U.S. $170,000,000
CREDIT AGREEMENT
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LTC PROPERTIES, INC.
BORROWER
THE FINANCIAL INSTITUTIONS NAMED HEREIN
LENDERS
BANQUE NATIONALE DE PARIS
Los Angeles Branch
SYNDICATION AGENT
THE SUMITOMO BANK, LIMITED
Chicago Branch
DOCUMENTATION AGENT
AND
SANWA BANK CALIFORNIA
ADMINISTRATIVE AGENT
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Dated as of October 3, 1997
TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS.................................................... 1
1.1 Definitions................................................... 1
1.2 Rules and Interpretation...................................... 20
ARTICLE 2 - THE REVOLVING CREDIT FACILITY................................. 21
2.1 Commitments................................................... 21
2.2 Borrowing Base................................................ 21
2.3 Issuance of Letters of Credit................................. 21
2.4 Commitment Percentage......................................... 24
2.5 Types of Loans................................................ 25
2.6 Evidence of Obligations....................................... 25
2.7 Commitment Reduction.......................................... 25
2.8 Commitment Termination........................................ 26
2.9 Required Payments............................................. 26
2.10 Commitment Fee................................................ 26
2.11 Interest Limitation........................................... 26
2.12 Administrative Fee............................................ 27
2.13 Voluntary Conversion of Advances.............................. 27
2.14 Notice of Borrowing........................................... 27
2.15 Commitment Obligations........................................ 28
2.16 Interest...................................................... 28
2.17 Rates Applicable After Default................................ 28
2.18 Method of Payment............................................. 29
2.19 Telephonic Notices............................................ 29
2.20 Interest Payment Dates; Interest and Fee Basis................ 29
2.21 Notification of Loan, Interest Rates, Prepayments and
Commitment Reductions......................................... 30
2.22 Applicable Lending Offices.................................... 31
2.23 Non-Receipt of Funds by the Agent............................. 31
2.24 Withholding Tax Exemption..................................... 31
2.25 Optional Prepayment........................................... 32
2.26 Mandatory Prepayments......................................... 32
2.27 Application of Repayments..................................... 34
ARTICLE 3 - CHANGE IN CIRCUMSTANCES....................................... 35
3.1 Yield Protection.............................................. 35
3.2 Taxes......................................................... 36
3.3 Changes in Capital Adequacy Regulations....................... 36
3.4 Replacement of Lenders........................................ 37
ARTICLE 4 - CONDITIONS PRECEDENT.......................................... 37
4.1 Initial Loan or Letter of Credit.............................. 37
4.2 All Loans..................................................... 39
4.3 All Letters of Credit......................................... 39
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES................................ 39
5.1 Authorization................................................. 39
5.2 Enforceability................................................ 40
5.3 Use of Proceeds............................................... 40
5.4 Litigation.................................................... 40
5.5 Financial Statements.......................................... 40
5.6 Taxes......................................................... 40
5.7 Subsidiaries.................................................. 40
5.8 ERISA......................................................... 41
5.9 Accuracy of Information....................................... 41
5.10 Organization and Existence.................................... 41
5.11 Consents...................................................... 41
5.12 Intellectual Property......................................... 42
5.13 Default....................................................... 42
5.14 Nature of Business............................................ 42
5.15 Ranking of Loans.............................................. 42
5.16 Investment Company Acts; Other Regulations.................... 42
5.17 Environmental Matters......................................... 42
5.18 Title......................................................... 42
ARTICLE 6 - FINANCIAL COVENANTS........................................... 43
6.1 Senior Leverage Ratio......................................... 43
6.2 Leverage Ratio................................................ 43
6.3 Minimum Tangible Net Worth.................................... 43
6.4 Debt Service Coverage Ratio................................... 43
6.5 Minimum Cash Flow Coverage Ratio.............................. 43
ARTICLE 7 - AFFIRMATIVE COVENANTS......................................... 43
7.1 Financial Reporting........................................... 43
7.2 Use of Proceeds............................................... 47
7.3 Notice of Default............................................. 47
7.4 Conduct of Business........................................... 47
7.5 Records....................................................... 47
7.6 Insurance..................................................... 47
7.7 Compliance with Laws.......................................... 47
7.8 Maintenance of Properties..................................... 48
7.9 Inspection/Audits............................................. 48
7.10 Payment of Obligations........................................ 48
7.11 REIT Status................................................... 48
7.12 New Significant Subsidiaries.................................. 48
7.13 Management.................................................... 48
ARTICLE 8 - NEGATIVE COVENANTS............................................ 49
8.1 Debt.......................................................... 49
8.2 Merger........................................................ 50
8.3 Sale of Assets................................................ 50
8.4 Prepayments of Convertible Subordinated Debt.................. 50
8.5 Acquisitions.................................................. 50
8.6 Affiliates.................................................... 51
8.7 ERISA......................................................... 51
8.8 Encumbrances and Liens........................................ 51
8.9 Loans, Advances and Guaranties................................ 52
8.10 Investments................................................... 53
8.11 Dividends and Distributions................................... 54
8.12 Concentrations................................................ 55
ARTICLE 9 - DEFAULTS...................................................... 55
9.1 Payment Defaults.............................................. 55
9.2 Representations and Warranties................................ 55
9.3 Other Loan Document Defaults.................................. 55
9.4 Bankruptcy.................................................... 55
9.5 Other Agreements.............................................. 56
9.6 ERISA......................................................... 56
9.7 Judgments..................................................... 56
9.8 Loan Documents................................................ 56
9.9 Change of Control............................................. 56
9.10 REIT Status................................................... 57
ARTICLE 10 - ACCELERATION, WAIVERS AND AMENDMENTS......................... 57
10.1 Acceleration.................................................. 57
10.2 Cash Collateral............................................... 57
10.3 Additional Remedies........................................... 57
10.4 Amendments and Waivers........................................ 57
10.5 Preservation of Rights........................................ 58
ARTICLE 11 - GENERAL PROVISIONS........................................... 59
11.1 Survival of Representations................................... 59
11.2 Governmental Regulation....................................... 59
11.3 Headings...................................................... 59
11.4 Entire Agreement.............................................. 59
11.5 Several Obligations; Benefits of this Agreement............... 59
11.6 Expenses; Indemnification..................................... 59
11.7 Numbers of Documents.......................................... 60
11.8 Severability of Provisions.................................... 60
11.9 Nonliability of Lenders....................................... 60
11.10 Choice of Law................................................. 60
11.11 Consent to Jurisdiction....................................... 60
11.12 Waiver of Jury Trial.......................................... 61
11.13 Integration Clause............................................ 61
11.14 Confidentiality............................................... 61
11.15 Dispute Resolution............................................ 61
ARTICLE 12 - THE AGENT.................................................... 62
12.1 Appointment................................................... 62
12.2 Powers........................................................ 62
12.3 General Immunity.............................................. 62
12.4 No Responsibility for Loans, Recitals, etc.................... 63
12.5 Action on Instructions of Lenders............................. 63
12.6 Employment of Agents and Counsel.............................. 63
12.7 Reliance on Documents; Counsel................................ 63
12.8 Agent's Reimbursement and Indemnification..................... 64
12.9 Rights as a Lender............................................ 64
12.10 Lender Credit Decision........................................ 64
12.11 Successor Agent............................................... 64
12.12 Documentation Agent........................................... 65
ARTICLE 13 - SETOFF; RATABLE PAYMENTS..................................... 66
13.1 Setoff........................................................ 66
13.2 Ratable Payments.............................................. 66
ARTICLE 14 - BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS............ 66
14.1 Successors and Assigns........................................ 66
14.2 Participations................................................ 67
14.3 Assignments................................................... 68
14.4 Dissemination of Information.................................. 69
14.5 Tax Treatment................................................. 69
ARTICLE 15 - NOTICES...................................................... 69
15.1 Giving Notice................................................. 69
15.2 Change of Address............................................. 69
ARTICLE 16 - COUNTERPARTS................................................. 70
SCHEDULE 1 - LENDERS AND APPLICABLE LENDING OFFICES
SCHEDULE 2 - SIGNIFICANT SUBSIDIARIES/SUBSIDIARIES
SCHEDULE 3 - DEBT
SCHEDULE 4 - LIENS
SCHEDULE 5 - INVESTMENTS
SCHEDULE 6 - TERMS OF SUBORDINATION
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT C - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT F - FORM OF GUARANTY
EXHIBIT G - FORM OF LETTER OF CREDIT REQUEST
CREDIT AGREEMENT
This Credit Agreement, dated as of October 3, 1997, is among LTC
PROPERTIES, INC., a Maryland corporation (the "Borrower"), the financial
institutions party hereto (together with their respective successors and
permitted assigns, the "Lenders"), BANQUE NATIONALE DE PARIS, Los Angeles Branch
("BNP"), as Syndication Agent, THE SUMITOMO BANK, LIMITED, Chicago Branch
("Sumitomo"), as Documentation Agent and SANWA BANK CALIFORNIA ("Sanwa"), as
Administrative Agent. The parties hereto agree as follows:
RECITALS
WHEREAS, the Borrower wishes to obtain commitments from all Lenders for pro
rata credit extensions under a revolving credit facility in an aggregate amount
not to exceed $170,000,000 at any time outstanding, such credit being available
on a committed basis as (i) pro-rata revolving loans in an aggregate amount at
any time outstanding not to exceed $170,000,000 and (ii) standby letters of
credit in an aggregate amount at any time issued and outstanding not to exceed
$15,000,000, shared by the Lenders on a pro-rata participation basis.
