and to
maximize the amount of any Tax savings available to it. The disallowance
or reduction of any credit, refund or other savings with respect to which a
Tax Indemnitee has made a payment to the applicable Lessee under this
Section 13.5(e) shall be treated as a Tax for which the applicable Lessee
is obligated to indemnify such Tax Indemnitee hereunder.
(d) Payments. Any Imposition indemnifiable under this Section 13.5
shall be paid within thirty (30) days after receipt of a written demand
therefor from the relevant Tax Indemnitee accompanied by a written
statement describing in reasonable detail the amount so payable, but not
before two Business Days prior to the date that the relevant Taxes are due;
such amount shall be paid directly (but not until such Taxes are due) to
the applicable taxing authority if direct payment is practicable and
permitted or, if not practical or permitted, to such Indemnitee. Any
payments made to a Tax Indemnitee or to any Lessee pursuant to this Section
13.5 shall be made directly to such Tax Indemnitee entitled thereto or the
applicable Lessee, as the case may be, in immediately available funds at
such bank or to such account as specified by the payee in written
directions to the payor, or, if no such direction shall have been given, by
check of the payor payable to the order of the payee by certified mail,
postage prepaid at its address as set forth in Schedule I hereto. Upon the
request of any Tax Indemnitee with respect to a Tax that any Lessee is
required to pay, such Lessee shall furnish to such Tax Indemnitee the
original or a certified copy of a receipt for such Lessee's payment of such
Tax or such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 13.5 and of which the applicable Lessee
has knowledge, the applicable Lessee shall promptly notify such Tax
Indemnitee of such requirement and, at the applicable Lessee's expense (i)
if the applicable Lessee is permitted (unless otherwise requested by such
Tax Indemnitee) by Applicable Law, timely file such report, return or
statement in its own name or (ii) if such report, return or statement is
required to be in the name of or filed by such Tax Indemnitee or such Tax
Indemnitee otherwise requests that such report, return or statement be
prepared for filing by such Tax Indemnitee, the applicable Lessee shall
prepare such report, return or statement in such manner as shall be
reasonably satisfactory to such Tax Indemnitee and send the same to such
Tax Indemnitee for filing no later than 15 days prior to the due date
therefor. In any case in which such Tax Indemnitee will file any such
report, return or statement, the applicable Lessee shall, upon written
request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is reasonably necessary to allow such Tax Indemnitee to file
such report, return or statement.
(f) Verification. At the applicable Lessee's request, the amount of
any indemnity payment by the applicable Lessee or any payment by a Tax
Indemnitee to the applicable Lessee pursuant to this Section 13.5 shall be
verified and certified by an independent public accounting firm mutually
acceptable to such Lessee and such Tax Indemnitee. The costs of such
verification shall be borne by the applicable Lessee unless such
verification shall result in an adjustment in the applicable Lessee's favor
of the lesser of (i) $10,000, and (ii) 5 percent of the payment as computed
by such Tax Indemnitee, in which case such fee shall be paid by such Tax
Indemnitee. In no event shall the applicable Lessee have the right to
review such Tax Indemnitee's tax returns or receive any other confidential
information from such Tax Indemnitee in connection with such verification;
provided that all information reasonably necessary to perform such
verification shall be made available to such accounting firm. Any
information provided to such accountants by any Person shall be and remain
the exclusive property of such Person and shall be deemed by the parties to
be (and the accountants will confirm in writing that they will treat such
information as) the private, proprietary and confidential property of such
Person, and no Person other than such Person and the accountants shall be
entitled thereto and all such materials shall be returned to such Person.
Such accounting firm shall be requested to make its determination within 30
days of the applicable Lessee's request for verifications and the
computations of the accounting firm shall be final, binding and conclusive
upon the applicable Lessee and such Tax Indemnitee. The parties agree that
the sole responsibility of the independent public accounting firm shall be
to verify the amount of a payment pursuant to this Agreement and that
matters of interpretation of this Agreement are not within the scope of the
independent accounting firm's responsibilities.
(g) Tax Ownership. Each Tax Indemnitee represents and warrants that
it will not, prior to the termination of the Master Lease, claim ownership
of (or any tax benefits, including depreciation, with respect to) any
Property for any income tax purposes, it being understood that each Lessee
is and will remain the owner of the applicable Property for such income tax
purposes at least until the termination of the Master Lease. If,
notwithstanding the income tax intentions of the parties as set forth
herein, any Tax Indemnitee actually receives any income tax deductions,
reductions in income tax or other income tax benefit as a result of any
claim for, or recharacterization or other event or circumstance requiring
such party to take, any tax benefits attributable to ownership of any
Property for income tax purposes, such Tax Indemnitee shall pay to the
applicable Lessee, together with an amount equal to any reduced Taxes
payable by such Tax Indemnitee as a result of such payment, the amount of
such income tax savings realized by such Tax Indemnitee (less the amount of
any anticipated increase in income tax which such Tax Indemnitee determines
is currently payable as a result of such claim or recharacterization),
provided that each Lessee shall agree to reimburse such Tax Indemnitee for
any subsequent increase in such Tax Indemnitee's income taxes resulting
from such claim or recharacterization not taken into account in the payment
made to such Lessee, up to the net amount paid to such Lessee by each Tax
Indemnitee. The parties agree that this Section 13.5(g) is intended to
require a payment to a Lessee if and only if a Tax Indemnitee shall have
received tax savings with respect to any Property that would not have been
received if such Tax Indemnitee had advanced funds to such Lessee in the
form of a loan secured by such Property in an amount equal to the
applicable Property Cost. Each Tax Indemnitee shall be required in good
faith to take any affirmative action to realize any such tax savings except
if in its reasonable judgment such action will have a material adverse
affect on such Tax Indemnitee.