WHEREAS, the Lenders have agreed, on the terms and conditions herein set
forth, to extend credit to the Borrower for the purpose of (i) funding
investments in healthcare facilities, related mortgage loans and dividend
payments and (ii) for general corporate purposes.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Definitions. As used in this Agreement:
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"ACQUISITION" means each transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any ongoing business operating
in the healthcare business (any such line of business , a "Permitted Business"),
of all or substantially all of the assets of any firm, corporation, or division
thereof in any Permitted Business, whether through the purchase of assets, by
merger or otherwise or (ii) directly or indirectly acquires (in one transaction
or as the most recent transaction in a series of transactions) at
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least a majority (in number of votes) of the securities of the corporation in
any Permitted Business which has ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by a percentage of voting power) of
the outstanding partnership interests of a partnership in any Permitted
Business.
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by the Lenders to the Borrower of the same Type and, in
the case of a LIBOR Loan, for the same Interest Period.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise; provided that control shall be conclusively
presumed when any Person or affiliated group directly or indirectly owns 20% or
more of the securities having ordinary voting power for the election of
directors of a corporation. Notwithstanding the foregoing, (i) HCI shall be
deemed an Affiliate of the Borrower until the earlier of (a) the date HCI
raises a minimum of $20,000,000 in net proceeds from public offerings of common
stock or (b) the date it is acquired by Assisted Living Concepts, Inc. and (ii)
a partnership shall not be deemed an Affiliate of the Borrower if a general
partner (which is an Affiliate of the Borrower) controls such partnership.
"AGENT" means Sanwa in its capacity as administrative agent for the Lenders
pursuant to Article 12, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article 12.
"AGGREGATE AVAILABLE COMMITMENT" means the aggregate of the Available
Commitments of all the Lenders.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
Lenders.
"AGREEMENT" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.5
(except for changes concurred to by the Borrower's independent public
accountants).
"APPLICABLE LENDING OFFICE" means for any Lender, its office for LIBOR
Loans and Reference Rate Loans, specified in
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Schedule 1 or in the Assignment and Acceptance pursuant to which it became a
party hereto, as the case may be, any of which offices may, upon 10 days' prior
written notice to the Agent and the Borrower, be changed by such Lender.
"APPLICABLE MARGIN" means, at any date of determination thereof, with
respect to any LIBOR Loan, Letter of Credit Fee or Commitment Fee, the
respective rates per annum or percentage, as applicable, for such LIBOR Loans,
Letters of Credit or Commitment Fees, calculated as set forth below:
LIBOR
Loans and
Letter of
Credit Fee Commitment Fee
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Level I Status 0.625% 0.20% p.a.
Level II Status 0.875% 0.20% p.a.
Level III Status 1.125% 0.225% p.a.
Level IV Status 1.25% 0.25% p.a.
Level V Status 1.375% 0.25% p.a.
Level VI Status 1.50% 0.25% p.a.
"APPLICABLE VALUE" means (i) with respect to any Owned Property, the Book
Value of such Owned Property determined in accordance with Agreement Accounting
Principles net of depreciation applied on a pro rata basis and (ii) with respect
to any Mortgaged Property, the unpaid principal balance of such related Mortgage
Note.
"APPRAISAL" means a Master Appraisal Institute appraisal (or an appraisal
prepared by Valuation Counselor's Group or other appraisal satisfactory to the
Agent and the Required Lenders).
"ARTICLE" means an article of this Agreement unless another document is
specifically referenced.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in the form
of Exhibit C hereto.
"AUTHORIZED OFFICER" means any of the Chairman, Chief Executive Officer,
President, Chief Financial Officer or Treasurer (specifically authorized by the
Borrower) of the Borrower, acting singly.
"AVAILABLE COMMITMENT" means, with respect to each Lender, the amount by
which (i) the Commitment of each Lender on such date exceeds (ii) the sum of (a)
the aggregate principal sum of such Lender's Loans outstanding, (b) such
Lender's Commitment
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Percentage of the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (c) such Lender's Commitment Percentage of the aggregate amount
of unreimbursed drawings under all Letters of Credit on such date.
"BNP" is defined in the first paragraph hereof.
"BOOK VALUE" means, with regard to any Owned Property, the sum of (i) the
lesser of (a) the purchase price or (b) the final construction cost (provided
that such construction was completed within the last 90 days), plus (ii)
capitalized improvements and all other related closing costs (calculated on a
cost basis,) as determined in accordance with Agreement Accounting Principles.
"BORROWER" is defined in the first paragraph hereof.
"BORROWING BASE" means, as at any date, (i) 75% of the aggregate Applicable
Value of the Eligible Mortgage Loans and (ii) 60% of the aggregate Applicable
Value of the Eligible Owned Properties, minus the aggregate principal amount of
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any outstanding Senior Debt (other than amounts outstanding hereunder,
Capitalized Leases and Washington Bonds referenced on Schedule 3).
"BORROWING BASE CERTIFICATE" means a certificate of an Authorized Officer
of the Borrower, in substantially the form of Exhibit E and appropriately
completed.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BUSINESS DAY" means any day (i) other than a Saturday, Sunday or other day
on which commercial banks are authorized or required by law to close in Los
Angeles, California, New York, New York and Chicago, Illinois and (ii) if the
applicable Business Day relates to a LIBOR Loan, on which dealings in Dollar
deposits are carried on in the London Interbank Market.
"CAPITALIZED LEASE" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"CASH FLOW" means, for any period, for the Borrower and its Subsidiaries
(determined on a Consolidated Basis in a presentation of Consolidated Statements
of Cash Flow without duplication in accordance with Agreement Accounting
Principles), Net Income plus minority interest expenses plus depreciation,
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amortization and other non-cash charges minus non-cash income plus Interest
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Expense for such period.
"CASH FLOW COVERAGE RATIO" means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter for the
period of four fiscal quarters then ended, the ratio of (i) Cash Flow to (ii)
the sum of
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principal payments (excluding principal payments on existing convertible
Subordinated Indebtedness and under this Agreement), Distributions and Interest
Expense.
"CHANGE OF CONTROL" means (i) the acquisition by any Person (including any
syndicate or group deemed to be a "Person" under Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act" or any
successor provision to either of the foregoing) of beneficial ownership,
directly or indirectly, of shares of capital stock of the Borrower entitling
such Person to exercise more than 50% of the total voting power of all voting
shares of the Borrower; or (ii) any consolidation of the Borrower with, or
merger of the Borrower into, any other Person, any merger of another Person into
the Borrower or any sale or transfer of all or substantially all of the assets
of the Borrower to another Person other than (a) where the surviving corporation
is the Borrower, (b) the Borrower continues to be a REIT and (c) the Borrower
shall be in pro forma compliance with all provisions of this Agreement
subsequent to such Change of Control.
"CLOSING DATE" means the date on which all the conditions precedent set
forth in Section 4.1 shall have been satisfied or waived and this Agreement
becomes effective.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, including the regulations proposed or
promulgated thereunder.
"COMMITMENT" means, for each Lender, the obligation of such Lender to make
Loans and participate in Letters of Credit not exceeding the amount set forth
opposite its name on Schedule 1 hereto or as set forth in any Assignment and
Acceptance relating to any assignment that has become effective pursuant to
Section 14.3, as such amount may be modified from time to time pursuant to the
terms hereof.
"COMMITMENT FEE" means the commitment fee payable pursuant to Section 2.10.
"COMMITMENT PERCENTAGE" means as to any Lender at any time, the percentage
of the Aggregate Commitments then constituted by such Lender's Commitments.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 7.1(iii).
"CONSOLIDATED," "CONSOLIDATING" and "ON A CONSOLIDATED BASIS," when
describing financial statements, refers to those of the Borrower and its
Subsidiaries.
"CONTROL" means the power to direct or cause the direction of the
management or policies of a Person, whether through rights of ownership under
voting securities, under contract or
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otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"CONVERSION/CONTINUATION NOTICE" is the notice referred to in Section 2.13.
"DEBT" of any Person means (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services, (ii) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (iii) all indebtedness created or arising under any
conditional-sale or other title-retention agreement with respect to property
acquired by such Person, (iv) all obligations of such Person as lessee under
leases that have been or should be, in accordance with Agreement Accounting
Principles, recorded as Capitalized Leases, (v) all obligations of such Person
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to secure a credit
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (i), (ii), (iii) or (iv) above (including letters of
credit or similar instruments for such purpose) and (vi) liabilities in respect
of unfunded vested benefits under plans covered by Title IV of ERISA.
"DEBT SERVICE COVERAGE RATIO" means for the Borrower and its Subsidiaries
on a Consolidated Basis, determined as of the end of each fiscal quarter for the
period of four fiscal quarters then ended, the ratio of (i) Cash Flow to (ii)
the sum of principal payments (excluding principal payments on existing
convertible Subordinated Indebtedness and under this Agreement) and Interest
Expense.
"DEFAULT" means any Event of Default and any default, event or condition
that would, with the giving of any requisite notice and the passage of any
requisite period of time, constitute an Event of Default.
"DISTRIBUTIONS" means the declaration of any dividend or the declaration of
a distribution on or in respect to any shares of any class of capital stock, any
partnership interest or any membership interest of any Person, other than
dividends or other distributions payable solely in shares of common stock,
partnership interests or membership units of such Person, as the case may be;
the purchase, redemption or other retirement of any shares of any class of
capital stocks, partnership interests or membership units of such Person,
directly or indirectly, through a Subsidiary or otherwise; the return of equity
capital by any
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Person to its shareholders, partners or members as such; or any other
distribution on or in respect of any shares of any class of capital stock,
partnership interests or membership unit of such Person.
"DOCUMENTATION AGENT" means Sumitomo in its capacity as documentation agent
for the Lenders, and not in its individual capacity as a Lender, and any
successor Documentation Agent appointed by the Lenders.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DRAWING LENDER" has the meaning set forth in Section 2.3(iii).
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
total assets in excess of $500,000,000; (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $500,000,000, provided that such bank is acting
through a branch or agency located in the United States; (iii) an insurance
company or other financial institution or an investment fund that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having total assets in excess of $500,000,000; (iv)
any Affiliate of an existing Lender; and (v) any other Person approved by the
Agent and, in the absence of any Event of Default, the Borrower; provided,
however, that an Affiliate of the Borrower or any Guarantor shall not qualify as
an Eligible Assignee, (b) no direct competitor of the Borrower shall qualify as
an Eligible Assignee and (c) no financial institution shall qualify as an
Eligible Assignee if its participation hereunder would result in increased
liability to the Borrower under Section 3.3.
"ELIGIBLE MORTGAGE LOANS" means, as of any date, any Mortgage Loan, other
than the following:
(i) Any Mortgage Loan to an Affiliate or any Mortgage Loan which is
not owned by the Borrower as sole owner and holder of such Mortgage Loan;
(ii) Any Mortgage Loan not originated by the Borrower;
(iii) Any Mortgage Loan pursuant to which the Mortgage relates to a
ground lease;
(iv) Any Mortgage Loan which is more than 30 days past due for any
payment thereunder;
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(v) Any Mortgage Loan for which the Borrower does not have the full
right and authority to sell, assign and transfer such Mortgage Loan,
Mortgage and the related Mortgage Note and other related documents;
(vi) Any Mortgage Loan for which there does not exist a Phase I
environmental report, any Mortgage Loan with respect to which any material
environmental claim has been made or any Mortgage Loan for which there
exists an environmental report which details the reasonable likelihood of
material environmental claims;
(vii) Any Mortgage Loan for which there has not been issued a title
policy showing the Borrower as first lienholder or a title policy has been
issued showing the Borrower as first lienholder, but with encumbrances or
exceptions of a material nature unless otherwise insured against;
(viii) Any Mortgage Loan, the principal balance of which is more than
80% of the value as determined by an Appraisal of the property secured by
such Mortgage Loan;
(ix) Any Mortgage Loan where the mortgagor thereof is currently the
subject of a bankruptcy proceeding or is otherwise insolvent;
(x) Any property subject to the Mortgage Loan which has been in
operation as a licensed skilled nursing home or long-term care facility for
less than one year, provided, however, that (a) if the Operator of any such
property which has been in operation less than one year is a publicly-
traded company with a ratio of (i) net income plus depreciation,
amortization, other non-cash charges and Interest Expense to (ii) Interest
Expense of at least 1.00:1.00 (calculated as of the end of each fiscal
quarter for the period of four quarters then ended and calculated in
accordance with generally accepted accounting principles), such Mortgage
Loan shall be considered eligible hereunder and (b) up to $20,000,000
(calculated on an aggregate basis with amounts permitted under Section
(viii)(b) of the definition of "Eligible Owned Properties") of such
property subject to a Mortgage Loan in operation less than one year and
which does not meet the requirements of (a) and which has an Operator which
is publicly-traded shall be considered eligible hereunder;
(xi) Any property subject to a Mortgage Loan for which the Operator
does not have all material Governmental Approvals required for the
operation thereof;
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(xii) Any Mortgage Loan of which the Borrower is not the sole lender;
(xiii) Any Mortgage Loan for which an Appraisal has not been
completed; or
(xiv) Any Mortgage Loan which is not free and clear of any and all
Liens which are likely to have a Material Adverse Effect, encumbering or
affecting the Mortgage Loan or Mortgage Note.
"ELIGIBLE OWNED PROPERTIES" means, as of any date, Owned Properties, other
than the following:
(i) Any Owned Properties leased to an Affiliate or which is not
owned by the Borrower or its Subsidiaries in fee simple ownership;
(ii) Any Owned Property for which the lease payment is 30 or more
days past due;
(iii) Any Owned Property for which the term of the lease does not
extend past the Facility Termination Date or for which the Operator thereof
has failed to exercise a renewal option and no new lease has been executed
by the Operator thereof within 60 days prior to the expiration of such
lease;
(iv) Any Owned Property for which no lease is in effect, or which
has been terminated for any reason;
(v) Any Owned Property where the Operator thereof is currently the
subject of a bankruptcy proceeding or is otherwise insolvent;
(vi) Any Owned Property subject to a Lien which is reasonably likely
to have a Material Adverse Effect;
(vii) Any Owned Property for which the Operator does not have all
material Governmental Approvals required for the operation thereof as an
Owned Property;
(viii) Any Owned Property which has been in operation as a licensed
skilled nursing home or long-term care facility for less than one year,
provided, however, that (a) if the Operator of any such Owned Property
which has been in operation less than one year is a publicly-traded company
with a ratio of (i) net income plus depreciation, amortization, other non-
cash charges and Interest Expense to (ii) Interest Expense of at least
1.00:1.00 (calculated as of the end of each fiscal quarter for the period
of four quarters then ended and calculated in accordance with generally
accepted accounting principles), such Owned Property shall be considered
eligible hereunder and (b)
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up to $20,000,000 (calculated on an aggregate basis with amounts permitted
under Section (x)(b) of the definition of "Eligible Mortgage Loans") of the
Book Value of Owned Property in operation less than one year and which does
not meet the requirements of (a) and which has an Operator which is
publicly-traded shall be considered eligible hereunder;
(ix) Any Owned Property for which there does not exist a Phase I
environmental report, any Owned Property with respect to which any material
environmental claim has been made or any Owned Property for which there
exists an environmental report which details the reasonable likelihood of
material environmental claims;
(x) Any Owned Property for which there has not been issued a title
policy showing the Borrower or any of its Subsidiaries as owner or a title
policy has been issued showing the Borrower or any of its Subsidiaries as
owner, but with encumbrances or exceptions of a material nature;
(xi) Any Owned Property of which the Borrower or any of its
Subsidiaries is not the sole owner; or
(xii) Any Owned Property of which the Borrower or its Subsidiaries
does not have full right and authority to sell, transfer or assign.