SECTION 13.6. Indemnity Payments in Addition to Lease Obligations.
The Lessees acknowledge and agree that the obligation to make indemnity
payments under this Article XIII are separate from, in addition to, and do
not reduce, the Lessees' obligations to pay under the Lease that portion of
the Lease Balance constituting the Lease Recourse Amount.
SECTION 13.7. LIBO Rate Lending Unlawful. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Participant (or its Funding Office) with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency shall make it unlawful or impossible for the
Lessor or any Lender, as the case may be (or its Funding Office) to make,
maintain or fund Loans or Lessor Amount, as applicable, at the LIBO Rate
(Reserve Adjusted) and such Participant shall promptly so notify the
Company, as agent for the Lessees, whereupon until such Participant
notifies the Company that the circumstances giving rise to such suspension
no longer exist, the obligation to continue LIBO Rate Amounts or convert
ABR Amounts into LIBO Rate Amounts shall be suspended. Such Participant,
with the consent of the Company, as agent for the Lessees, (which consent
shall not unreasonably be withheld), will designate a different Funding
Office if such designation will avoid the need for giving such notice and
will not, in the judgment of such Participant, be otherwise disadvantageous
to such Participant. If such notice is given, then (i) the Company, as
agent for the Lessees, shall be entitled upon its request to a reasonable
explanation of the factors underlying such notice and (ii) each LIBO Rate
Amount of such Participant then outstanding shall automatically convert
into an ABR Amount either (a) on the last day of the then current Interest
Period applicable thereto, if such Participant may lawfully continue to
maintain and fund such LIBO Rate Amount to such day or (b) immediately, if
such Participant shall determine that it may not lawfully continue to
maintain and fund such LIBO Rate Amount to such day.
SECTION 13.8. Deposits Unavailable. If any of the Participants
shall have determined that
(i) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Participant in its
relevant market; or
(ii) by reason of circumstances affecting the Participant's
relevant market, adequate means do not exist for ascertaining the
Applicable Rate applicable to such Participant's LIBO Rate Amounts,
then such Participant shall promptly notify the Company, as agent for the
Lessees, of same and, upon notice from such Participant to the Company, as
agent for the Lessees, and the other Participants, (i) the obligations of
the Participants to continue LIBO Rate Amounts or convert ABR Amounts into
LIBO Rate Amounts shall be suspended as of the last day of the then current
Interest Period applicable thereto and (ii) each outstanding LIBO Rate
Amount shall automatically convert into an ABR Amount on the last day of
the then current Interest Period applicable thereto.
SECTION 13.9. Increased Costs, etc. (a) In the event that the
adoption of any applicable law, rule or regulation, or any change therein
or in the interpretation or application thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Participant
with any request or directive after the date hereof (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) does or shall subject any Participant to any additional
tax of any kind whatsoever with respect to the Operative Documents or
any Loan or Lessor Amount, as applicable, made by it, or change the
basis or the applicable rate of taxation of payments to such
Participant of principal, interest or any other amount payable
hereunder (except for the imposition of or change in any tax on or
measured by or with respect to the overall gross or net income, or
gross or net receipts (including, without limitation, any minimum
taxes, income or capital gains taxes, or taxes on, or measured by or
with respect to or in the nature of capital, net worth, excess
profits, items of tax preference, capital stock, business privilege
or doing business or any other similar taxes) of such Participant
(other than any such tax imposed by means of withholding and
specifically excluding income taxes merely collected by means of
withholding) or any tax imposed in lieu thereof);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, insurance assessment, compulsory loan or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office
of such Participant which are applicable to banks generally and not
otherwise included in determination of the rate of interest on Loan
or Lessor Amount, as applicable, hereunder; or
(iii) does or shall impose on such Participant any other
condition applicable to banks generally;
and the result of any of the foregoing is to increase the cost to such
Participant of making or maintaining any LIBO Rate Amount, or to reduce any
amount receivable hereunder, then in any such case, such Participant shall
promptly notify the Company, as agent for the Lessees, and the Lessees
shall promptly pay to such Participant, upon demand, any additional amounts
necessary to compensate such Participant for such increased cost or reduced
amount receivable which such Participant deems to be material as determined
by such Participant with respect to any LIBO Rate Amount, and the Lessees
may act to minimize such increased cost or the reduction in the amount
receivable, so long as such action does not adversely affect such
Participant.