Notwithstanding the foregoing, for any Owned Property, only the lesser of (a)
the Book Value or (b) the value as determined by an Appraisal (if an Appraisal
exists) shall be considered eligible for Borrowing Base purposes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"EUROCURRENCY LIABILITIES" has the meaning set forth in Regulation D of the
Board of Governors of the Federal Reserve System.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.
"FACILITY TERMINATION DATE" means October 2, 2000, unless accelerated
pursuant to Section 10.1.
"FED FUNDS RATE" means for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
--------
a Business Day, the Federal
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Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day and
(ii) if such rate is not so published for any Business Day, the Federal Funds
Rate for such Business Day shall be the average rate charged to the Agent on
such Business Day on such transactions as determined by the Agent.
"GOVERNMENTAL APPROVALS" means any authorization, consent, approval,
license, lease, ruling, permit, waiver, exemption, filing, registration or
notice by or with a Governmental Person.
"GOVERNMENTAL PERSON" means, whether domestic or foreign, any national,
federal, state or local government, any political subdivision thereof or any
governmental, quasi-governmental, judicial, public or regulatory
instrumentality, authority, body or entity, including the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, any central bank, the Department of Housing and
Urban Development, the Health Care Financing Administration, the Department of
Health and Human Services, and any comparable authority.
"GOVERNMENTAL RULE" means any treaty, law, rule, regulation, ordinance,
order, code, judgment, decree, directive, interpretation, request, guideline,
policy or similar form of decision of any Governmental Person.
"GUARANTIES" means the Guaranties executed by each of the Guarantors, all
in substantially the form attached as Exhibit F.
"GUARANTORS" means each existing and future Significant Subsidiary of the
Borrower which is wholly-owned, directly or indirectly, by the Borrower (other
than LTC REMIC Corporation and any other Subsidiary of the Borrower formed
directly in connection with securitization of the Borrower's Mortgage Loans),
which Significant Subsidiaries as of the Closing Date, are set forth in Schedule
2.
"HCI" means Home and Community Care, Inc., a Nevada corporation.
"INTEREST EXPENSE" means, for any Person on a Consolidated Basis, as of any
date, for the fiscal quarter most recently ended and the immediately preceding
three fiscal quarters, the sum of (i) the amount of all interest on Debt and
(ii) all amortized discount and expenses relating to Debt (as more specifically
reflected on the Borrower's income statements, prepared in accordance with
Agreement Accounting Principles, under "interest").
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"INTEREST PERIOD" means, with respect to a LIBOR Loan, a period of one week
or one, two, three or six months, commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one week or one,
two, three or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next week or next, second or third or
sixth succeeding month, such Interest Period shall end on the last Business Day
as such next week or next, second or third or sixth succeeding month. If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.
No Interest Period may end after the Facility Termination Date. (If the
Borrower shall have selected an Interest Period which ends after the Facility
Termination Date, such Interest Period shall end on the Facility Termination
Date and the Borrower shall pay to the Lenders all amounts due under Section 3.1
as a result of such termination.)
"INVESTMENT" means, for any Person, any investment made in cash or by
delivery of Property:
(i) In any Person, whether by acquisition of stock, indebtedness or
other obligation or investment security, or by loan, guarantee, advance,
capital contribution or otherwise; or
(ii) In any Property, the amount of any investment shall be at cost
(the amount of cash or the fair market value of other property given in
exchange therefor).
"LENDERS" is defined in the first paragraph hereof.
"LETTER OF CREDIT" shall have the meaning set forth in Section 2.1.
"LETTER OF CREDIT AMOUNT" means the stated maximum amount available to be
drawn under a particular Letter of Credit, as such amount may be reduced or
reinstated from time to time in accordance with the terms of such Letter of
Credit.
"LETTER OF CREDIT FEE" means with regard to each Letter of Credit an amount
equal to the product of (i) the Applicable Margin and (ii) the original Letter
of Credit Amount of each Letter of Credit.
"LETTER OF CREDIT REQUEST" means a request by the Borrower for the issuance
of a Letter of Credit on the Agent's standard form of standby letter of credit
application and agreement attached as Exhibit G (or any successor standard
agreement or
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related agreements containing substantially the same terms and conditions).
"LEVEL I STATUS" means at any time that the Borrower's Rating is BBB+ or
higher by S&P or Baa1 or higher by Moody's.
"LEVEL II STATUS" means at any time that the Borrower's Rating is BBB by
S&P or Baa2 by Moody's and Level I Status does not apply.
"LEVEL III STATUS" means at any time that the Borrower's Rating is BBB- by
S&P or Baa3 by Moody's and Levels I and II Status do not apply.
"LEVEL IV STATUS" means at any time that the Borrower does not have a
Rating or that the Borrower's Rating is less than BBB- by S&P or less than Baa3
by Moody's and the Borrower's Leverage Ratio is less than or equal to 0.75:1.00
as of the last day of the most recently ended fiscal quarter of the Borrower.
"LEVEL V STATUS" means at any time that the Borrower does not have a Rating
or that the Borrower's Rating is less than BBB- by S&P or less than Baa3 by
Moody's and the Borrower's Leverage Ratio is greater than 0.75:1.00 and less
than or equal to 1.0:1.0 as of the last day of the most recently ended fiscal
quarter of the Borrower.
"LEVEL VI STATUS" means at any time that Borrower does not have a Rating or
that the Borrower's Rating is less than BBB- by S&P or less than Baa3 by Moody's
and the Borrower's Leverage Ratio is greater than 1.00:1.00 but less than or
equal to 1.25:1.00 as of the last day of the most recently ended fiscal quarter
of the Borrower.
"LEVERAGE RATIO" means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter the ratio of
(i) Total Liabilities outstanding at such time to (ii) Tangible Net Worth.
"LIBOR" means, for any Interest Period for any LIBOR Loan, the arithmetic
mean (rounded upwards, if necessary, to the nearest 1/16 of 100%), as determined
by the Agent of the respective rates per annum quoted by Telerate, Inc. at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date 2 Business Days before the first day of such Interest Period for the
offering by lenders to leading banks in the London Interbank Market of Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the LIBOR Loan to be made by the Lenders
for such Interest Period.
"LIBOR LOAN" means a Loan when it bears interest at the LIBOR Rate.
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"LIBOR RATE" means, with respect to a LIBOR Loan for the relevant Interest
Period, the sum of (i) LIBOR applicable to such Interest Period, plus (ii) the
Applicable Margin. The LIBOR Rate shall be rounded to the next higher multiple
of 1/100 of 1% if the rate is not such a multiple.
"LIBOR RESERVE PERCENTAGE" means, for any Interest Period for any LIBOR
Loan, the reserve percentage applicable 2 Business Days before the first day of
such Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirements (including any emergency, supplemental or other marginal reserve
requirement) for the Agent with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
such LIBOR Loan is determined) having a term equal to such Interest Period.
"LIEN" means any voluntary or involuntary lien, security interest or other
charge or encumbrance of any kind, or any other type of preferential
arrangement, including the lien or retained title of a conditional vendor and
any easement, right of way or other encumbrance on title to real property.
"LOAN" means, with respect to a Lender, a LIBOR Loan or a Reference Rate
Loan.
"LOAN DOCUMENTS" means this Agreement, any Letter of Credit Requests, the
Letters of Credit, the Guaranties and the Notes executed by the Borrower and the
Guarantors in connection herewith and any other agreement (including, but not
limited to any fee letters) executed by the Borrower or any Guarantor in
connection herewith, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with the
terms hereof.