(b) If any Participant shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Participant (or any entity directly
or indirectly controlling such Participant) as a consequence of such
Participant's obligations under the Operative Documents to a level below
that which such Participant (or any entity directly or indirectly
controlling such Participant) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Participant to be
material, then such Participant shall promptly notify the Company, as agent
for the Lessees, of same and, from time to time, within fifteen (15) days
after demand by such Participant, the Lessees shall pay to such Participant
such additional amount or amounts as will compensate such Participant (or
its Parent) for such reduction, and the Lessees may act to minimize such
increased cost or the reduction in the amount receivable, so long as such
action does not adversely affect such Participant.
(c) Each Participant will promptly notify the Company, as agent for
the Lessees, of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Participant to compensation pursuant
to this Section and will, if practicable, with the consent of the Company,
as agent for the Lessees (which consent shall not unreasonably be
withheld), designate a different Funding Office or take any other
reasonable action if such designation or action will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Participant, be otherwise disadvantageous to such Participant. A
certificate of such Participant claiming compensation under this Section
and setting forth in reasonable detail its computation of the additional
amount or amounts to be paid to it hereunder shall be presumed correct in
the absence of demonstrable error. In determining such amount, such
Participant may use any reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing clauses (a) and (b) of this
Section 13.9, the Lessees shall only be obligated to compensate such
Participant for any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in the case
of subsection (a), not earlier than the first day of any Interest
Period in effect on the date which, and (y) in the case of subsection
(b), not earlier than the date on which, such Participant notifies
the Company, as agent for the Lessees, that it proposes to demand
such compensation and identifies to the Company in such notice the
statute, regulation or other basis upon which the claimed
compensation is or will be based and how amounts owing thereunder are
to be allocated to the Lessees and (B) any time or period during
which, because of the retroactive application of such statute,
regulation or other basis, such Participant did not know that such
amount would arise or accrue; and
(ii) within six months prior to any demand therefor,
accompanied by a certificate of such Participant claiming
compensation and setting forth in reasonable detail its computation
of the additional amount or amounts to be paid to it hereunder.
SECTION 13.10. Funding Losses. The Lessees shall pay to the Lease
Agent for the account of each Participant, upon the request of such
Participant through the Lease Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Participant) to compensate it
for any loss, cost or expense which such Participant determines is
attributable to:
(a) any payment, prepayment, conversion or renewal of a LIBO
Rate Amount made by such Participant on a date other than the last
day of an Interest Period for such LIBO Rate Amount (whether pursuant
to an assignment under Section 14.15 or by reason of acceleration or
otherwise); or
(b) any Loans or Lessor Amounts not being made as LIBO Rate
Amounts in accordance with the Funding Request therefor, or any Loans
or Lessor Amounts not being continued as, or converted into, LIBO
Rate Loans in accordance with the Interest Period
Selection/Continuation/Conversion Notice therefor.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of (i) the amount of interest or Yield which
otherwise would have accrued on the principal amount so paid, prepaid,
converted or renewed or not made, converted, prepaid or renewed for the
period from and including the date of such payment, prepayment or
conversion or failure to be made, converted, prepaid or renewed to but
excluding the last day of the then current Interest Period for such LIBO
Rate Amount (or, in the case of a failure to make, convert, prepay or renew
LIBO Rate Amounts, to but excluding the last day of the Interest Period for
such LIBO Rate Amount which would have commenced on the date specified
therefor in the relevant notice) at the Applicable Rate for such LIBO Rate
Amount provided for in Section 4.1(a), over (ii) the amount of interest or
Yield (as reasonably determined by such Participant) such Participant would
have bid in the London interbank market for Dollar deposits for amounts
comparable to such principal amount of Loans or Lessor Amounts, as the case
may be, and maturities comparable to such period. A determination of any
Participant as to the amounts payable pursuant to this Section 13.10 shall
be conclusive absent manifest error; provided that such determination is
made on a reasonable basis.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Survival of Agreements. The representations,
warranties, covenants, indemnities and agreements of the parties provided
for in the Operative Documents, and the parties' obligations under any and
all thereof, shall survive the execution and delivery of this Participation
Agreement, the transfer of the Equity Interests and Properties to the
Lessor, any disposition of any interest of the Lessor in the Properties or
any Improvements or any interest of the Lessor in the Properties and the
payment of the Lease Facility Notes and any disposition thereof and shall
be and continue in effect notwithstanding any investigation made by any
party and the fact that any party may waive compliance with any of the
other terms, provisions or conditions of any of the Operative Documents.
SECTION 14.2. New Lessees. Any wholly-owned Subsidiary of the
Company may become a "Lessee" for all purposes of the Master Lease and the
other Operative Documents by executing and delivering an Adoption
Agreement, substantially in the form of Exhibit E hereto (an "Adoption
Agreement"), to the Lessor and each Lender. Upon receipt by the Lessor and
each Lender of an Adoption Agreement duly executed by any such Subsidiary,
and upon satisfaction of all conditions to effectiveness thereof set forth
in such Adoption Agreement, such Subsidiary shall be deemed to be a party
to this Participation Agreement and the Master Lease as a "Lessee"
hereunder and thereunder as if such Subsidiary was originally a party
hereto and thereto.