"LTC REMIC CORPORATION" means LTC REMIC Corporation, a Delaware
corporation.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower or any Guarantor to perform its obligations under the Loan Documents to
which it is a party or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent or the Lenders thereunder.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" means, with respect to any Mortgage Loan, the mortgage, deed of
trust or other instrument creating a first mortgage lien on the related Mortgage
Property. In the case of
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a Mortgage Loan secured by more than one Mortgage, the term "Mortgage" shall
refer to each such Mortgage.
"MORTGAGED PROPERTY" means, with respect to any Mortgage Loan, any fee
interest of the obligor on the related Mortgage Note in land and the
improvements thereof subject to the lien of the related Mortgage. In the case
of any Mortgage Loans secured by more than one Mortgaged Property, the term
"Mortgaged Property" shall refer to each such Mortgaged Properties.
"MORTGAGE LOAN" means each Mortgage Loan made by any Person to finance
Owned Properties, evidenced by a Mortgage Note secured by a Mortgage, together
with all direct rights to payment in respect thereof under the Mortgage Note and
any and all related agreements, any security interest thereunder and any
guarantee relating to the Mortgaged Property and any Mortgage Loan.
"MORTGAGE NOTE" means, with respect to any Mortgage Loan, the note (or
notes) or other instrument(s) evidencing the indebtedness under such Mortgage
Loan.
"MULTIEMPLOYER PLAN" means a Plan that is a "multiemployer plan" as defined
in Section 3(37) or 4001(i)(3) of the Borrower's ERISA Plan.
"NET INCOME" means for the Borrower and its Subsidiaries on a Consolidated
Basis, net income as determined in accordance with Agreement Accounting
Principles.
"NOTES" mean promissory notes, in substantially the form of Exhibit A
hereto, duly executed by the Borrower and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"NOTICE OF ASSIGNMENT" is defined in Section 14.3(ii).
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
on the Notes, the obligation to reimburse drawings under Letters of Credit
(including the contingent obligation to reimburse any drawings under outstanding
Letters of Credit), all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under the
Loan Documents.
"OPERATOR" means (i) the lessee of any Owned Property owned by the Borrower
and (ii) the mortgagor or lessee of a Mortgaged Property to the extent such
entity controls the operation of the Mortgaged Property.
"OWNED PROPERTY" means a health care facility offering long-term health
care-related products and services, including
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any skilled nursing homes, long-term care facilities, assisted living facilities
and other similarly related health care facilities.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERSON" means any natural person, corporation, firm, limited liability
company, joint venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code maintained by or contributed to by the Borrower or any member of the
Controlled Group.
"PROPERTY" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"PURCHASERS" is defined in Section 14.3(i).
"RATING" means a rating issued (not implied) from time to time by S&P or
Moody's for senior, unsecured, non-credit enhanced long-term Debt of the
Borrower.
"REFERENCE RATE" means, for any day, the rate per annum (rounded upward, if
necessary, to the next higher 1/100th of 1%) equal to the higher of (i) the
annual rate of interest announced from time to time by the Agent at its head
office in Los Angeles, California, as its corporate reference rate (which is a
rate set by the Agent based upon various factors including general economic and
market conditions, is used as a reference point for pricing certain loans and
the Agent may price its loan at, above or below such rate) and (ii) the sum of
the Fed Funds Rate plus 1/2% per annum.
"REFERENCE RATE LOAN" means a Loan when it bears interest at the Reference
Rate.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by
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banks for the purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.
"REIT" means a Real Estate Investment Trust (as defined in the Code) formed
and operated in compliance with the Code.
"REMIC" means a Real Estate Mortgage Investment Conduit (as defined in the
Code) formed and operated in compliance with the Code.
"REMIC CERTIFICATE" means any certificates issued by or on behalf of any
REMIC formed by the Borrower or any of its Subsidiaries representing an interest
in a mortgage portfolio held by or on behalf of such REMIC.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Single
Employer Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however, that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66 2/3% of the aggregate unpaid
principal amount of the outstanding Loans. Any Lender which has refused (except
if such refusal is mandated by law) to make available its Commitment Percentage
of any Advance or to fund its portion of any Loan or Letter of Credit shall not
be included in this calculation.
"REQUIREMENT OF LAW" means as to any Person, the articles or certificate of
incorporation of such Person, and any material law, treaty, rule or regulation,
determination or policy statement or interpretation of an arbitrator or a court
or other Governmental Person, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.
"S&P" means Standard and Poor's Corporation.
"SANWA" is defined in the first paragraph hereof.
"SEC" means the United States Securities and Exchange Commission or any
successor thereto.
"SEC REPORT" means a Current Report on Form 8-K pursuant to the Securities
Exchange Act of 1934.
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"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SENIOR DEBT" means the sum of the outstanding principal balance of all
non-subordinated Debt of the Borrower and its Subsidiaries on a Consolidated
Basis (excluding non-recourse Mortgage Loans).
"SENIOR LEVERAGE RATIO" means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter, the ratio
of (i) Senior Debt outstanding at such time to (ii) Tangible Net Worth.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary of the Borrower, the stock of
which is directly owned by the Borrower and which has Tangible Net Worth of at
least $2,500,000.
"SINGLE EMPLOYER PLAN" means a Plan other than a Multiemployer Plan.
"SUBORDINATED INDEBTEDNESS" means, collectively, Debt (i) for which the
Borrower is directly and primarily liable and in respect of which none of its
Subsidiaries is contingently or otherwise obligated, (ii) that does not have any
principal or sinking fund payment due prior to the Facility Termination Date and
(iii) that is subordinated (on terms set forth in Schedule 6 or such other terms
as are acceptable to the Required Lenders) to the Obligations of the Borrower
hereunder and under other Loan Documents, and pursuant to documentation
containing other terms (including covenants and events of default) that are not
more favorable than those applicable to the Loans and the Letters of Credit.
Notwithstanding the foregoing, the Borrower's 8.25% Convertible Subordinated
Debentures due January 1999 in the original issued amount of $10,000,000 shall
be deemed Subordinated Indebtedness.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any general partner of any partnership (but not the partnership itself),
any association, any joint venture or any similar business organization more
than 50% of the ownership interests having ordinary voting power of which shall
at the time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"SUMITOMO" is defined in the first paragraph hereof.
"SYNDICATION AGENT" means BNP in its capacity as syndication agent for the
Lenders, and not in its individual
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capacity as a Lender, and any successor Syndication Agent appointed by the
Lenders.
"TANGIBLE NET WORTH" means, as at any date for any Person, the sum for such
Person and its Subsidiaries (determined on a Consolidated Basis without
duplication in accordance with Agreement Accounting Principles) of the
following:
(i) The total amount of shareholders' equity, minus
-----
(ii) The sum of the following: the cost of treasury shares and the book
value of all assets which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) but in any event including Debt issuance costs,
unamortized costs of securitization, unrealized gain or loss on mortgage-backed
securities, goodwill, research and development costs, trademarks, tradenames,
copyrights, patents and franchises, unamortized debt discount and expense, and
any write-up of the book value of assets resulting from a revaluation of such
assets subsequent to the Closing Date, minus
-----
(iii) All amounts (without duplication) due to such Person from current and
former officers, directors, consultants, employees.
"TAXES" is defined in Section 3.2.
"TOTAL INVESTMENTS" mean any Investment made, directly or indirectly, (i)
in the unpaid principal balance of any Mortgage Loan, (ii) in the Book Value
plus depreciation relating to any Owned Property and (iii) in the unpaid
principal balance of the Mortgage Loans underlying any REMIC Certificate (minus
any Mortgage Loans payable by the Borrower or its Subsidiaries to such REMIC).
"TOTAL LIABILITIES" means, as of any date, the sum, for the Borrower and
its Subsidiaries on a Consolidated Basis in accordance with Agreement Accounting
Principles of the following:
(i) all Debt and
(ii) all other liabilities which should be classified as liabilities on the
balance sheet, including all reserves (other than general contingency reserves)
and all deferred taxes and other deferred items.
"TRANSFEREE" is defined in Section 14.4.
"TYPE" means, with respect to a Loan, its nature as a Reference Rate Loan
or a LIBOR Loan.