SECTION 14.3. Notices. Unless otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions,
requests and other communications required or permitted by the terms hereof
to be given to any Person shall be given in writing by United States mail,
by nationally recognized courier service or by hand and any such notice
shall become effective five Business Days after being deposited in the
mails, certified or registered with appropriate postage prepaid or one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery or, if delivered by hand, when received, and
shall be directed to the address of such Person as indicated on Schedule I.
From time to time any party may designate a new address for purposes of
notice hereunder by written notice to each of the other parties hereto in
accordance with this Section.
SECTION 14.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 14.5. Amendments. (a) Prior to the termination of the
Intercreditor Agreement, neither this Participation Agreement, any other
Operative Document nor any of the terms hereof or thereof may be amended,
supplemented, replaced, renewed, extended, refinanced, waived or modified
except in accordance with the provisions of Section 3.01 of the
Intercreditor Agreement.
(b) At all times after the earlier of (x) the termination of the
Intercreditor Agreement and (y) the payment in full of all obligations of
the Company and the Subsidiary Co-Borrowers owing to the Credit Facility
Banks under the Credit Facility Documents and the termination of all
commitments of the Credit Facility Banks thereunder:
(i) the provisions of this Participation Agreement may from
time to time be amended, modified or waived by an instrument in
writing signed by the Company, each Lessee, and the Required
Participants; provided, however, that no amendment or waiver of any
provision relating to payment to any Participant shall be effective
against such Participant unless it has been consented to in writing
by such Participant;
(ii) neither any Operative Document nor any of the terms
thereof may be terminated (except upon payment in full of the Lease
Balance or effective exercise and consummation of the Remarketing
Option in accordance with Article XX of the Master Lease and payment
in full of all amounts due in accordance therewith), amended,
supplemented, waived or modified without the written agreement or
consent of each party thereto and, regardless of whether the Lenders
and the Lessor are parties thereto, the Required Participants;
provided, however, that:
(x) no such termination, amendment, supplement, waiver
or modification shall without written agreement or consent of
each Participant:
(i) modify any of the provisions of this Section
14.5, change the definition of "Required Participants" or
modify or waive any provision of an Operative Agreement
requiring action by the foregoing;
(ii) amend, modify, waive or supplement any of the
provisions of Article VII or Section 2.5, 2.6, 2.7, or
2.8 of the Loan Agreement;
(iii) reduce, modify, amend or waive any fees or
indemnities in favor of any Participant, including
amounts payable pursuant to Article XIII (except that any
Person may consent to any reduction, modification,
amendment or waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in whole
or in part, any payment of Rent (other than pursuant to
the terms of any Operative Document), any Loan or Lessor
Amount, the Lease Balance, the Loan Balance, the Lease
Recourse Amount, fees due pursuant to the Fee Letter,
amounts due pursuant to Section 20.2 of the Lease,
interest or Yield (except that any Person may consent to
any modification, postponement, reduction or forgiveness
of any payment of any fee payable to it) or, subject to
clause (iii) above, any other amount payable under the
Lease or this Participation Agreement, or modify the
definition or method of calculation of Rent (other than
pursuant to the terms of any Operative Document),
Applicable Rate, Applicable Lease Margin, Applicable Loan
Margin, Loans or Lessor Amount, Lease Balance, Loan
Balance, Lease Recourse Amount, fees due pursuant to the
Fee Letter, Shortfall Amount, Property Improvement Costs,
Estimated Improvement Costs, Participant Balance, or any
other definition which would affect the amounts to be
advanced or which are payable under the Operative
Documents; or
(v) consent to any assignment of any Lease by a
Lessee other than to an Affiliate of a Lessee, releasing
such Lessee from its obligations in respect of the
payments of Rent, Loan Balance, Lease Recourse Amount or
Lease Balance or changing the absolute and unconditional
character of such obligations;
(y) no other termination, amendment, supplement, waiver
or modification shall, without the written agreement or consent
of the Required Participants, be made to any Lease or Article
VI of this Participation Agreement or the definition of "Loan
Agreement Default"; and
(z) no such termination, amendment, supplement, waiver
or modification that would increase the obligations of any
Lessee thereunder or deprive such Lessee of any of its rights
thereunder shall be effective against such Lessee without the
written agreement or consent of such Lessee; and
(iii) neither the Agent, the Lenders nor the Lessor shall
amend, supplement or otherwise modify any provision of the Operative
Documents in a manner which adversely affects the rights of the
Lessees without the prior written consent of the Lessees.
(c) It is the intent of the parties hereto that the percentages per
annum contained in the definition of "Applicable Lease Margin" and
"Applicable Loan Margin" (with respect to the Tranche A Loans) shall at all
times, for each Pricing Level, be equal to the percentage per annum set
forth in the definition of "Applicable Margin" in the Credit Agreement
under the caption "Applicable Margin Fixed Rate Loans" for such Pricing
Level and, further, that the definitions of "Pricing ▇▇▇▇▇ ▇", "▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇", "▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇" and "Pricing Level IV" conform to the
definitions thereof contained in the Credit Agreement, in each case as the
Credit Agreement may be amended from time to time in accordance with
Section 3.01 of the Intercreditor Agreement (but subject to the provisions
of Section 3.01(c) of the Intercreditor Agreement). Accordingly,
notwithstanding the provisions of clauses (a) and (b) above, the
definitions of "Applicable Lease Rate", "Applicable Loan Rate" (with
respect to Tranche A Loans) and "Pricing Level" (and all ancillary
definitions related thereto) shall, without any further act on the part of
any party hereto, automatically be deemed to be amended by, and to the
extent set forth in, any amendment to the analogous definitions contained
in the Credit Agreement effected in accordance with the provisions of
Section 3.01 of the Intercreditor Agreement (but subject to the provisions
of Section 3.01(c) of the Intercreditor Agreement), so that at all times
the Applicable Lease Margin and the Applicable Loan Margin with respect to
the Tranche A Loans shall, for each Pricing Level, be equal to the
"Applicable Margin" (as defined in the Credit Agreement) for such Pricing
Level. In addition, if at any time the "Applicable Margin" under the
Credit Agreement for Variable Rate Loans (as defined in the Credit
Agreement) shall be more than 0.00% for any Pricing Level, then the
definition of "Alternate Base Rate" contained in Appendix A hereto shall,
without any further act on the part of any party hereto, automatically be
deemed to be amended to include a margin for such Pricing Level equal to
the "Applicable Margin" for Variable Rate Loans for such Pricing Level set
forth in the Credit Agreement.
SECTION 14.6. Headings, etc. The Table of Contents and headings of
the various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof.
SECTION 14.7. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Participation Agreement is intended
for the benefit of any Person except the parties hereto and their permitted
assigns and successors. Neither the Company nor any Lessee shall assign or
transfer any of its rights or obligations under the Operative Documents
except in accordance with the terms and conditions thereof.
SECTION 14.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION
OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 14.9. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, to
the full extent permitted by law, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 14.10. Liability Limited. (a) The parties hereto agree
that except as specifically set forth herein or in any other Operative
Document, the Lessor shall have no personal liability whatsoever to the
Company, any Lessee, any Lender or any other Secured Party or their
respective successors and assigns for any claim based on or in respect
hereof or any of the other Operative Documents or arising in any way from
the transactions contemplated hereby or thereby and the recourse shall be
solely had against the Lessor's interest in the Property; provided,
however, that the Lessor shall be liable in its individual capacity (a) for
its own willful misconduct or gross negligence (or negligence in the
handling of funds), (b) breach of any of its representations, warranties,
obligations or covenants under the Operative Documents (including its
obligation under Section 10.5), or (c) for any Tax based on or measured by
any fees, commission or compensation received by it for acting as the
Lessor as contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding sentence: (i) Lessor
shall have no personal liability under any of the Operative Documents as a
result of acting pursuant to and consistent with any of the Operative
Documents; (ii) all obligations of the Lessor to any Lessee, any Lender or
any other Secured Party are, in each case, solely nonrecourse obligations
except to the extent that it has received payment from others; and
(iii) all such personal liability of the Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and
delivery of the Operative Documents by the Lessor.
(b) No Participant shall have any obligation to any other
Participant or to any Lessee with respect to transactions contemplated by
the Operative Documents, except those obligations of such Participant
expressly set forth in the Operative Documents or except as set forth in
the instruments delivered in connection therewith, and no Participant shall
be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
SECTION 14.11. Further Assurances. The parties hereto shall
promptly cause to be taken, executed, acknowledged or delivered, at the
sole expense of the Lessees, all such further acts, conveyances, documents
and assurances as the other parties may from time to time reasonably
request in order to carry out and preserve the security interests and Liens
(and the priority thereof) intended to be created pursuant to this
Participation Agreement, the other Operative Documents, and the
transactions thereunder (including the preparation, execution and filing of
any and all Uniform Commercial Code financing and termination statements
and other filings or registrations which the parties hereto may from time
to time request to be filed or effected or terminated); provided, however,
that the Lessees shall not be required to pay expenses pursuant to this
Section or elsewhere to the extent arising from the assignment or
participation of any Loan or Lessor Amount. Each Lessee, at its own
expense and without need of any prior request from any other party, shall
take such action as may be reasonably necessary (including any action
specified in the preceding sentence), or (if the Lessor shall so request)
as so reasonably requested, in order to maintain and protect all security
interests provided for hereunder or under any other Operative Document.