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"UNFUNDED LIABILITIES" means the amount (if any) by which the present value
of all nonforfeitable benefits under all Single Employer Plans exceeds the fair
market value of all such Plan assets allocable to such benefits, all determined
in accordance with the respective most recent valuations for such Plans.
1.2 Rules and Interpretation.
------------------------
(i) A reference to any document or agreement shall mean such document
or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(ii) The singular includes the plural and the plural includes the
singular.
(iii) A reference to any law includes any amendment or modification of
such law.
(iv) A reference to any Person includes its permitted successors and
permitted assigns.
(v) Accounting terms capitalized but not otherwise defined herein
shall have their meanings applied to them by Agreement Accounting
Principles applied on a consistent basis by the accounting entity to which
they refer.
(vi) The words "include," "includes," and "including" are not
limiting.
(vii) All terms not specifically defined herein or by Agreement
Accounting Principles, which terms are defined in the Uniform Commercial
Code as in effect in the State of California, have the meanings assigned to
them therein.
(viii) Reference to a particular "section" refers to that section of
this Agreement unless otherwise indicated.
(ix) The words "herein," "hereof," "hereunder" and words of like
import shall mean to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
ARTICLE 2
THE REVOLVING CREDIT FACILITY
-----------------------------
2.1 Commitments. Each Lender severally agrees, on the terms and
-----------
conditions set forth in this Agreement, (i) to make Loans on a revolving credit
basis and in Dollars to the Borrower from time to time and (ii) to participate
in standby letters of credit issued for the account of the Borrower pursuant to
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Section 2.3 from time to time (each a "Letter of Credit" and, collectively, the
"Letters of Credit"), from and including the Closing Date to but excluding the
Facility Termination Date in an amount not to exceed the amount of its
Commitment. The sum of (a) the aggregate principal amount of all Loans
outstanding, (b) the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (c) the aggregate amount of unreimbursed drawings under all
Letters of Credit, shall not exceed, at any time, the lesser of (x) the
Aggregate Commitment and (b) the Borrowing Base. Further, the sum of (a) the
aggregate Letter of Credit Amount of all Letters of Credit outstanding and (b)
the aggregate amount of unreimbursed drawings under all Letters of Credit shall
not exceed $15,000,000 at any time. Within the limit of each Lender's Commitment
and as set forth herein, the Borrower may borrow, have Letters of Credit issued
and/or renewed for its account, prepay Loans, reborrow and have additional
Letters of Credit issued for its account.
Notwithstanding the foregoing, no more than ten separate Interest Periods
in respect of LIBOR Loans from each Lender may be outstanding at any one time.
2.2 Borrowing Base. The Borrowing Base availability shall be
--------------
determined on the basis of the Borrowing Base Certificate which is delivered on
the Closing Date and in accordance with Section 7.1(iv).
2.3 Issuance of Letters of Credit.
-----------------------------
(i) The Borrower shall be entitled to request the issuance of standby
Letters of Credit from time to time from and including the Closing Date to but
excluding the date which is fourteen Business Days prior to the Facility
Termination Date by giving the Agent a Letter of Credit Request at least three
Business Days before the requested date of issuance of such Letter of Credit
(provided that such Letter of Credit Request is received by the Agent no later
than 11:00 a.m., Los Angeles time, and any Letter of Credit Request received
after such time shall be deemed to have been received on the next Business Day)
(which date of issuance shall be a Business Day). No Letter of Credit shall
have an expiration date beyond the later of (i) the date one year from its date
of issuance or (ii) seven Business Days prior to the Facility Termination Date.
The aggregate Letter of Credit Amounts under all outstanding Letters of Credit
and the aggregate amount of unreimbursed drawings under Letters of Credit shall
reduce, dollar for dollar, the Aggregate Available Commitment. Letters of
Credit may only be requested in Dollars and in minimum amounts of at least
$500,000. The sum of (a) the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and (b) the aggregate amount of unreimbursed drawings
under all Letters of Credit shall not at any time exceed $15,000,000. In
addition, the sum of (i) the aggregate principal amount of all Loans
outstanding, (ii) the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and
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(iii) the aggregate amount of unreimbursed drawings under all Letters of Credit
shall not exceed, at any time, the lesser of (a) the Aggregate Commitment and
(b) the Borrowing Base. Each Letter of Credit Request shall be made in writing,
shall be signed by an Authorized Officer and shall be effective upon receipt by
the Agent. Provided that a valid Letter of Credit Request has been received by
the Agent and upon the reasonable acceptance by the Agent of the form of Letter
of Credit requested and fulfillment of the other applicable conditions set forth
in Section 4.3, the Agent will issue the requested Letter of Credit from its
office specified in Section 15.1.
(ii) Immediately upon the issuance of each Letter of Credit, the Agent
shall be deemed to have sold and transferred to each Lender, and each Lender
shall be deemed to have purchased and received from the Agent, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the product of (a) such Lender's Commitment Percentage and (b) the
maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). The Agent shall promptly advise each
Lender of the issuance of each Letter of Credit, the Letter of Credit Amount of
such Letter of Credit, any change in the face amount or expiration date of such
Letter of Credit, the cancellation or other termination of such Letter of Credit
and any drawing under such Letter of Credit. The Agent shall also promptly
notify the Borrower of any drawing under such Letter of Credit, provided that
the failure to do so shall not affect the Borrower's obligations hereunder.
Whenever the Agent receives a payment on account of a drawing under a Letter of
Credit, including interest thereon, it shall promptly pay to each Lender which
has funded its participating interest therein, in immediately available funds,
an amount equal to such Lender's Commitment Percentage thereof.
(iii) The payment by the Agent of a draft drawn under any Letter of
Credit shall first be made from any cash collateral deposit held by the Agent
with respect to such Letter of Credit. After any such cash collateral deposit
has been applied, the payment by the Agent of a draft drawn under any Letter of
Credit shall constitute for all purposes of this Agreement the making by the
Agent in its individual capacity as a Lender hereunder (in such capacity, the
"Drawing Lender") of a Reference Rate Loan in the amount of such payment (but
without any requirement of compliance with the conditions set forth in Section
4.3). In the event that any such Loan by the Drawing Lender resulting from a
drawing under any Letter of Credit is not repaid by the Borrower by 12:00 noon,
Los Angeles time, on the day of payment of such drawing, the Agent shall
promptly notify each other Lender. Each Lender shall, on the day of such
notification (or if such notification is not given by 1:00 p.m., Los Angeles
time, on such day, then on the next succeeding Business Day),
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make a Reference Rate Loan, which shall be used to repay the applicable portion
of the Reference Rate Loan of the Drawing Lender with respect to such Letter of
Credit drawing, in an amount equal to the amount of such Lender's participation
in such drawing for application to repay the Drawing Lender (but without any
requirement of compliance with the applicable conditions set forth in Section
4.3) and shall deliver to the Agent for the account of the Drawing Lender, on
the day of such notification (or if such notification is not given by 1:00 p.m.,
Los Angeles time, on such day, then on the next succeeding Business Day) and in
immediately available funds, the amount of such Reference Rate Loan. In the
event that any Lender fails to make available to the Agent for the account of
the Drawing Lender the amount of such Reference Rate Loan (except if such Lender
is prohibited by law from making such amount available to the Drawing Lender),
the Drawing Lender shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate.
(iv) The obligations of the Borrower with respect to any Letter of
Credit, any Letter of Credit Request and any other agreement or instrument
relating to any Letter of Credit and any Reference Rate Loan made under Section
2.3(iii) shall be absolute, unconditional and irrevocable and shall be paid
immediately when due (and in any event shall reimburse the Agent for drawings
under a Letter of Credit on the date of payment thereof by the Agent), strictly
in accordance with the terms of the aforementioned documents under all
circumstances, including the following:
(a) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any other Loan Document;
(b) the existence of any claim, setoff, defense or other right
that the Borrower may have at any time against any beneficiary or transferee of
any Letter of Credit (or any Person for whom any such beneficiary or transferee
may be acting), the Agent, any Lender (other than the defense of payment to a
Lender in accordance with the terms of this Agreement) or any other Person,
whether in connection with this Agreement, any other Loan Document, the
transactions contemplated hereby or thereby or any unrelated transaction;
(c) any statement or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect,
or any statement therein being untrue or inaccurate in any respect whatsoever;
(d) any exchange, release or nonperfection of any collateral, or
any release, amendment or waiver of or consent to departure from any Loan
Document or other guaranty, for any of the Obligations of the Borrower in
respect of the Letters of Credit; and
-23-
(e) any other circumstance or happening similar to any of the
foregoing.