SECTION 14.12. Submission to Jurisdiction. The Company and each
Lessee hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York for purposes of all
legal proceedings arising out of or relating to the Operative Documents or
the transactions contemplated hereby. The Company and each Lessee
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION 14.13. Setoff. The Lessor and the Lenders shall, upon the
occurrence of any Lease Event of Default, have the right to appropriate and
apply to the payment of the obligations under the Lease as security for the
payment of such obligations, any and all balances, credits, deposits,
accounts or moneys of each Lessee then or thereafter maintained with the
Lessor or any Lender. The rights of the Lessor and the Lenders under this
Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Person may
have.
SECTION 14.14. Replacement of Lender. If a Lender fails to fund its
share of the Loans, then, in addition to any other right or remedies that
Lessees may have at law or in equity, the Company, as agent for the
Lessees, shall have the right (but not the obligation) to require such
Lender, upon receipt by such Lender of all its Participant Balance plus all
other amounts owing to such Lender under the Operative Documents
(including, without limitation, amounts payable to such Lender under
Section 13.10 as a result of such payment of its Participant Balance) to
assign and delegate in accordance with Section 12.1 all of such Lender's
total Loans and Commitment to any of the Lenders or to any other financial
institution selected by Company, as agent for the Lessees, that, in each
case, is willing to accept such assignment and delegation.
SECTION 14.15. Assignment of Tranche A Loans in Connection with an
Increase in Commitments. In the event that the aggregate Loan Commitments
of the Tranche A Lenders is increased after the Documentation Date (whether
through an increase in any Tranche A Lender's Loan Commitment or through
additional Commitments from new Tranche A Lenders) then each Tranche A
Lender agrees that, on and as of the Acquisition Date immediately following
such Commitment increase, (i) the Tranche A Lenders that have increased
their Loan Commitments or are new Tranche A Lenders shall purchase
outstanding Tranche A Loans from the other Tranche A Lenders and (ii) the
other Tranche A Lenders shall sell and assign a portion of their
outstanding Tranche A Loans to the Tranche A Lenders that have increased
their Loan Commitments and the new Tranche A Lenders.
SECTION 14.16. WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS PARTICIPATION AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO. THE PARTIES HERETO
HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION
WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE
WAIVED. THE PROVISIONS OF THIS SECTION 14.15 HAVE BEEN FULLY NEGOTIATED BY
THE PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS. THE COMPANY AND
EACH LESSEE ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER
OPERATIVE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTICIPANTS ENTERING INTO THIS PARTICIPATION
AGREEMENT AND EACH SUCH OTHER OPERATIVE DOCUMENT.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT
INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE MULTICARE COMPANIES, INC.,
as the Company
By ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice-President
ACADEMY NURSING HOME, INC., as a Lessee
By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
NURSING AND RETIREMENT CENTER OF THE
ANDOVERS, INC., as a Lessee
By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
PRESCOTT NURSING HOME, INC., as a
Lessee
By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
WILLOW MANOR NURSING HOME, INC.,, as a
Lessee
By ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
ADS/MULTICARE, INC., as a Lessee
By ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SELCO SERVICE CORPORATION,
as Lessor
By
Name:
Title:
NATIONSBANK, N.A.,
as Lease Agent and as Collateral Agent
By
Name:
Title:
TORONTO-DOMINION (NEW YORK), INC.,
as a Tranche A Lender
By
Name:
Title:
BANQUE PARIBAS,
as a Tranche A Lender
By
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.,
as a Tranche A Lender
By
Name:
Title:
MELLON BANK, N.A.,
as a Tranche A Lender
By
Name:
Title:
FBTC LEASING CORP.,
as a Tranche B Lender
By
Name:
Title:
ANNEX A
COMMITMENTS
PARTICIPANT COMMITMENT FUNDING
PERCENTAGE
Toronto-Dominion
(New York) Inc. $10,000,000 18.73445%
Tranche A
Banque Paribas, New
York Branch $15,000,000 28.10167%
Tranche A
Creditanstalt
Corporate Finance,
Inc. $10,000,000 18.73445%
Tranche A
Mellon Bank, N.A. $10,000,000 18.73445%
Tranche A
FBTC Leasing Corp. $7,616,988 12.69498%
Tranche B
SELCO Service $1,800,000 3.00000%
Corporation
Lessor
TOTAL: $54,416,988 100.00%
The foregoing Funding Percentages are based on a Lease Recourse Amount of
84.30502% of the sum of the outstanding Loans and Lessor Amounts. In the
event the Lease Recourse Amount with respect to any Property financed after
the Initial Acquisition Date differs from 84.30502%, the parties hereto
agree to reallocate the Funding Percentages to take account of such
different Lease Recourse Amount so that the aggregate Funding Percentages
of all Tranche A Lenders equals the Lease Recourse Amount.
SCHEDULE I
Notice Information, Wire Instructions,
Funding Offices and LIBOR Office
SCHEDULE II
Item 8.2(d): Litigation
Each of the Company and the Lessees is party to claims and legal actions
arising in the ordinary course of its business. Management of the Company
or any Lessee does not believe that any litigation to which the Company or
any Lessee is currently a party will have a Material Adverse Effect.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; INTERPRETATION
ARTICLE II
INTENTIONALLY OMITTED
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1. Lessor Acquisition. . . . . . . . . . . . . . . . . 3
SECTION 3.2. Lessor's Commitment . . . . . . . . . . . . . . . . 4
SECTION 3.3. Lenders' Commitments. . . . . . . . . . . . . . . . 4
SECTION 3.4. Procedures for Advances . . . . . . . . . . . . . . 4
SECTION 3.5. Interest Period Selection/Continuation/ Conversion
Elections . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.6. Funding of Certain Modifications; Construction
Financings. . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
COMPUTATION OF BASIC RENT; INTEREST ON LOANS; FEES
SECTION 4.1. Computation of Basic Rent (Interest/Yield). . . . . 6
SECTION 4.2. Interest on Loans . . . . . . . . . . . . . . . . . 6
SECTION 4.3. Yield on Lessor Amount. . . . . . . . . . . . . . . 7
SECTION 4.4. Prepayments of Loans and Lessor Amount. . . . . . . 7
SECTION 4.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Facility Fees . . . . . . . . . . . . . . . . . 7
(b) Structuring Agent's Fees. . . . . . . . . . . . 7
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. Nature of the Transaction . . . . . . . . . . . . . 8
SECTION 5.2. Amounts Due Under Lease . . . . . . . . . . . . . . 8
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Documentation Date. . . . . . . . . . . . . . . . . 9
(a) Participation Agreement. . . . . . . . . . . . 9
(b) Master Lease . . . . . . . . . . . . . . . . . 9
(c) Loan Agreement . . . . . . . . . . . . . . . . 9
(d) Assignment of Lease and Rent . . . . . . . . . 9
(e) Intercreditor Agreement . . . . . . . . . . . 10
(f) Security Documents.. . . . . . . . . . . . . . 10
(g) [Intentionally Omitted]. . . . . . . . . . . . 10
(h) Certain Transaction Expenses . . . . . . . . . 10
SECTION 6.2. Initial Acquisition Date. . . . . . . . . . . . . . 10
(a) Lessees' Resolutions and Incumbency Certificate,
etc. . . . . . . . . . . . . . . . . . . . . . 10
(b) Company's Resolutions and Incumbency Certificate,
etc. . . . . . . . . . . . . . . . . . . . . . 11
(c) Opinion of Counsel to the Company and the
Lessees. . . . . . . . . . . . . . . . . . . . 11
(d) Fees . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.3. Conditions Precedent to Each Acquisition Date 11
(a) Funding Request . . . . . . . . . . . . . . . . 12
(b) Transfer Documents. . . . . . . . . . . . . . . 12
(c) Deed; ▇▇▇▇ of Sale for Certain Properties . . . 12
(d) Supplement to Assignment of Lease and Rent. . . 12
(e) Lease Supplement/Memorandum of Lease. . . . . . 13
(f) Responsible Officer's Certificate . . . . . . . 13
(g) Lease Facility Mortgage . . . . . . . . . . . . 13
(h) Lease Facility Financing Statements . . . . . . 14
(i) Recordation of Mortgages and Filing of Lease
Facility Financing Statements . . . . . . . . . 14
(j) Evidence of Property Insurance. . . . . . . . . 14
(k) Environmental Audit . . . . . . . . . . . . . . 14
(l) Property Survey . . . . . . . . . . . . . . . . 14
(m) Title Insurance . . . . . . . . . . . . . . . . 14
(n) Appraisal . . . . . . . . . . . . . . . . . . . 15
(o) Opinion of Local Counsel. . . . . . . . . . . . 15
(p) Fees . . . . . . . . . . . . . . . . . . . 15
(q) Representations and Warranties. . . . . . . . . 15
(r) Taxes . . . . . . . . . . . . . . . . . . . . 15
(s) Governmental Approvals. . . . . . . . . . . . . 15
(t) Litigation . . . . . . . . . . . . . . . . . . 16
(u) Requirements of Law . . . . . . . . . . . . . . 16
(v) No Default . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1. Basic Rent (Interest/Yield) . . . . . . . . . . . . . 16
SECTION 7.2. Purchase Payments by the Lessees. . . . . . . . . . . 17
SECTION 7.3. Payment of Lease Recourse Amount. . . . . . . . . . . 18
SECTION 7.4. Sales Proceeds of Remarketing of Properties . . . . . 18
SECTION 7.5. Supplemental Rent . . . . . . . . . . . . . . . . . . 18
SECTION 7.6. Reserved . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.8. Other Payments. . . . . . . . . . . . . . . . . . . . 20
SECTION 7.9. Casualty and Condemnation Amounts . . . . . . . . . . 21
SECTION 7.10. Order of Application. . . . . . . . . . . . . . . . . 21
SECTION 7.11. Deemed Receipt. . . . . . . . . . . . . . . . . . . . 21
SECTION 7.12. Agreement of Collateral Agent and Participants. . . . 22
ARTICLE VIII
REPRESENTATIONS