(v) The Borrower shall pay to the Agent with respect to each Letter of
Credit issued hereunder, the following fees:
(a) a nonrefundable Letter of Credit Fee to the Agent for the pro
rata benefit of the Lenders, such fee to be payable quarterly in arrears.
(b) from time to time, such additional fees and charges (including
cable charges) as are generally associated with letters of credit, in accordance
with the Agent's standard internal charge guidelines and the related Letter of
Credit Request.
(vi) The terms of this Agreement shall take precedence if there is any
inconsistency between the terms of this Agreement and the terms of any Letter of
Credit Request utilized by the Agent.
(vii) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Agent nor any Lender nor any of their
respective officers or directors shall be liable or responsible for (i) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereof, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) in the absence of any gross negligence or willful
misconduct by the Agent, payment by the Agent against presentation of documents
that do not comply with the terms of any Letter of Credit, including failure of
any documents to bear any reference or adequate reference to any Letter of
Credit; or (iv) any other circumstance whatsoever in making or failing to make
payment under any Letter of Credit. In furtherance and not in limitation of the
foregoing, the Agent may accept any document that appears on its face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
2.4 Commitment Percentage. The principal amount of each Lender's Loan
---------------------
and participation in a Letter of Credit shall be in an amount equal to the
product of (i) such Lender's Commitment Percentage (expressed as a fraction) and
(ii) the total amount of the Loan or Loans or Letters of Credit requested;
provided that in no event shall any Lender be obligated to make a Loan or
-------- ----
participate in a Letter of Credit if after giving effect to such Loan or such
participation such Lender's Loans, its Commitment Percentage of the aggregate
Letter of Credit Amount of all Letters of Credit outstanding and its Commitment
Percentage of the aggregate amount of
-24-
unreimbursed drawings under all Letters of Credit outstanding would exceed its
Commitment or if the amount of such requested Loan is in excess of such Lender's
Available Commitment.
2.5 Types of Loans. Except as limited herein, the Loans may from time
--------------
to time be (i) LIBOR Loans, (ii) Reference Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with Section 2.14. Notwithstanding the foregoing, the initial Loans made on the
Closing Date shall be made as Reference Rate Loans and shall be subject to
conversion to LIBOR Loans pursuant to Section 2.13. Each Lender may make or
maintain its Loans to the Borrower by or through any Applicable Lending Office.
2.6 Evidence of Obligations. The Loans made by each Lender to the
-----------------------
Borrower shall be evidenced by a Note, with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of all Loans made by such Lender to the Borrower, with interest
thereon as prescribed in Sections 2.16 and 2.17. Each Lender is hereby
authorized (but not required) to record the date and amount of each payment or
prepayment of principal of its Loans made to the Borrower, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of LIBOR Loans, the length of each Interest Period with respect thereto, in
the books and records of such Lender, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded. The failure
----- -----
of any Lender to make any such recordation or notation in the books and records
of the Lender (or any error in such recordation or notation) shall not affect
the obligations of the Borrower hereunder or under the Notes. Each Note shall
(i) be dated the Closing Date, (ii) provide for the payment of interest in
accordance with Sections 2.16 and 2.17 and (iii) be stated to be payable on the
Facility Termination Date.
2.7 Commitment Reduction. At the Borrower's option and upon at least
--------------------
five Business Days' prior irrevocable written notice to the Agent, with such
notice specifying the amount and the date of such reduction, the Borrower may
permanently reduce the Aggregate Commitment in whole at any time or in part from
time to time; provided, however, that (i) each partial reduction of the
Aggregate Commitment shall be in an aggregate amount equal to at least
$5,000,000 or an integral multiple of $1,000,000 and (ii) the Borrower may not
reduce the Aggregate Commitment below an amount equal to the sum of all Loans
and Letters of Credit outstanding together with unreimbursed drawings under
Letters of Credit. The Agent shall promptly notify each Lender (by telecopy or
by telephone) of such requested Commitment reduction.
In addition, the Aggregate Commitments shall automatically terminate upon
the occurrence of a Change of Control.
-25-
Reductions of the Aggregate Commitment pursuant to this Section 2.7 shall
automatically effect a reduction of the Commitment of each Lender to an amount
equal to the product of (i) the Aggregate Commitment of all Lenders, as reduced
pursuant to this Section 2.7 and (ii) the Commitment Percentage of such Lender,
in each case determined immediately prior to such reduction of the Aggregate
Commitment on such date. Any such Commitment reduction shall be applied as the
Borrower directs.
Upon each reduction of the Aggregate Commitment, the Borrower shall pay the
Commitment Fee, payable pursuant to Section 2.10, accrued on the amount of the
Aggregate Commitment so reduced through the date of such reduction.
2.8 Commitment Termination. The Commitment of each Lender and the
----------------------
Aggregate Commitment shall terminate on the Facility Termination Date.
2.9 Required Payments. The outstanding Loans and all other unpaid
-----------------
Obligations shall be paid in full by the Borrower on the Facility Termination
Date.
2.10 Commitment Fee. The Borrower agrees to pay to the Agent for the
--------------
benefit of the Lenders a Commitment Fee to be shared among Lenders on the basis
of their respective Commitment Percentages with respect to the Aggregate
Available Commitments for the period from and including the Closing Date to but
excluding the Facility Termination Date, computed at an amount equal to the
Applicable Margin multiplied by the average daily aggregate amount of the
Aggregate Available Commitment from time to time in effect, to be payable
quarterly in arrears, within 5 days after the end of each quarter, and on the
Facility Termination Date.
2.11 Interest Limitation. Notwithstanding any other term of this
-------------------
Agreement or any Note or any other Loan Document or any other document referred
to herein or therein, the maximum amount of interest which may be charged to or
collected from any Person liable hereunder or under any Note by the Lenders
shall be absolutely limited to, and shall in no event exceed, the maximum amount
of interest which could lawfully be charged or collected under applicable law,
and any term of this Agreement, any Note, any Loan Document or any other
document referred to herein or therein which could be construed as providing for
interest in excess of such lawful maximum shall be and hereby is made expressly
subject to and modified by the provisions of this Section.
2.12 Administrative Fee. The Borrower agrees to pay to the Agent, for
------------------
its own account, an administrative fee set forth in a fee letter dated as of the
Closing Date between the Borrower and the Agent.
-26-
2.13 Voluntary Conversion of Advances. The Borrower may on any Business
--------------------------------
Day, upon written notice (a "Conversion/ Continuation Notice") given to the
Agent not later than 12:00 noon, Los Angeles time, on the third Business Day
before the date of the proposed conversion convert any Advance into an Advance
of another Type; provided, however, that, with respect to a conversion from a
-------- -------
LIBOR Loan into a Reference Rate Loan, any such conversion shall be made on, and
only on, the last day of the Interest Period for such Loan. Each such notice of
a conversion shall, within the restrictions specified above, specify (i) the
Loan to be converted, (ii) the Type of Loan into which such Loan is to be
converted and (iii) the requested date for such conversion. Upon receipt of any
such notice the Agent shall promptly notify each Lender thereof. Any part of
outstanding LIBOR Loans and Reference Rate Loans may be converted as provided
herein, provided (a) no Loan may be converted into a LIBOR Loan after the date
that is one month prior to the Facility Termination Date and (b) the Borrower
shall not have the right to continue or convert to a LIBOR Loan if a Default
shall have occurred and be continuing. However, if the Borrower shall fail to
give any required notices described above in this Section or if such
continuation is not permitted pursuant to the preceding sentence, such Loans
shall be automatically converted to Reference Rate Loans on the last day of such
then-expiring Interest Period.