SECTION 8.1. Representations of the Participant. . . . . . . . . . 22
(a) ERISA . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Status . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Organization, Good Standing and Due Qualification . . 22
(d) Power and Authority, No Conflicts . . . . . . . . . . 23
(e) No Affiliation With Lessor. . . . . . . . . . . . . . 23
(f) Legally Enforceable Agreements. . . . . . . . . . . . 23
SECTION 8.2. Representations of the Company and the Lessees. . . . 24
(a) Organization, Good Standing and Due Qualification . . 24
(b) Power and Authority, No Conflicts . . . . . . . . . . 24
(c) Legally Enforceable Agreements . . . . . . . . . . . 25
(d) Litigation . . . . . . . . . . . . . . . . . . . . . 25
(e) Financial Statements. . . . . . . . . . . . . . . . . 25
(f) ERISA . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Hazardous Materials . . . . . . . . . . . . . . . . . 26
(h) Governmental Regulation . . . . . . . . . . . . . . . 27
(i) Solvency. . . . . . . . . . . . . . . . . . . . . . . 27
(j) Lessees . . . . . . . . . . . . . . . . . . . . . . . 28
(k) Property. . . . . . . . . . . . . . . . . . . . . . . 28
(l) Condition of Property . . . . . . . . . . . . . . . . 28
(m) [Intentionally Omitted] . . . . . . . . . . . . . . . 29
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . 29
(o) Flood Hazard Areas . . . . . . . . . . . . . . . . . 29
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
SECTION 9.1. Transaction Expenses. . . . . . . . . . . . . . . . . 30
SECTION 9.2. Brokers' Fees and Stamp Taxes . . . . . . . . . . . . 30
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of the Company and each Lessee . . . . . . 30
SECTION 10.2. Right of Inspection . . . . . . . . . . . . . . . . 31
SECTION 10.3. Further Assurances . . . . . . . . . . . . . . . . 31
SECTION 10.4. Agreement of Parties . . . . . . . . . . . . . . . . 32
SECTION 10.5. Removal of Liens . . . . . . . . . . . . . . . . . . 32
SECTION 10.6. Massachusetts Circular Letter. . . . . . . . . . . . 32
ARTICLE XI
LESSEE DIRECTIONS
SECTION 11.1. Lessee Directions. . . . . . . . . . . . . . . . . . 33
ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1. Assignments . . . . . . . . . . . . . . . . . . . . 34
SECTION 12.2. Participations . . . . . . . . . . . . . . . . . . . 35
SECTION 12.3. Withholding Taxes; Disclosure of Information; Pledge
Under Regulation A . . . . . . . . . . . . . . . . . 36
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1. General Indemnification. . . . . . . . . . . . . . . 38
SECTION 13.2. End of Term Indemnity . . . . . . . . . . . . . . . 40
SECTION 13.3. Environmental Indemnity. . . . . . . . . . . . . . . 41
SECTION 13.4. Proceedings in Respect of Claims . . . . . . . . . . 42
SECTION 13.5. General Tax Indemnity . . . . . . . . . . . . . . . 44
SECTION 13.6. Indemnity Payments in Addition to Lease Obligations 51
SECTION 13.7. LIBO Rate Lending Unlawful . . . . . . . . . . . . . 51
SECTION 13.8. Deposits Unavailable . . . . . . . . . . . . . . . 52
SECTION 13.9. Increased Costs, etc. . . . . . . . . . . . . . . . 52
SECTION 13.10. Funding Losses . . . . . . . . . . . . . . . . . . 55
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Survival of Agreements . . . . . . . . . . . . . . . 55
SECTION 14.2. New Lessees . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.3. Notices . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.4. Counterparts . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.5. Amendments . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.6. Headings, etc. . . . . . . . . . . . . . . . . . . . 59
SECTION 14.7. Parties in Interest. . . . . . . . . . . . . . . . . 59
SECTION 14.8. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 59
SECTION 14.9. Severability . . . . . . . . . . . . . . . . . . . 59
SECTION 14.10. Liability Limited . . . . . . . . . . . . . . . . . 60
SECTION 14.11. Further Assurances . . . . . . . . . . . . . . . . 60
SECTION 14.12. Submission to Jurisdiction . . . . . . . . . . . . . 61
SECTION 14.13. Setoff . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14.14. Replacement of Lender . . . . . . . . . . . . . . . 61
SECTION 14.15. Assignment of Tranche A Loans in Connection with an
Increase in Commitments . . . . . . . . . . . . . . 62
SECTION 14.16. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 62
ANNEXES
ANNEX A Participants' Commitments
SCHEDULES
SCHEDULE I Notice Information, Wire Instructions, Funding Offices,
and LIBOR Office
SCHEDULE II Item 8.2(d): Litigation
EXHIBITS
EXHIBIT A Form of Funding Request
EXHIBIT B Form of Interest Period
Selection/Continuation/Conversion Notice
EXHIBIT C Form of Responsible Officer's Certificate
EXHIBIT D Form of Assignment Agreement
EXHIBIT E Form of Adoption Agreement