2.14 Notice of Borrowing. The Borrower shall give the Agent telephonic
-------------------
notice which must be promptly confirmed by written notice substantially in the
form of Exhibit D attached hereto (which telephonic notice must be received by
the Agent prior to 9:00 a.m., Los Angeles time, on the proposed Borrowing Date
or, if all or any part of the Loans are requested to be made as LIBOR Loans,
three Business Days prior to each proposed Borrowing Date) requesting that the
Lenders make the Loans on the proposed Borrowing Date and specifying (i) the
aggregate amount of Loans requested to be made (which must be in an aggregate
amount equal to at least $5,000,000 or an integral multiple of $1,000,000) (or,
if less, the then Available Commitment), (ii) subject to Section 2.5, whether
the Loans are LIBOR Loans or Reference Rate Loans or a combination thereof and
(iii) if the Loans are to be entirely or partly LIBOR Loans, the respective
amounts of each such Type of Loan and the respective lengths of the Interest
Periods therefor. On receipt of such notice, the Agent shall promptly notify
each Lender thereof no later than 10:00 a.m., Los Angeles time, on the date of
receipt of such telephonic notice. On the proposed Borrowing Date, not later
than 12:00 noon, Los Angeles time, each Lender shall make available to the Agent
at its office specified in Section 15.1 such Lender's Commitment Percentage of
the aggregate borrowing amount (as determined in accordance with Section 2.4) in
immediately available funds and in Dollars. Not later than 12:00 noon, Los
Angeles time, on the date of such Loans and upon fulfillment of the applicable
conditions set forth in Section 4, the Agent shall make such Loans available to
the Borrower in
-27-
immediately available funds. Each notice pursuant to this Section 2.14 shall be
irrevocable and binding on the Borrower and, to the extent that any discrepancy
exists between the telephonic notice and the later written notice, the
telephonic notice shall take precedence. The Agent may, in the absence of
notification from any Lender that such Lender has not made its Commitment
Percentage available to the Agent, on such date, credit the account of the
Borrower on the books of such office of the Agent with the aggregate amount of
Loans.
2.15 Commitment Obligations. Neither the Agent nor any Lender shall be
----------------------
responsible for the obligation or Available Commitment of any other Lender
hereunder, nor will the failure of any Lender to comply with the terms of this
Agreement relieve any other Lender or the Borrower of their obligations under
this Agreement and the Notes. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights which the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
2.16 Interest. A Reference Rate Loan shall bear interest on the
--------
outstanding principal amount thereof, for each day from and including the date
such Loan is made or is converted from a LIBOR Loan into a Reference Rate Loan
pursuant to Section 2.13 to (but not including) the date it becomes due or is
converted into a LIBOR Loan pursuant to Section 2.13 hereof, at a rate per annum
equal to the Reference Rate for such day. Changes in the rate of interest on any
Loan maintained as a Reference Rate Loan will take effect simultaneously with
each change in the Reference Rate. Each LIBOR Loan shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the LIBOR Rate determined as
applicable to such LIBOR Loan.
2.17 Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained herein, during the continuance of an Event of Default no Loan
may be made as, converted into or continued as a LIBOR Loan. During the
continuance of an Event of Default each Loan shall bear interest at a rate per
annum equal to the Reference Rate plus 2% per annum. All such interest shall be
payable on demand of the Agent.
2.18 Method of Payment. All payments of the Obligations hereunder shall
-----------------
be made, without setoff, deduction, or counterclaim, in immediately available
funds in Dollars to the Agent at the address specified pursuant to Article 15,
or at any other Applicable Lending Office of the Agent specified in writing by
the Agent to the Borrower, by 12:00 noon, Los Angeles time, on the date when due
and shall be applied ratably by the Agent among the Lenders (except for amounts
required under Sections 3.1, 3.2 and 3.3 in which case such amounts shall be
-28-
paid to the affected Lender or Lenders). Each payment delivered to the Agent for
the account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its address
specified pursuant to Article 15 or at any Applicable Lending Office specified
in a notice received by the Agent from such Lender. The Agent is hereby
authorized (but not obligated) to charge Account No. 0496-17539 (or such other
account as may be designated by the Borrower from time to time) of the Borrower
maintained with Sanwa for each payment of principal, interest and fees as it
becomes due hereunder.
2.19 Telephonic Notices. The Borrower hereby authorizes the Lenders and
------------------
the Agent to convert or continue Loans and effect selections of Types of Loans
based on telephonic notices made by any Person or Persons the Agent or any
Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice
signed by an Authorized Officer. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, the records
of the Agent and the Lenders shall govern absent manifest error.
2.20 Interest Payment Dates; Interest and Fee Basis. Interest accrued
----------------------------------------------
on each Reference Rate Loan shall be payable in arrears on the first Business
Day of each calendar month, commencing with the first such date to occur after
the Closing Date, on any date on which Reference Rate Loan is prepaid, whether
due to acceleration or otherwise, and at maturity. Interest accrued on that
portion of the outstanding principal amount of any Reference Rate Loan converted
into a LIBOR Loan on a day other than an interest payment date shall be payable
on the date of conversion. Interest accrued on each LIBOR Loan shall be payable
on the last day of its applicable Interest Period, on any date on which the
LIBOR Loan is prepaid, whether by acceleration or otherwise, and at maturity.
Interest on LIBOR Loans and fees shall be calculated for actual days
elapsed on the basis of a 360-day year and interest on Reference Rate Loans
shall be calculated for actual days elapsed on the basis of 365-day year.
Interest shall be payable for the day a Loan is made but not for the day of any
payment on the amount paid if payment is received prior to 12:00 noon, Los
Angeles time, at the place of payment. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest;
provided, however, that, if such extension would cause any payment of interest
-------- -------
on or principal of any LIBOR Loan to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day, and such
-29-
shortened time shall in such case be used in the computation of payment of
interest.
For purposes of calculating the Applicable Margin for LIBOR Loans,
the Letter of Credit Fee and the Commitment Fee, if the Ratings shall fall
within different Levels, the Applicable Margin, the Letter of Credit Fee and the
Commitment Fee shall be based on the higher Rating. If any Rating shall be
changed, each such change with respect to the Borrower shall apply at any time
during the period commencing on the fifth Business Day following the date on
which the Agent has received notice of such change from the Borrower after the
effective date of such change and ending on the date five Business Days
following the date on which the Agent has received notice of any new change in
Rating (after the effective date of the next such change). If the rating system
of either S&P or ▇▇▇▇▇'▇ shall change, the parties hereto shall negotiate in
good faith to amend the references to specific Ratings in the Applicable Margin
definition to reflect such changed rating system.
The Applicable Margin for LIBOR Loans, the Letter of Credit Fee and
the Commitment Fee shall also be subject to adjustment (upwards or downwards, as
appropriate) based on the Borrower's Leverage Ratio. The Leverage Ratio shall
be determined from the then most recent annual or quarterly financial statement
of the Borrower delivered with the Compliance Certificate. The adjustment, if
any, to the Applicable Margin for LIBOR Loans, the Letter of Credit Fee and the
Commitment Fee, as it relates to the Leverage Ratio, shall take place on, and be
effective from and after the fifth Business Day following the date on which the
Agent has received the Compliance Certificate. If the Borrower shall at any
time fail to furnish to the Agent the Compliance Certificate within the time
limitation set forth in Section 7.1(iii), then the Borrower's Level shall be
Level VI Status from the date of such failure until 5 Business Days after such
Compliance Certificate is so delivered.
2.21 Notification of Loan, Interest Rates, Prepayments and Commitment
----------------------------------------------------------------
Reductions. Promptly after receipt thereof, the Agent will notify each Lender
----------
of the contents of a borrowing notice, Conversion/Continuation Notice and
repayment notice received by it hereunder. The Agent will notify each Lender of
the interest rate applicable to each Loan promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Reference Rate.
Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error.
2.22 Applicable Lending Offices. Each Lender may book its Loans at any
--------------------------
Applicable Lending Office selected by such
-30-
Lender and may change its Applicable Lending Office from time to time. All terms
of this Agreement shall apply to any such Applicable Lending Office and the
Notes shall be deemed held by each Lender for the benefit of such Applicable
Lending Office. Each Lender may, by written or telex notice to the Agent and the
Borrower, designate an Applicable Lending Office through which the Loans will be
made by it and for whose account Loan payments are to be made. For purposes of
Article 3 and determining the LIBOR Rate, all LIBOR Loans shall be deemed to
have been funded with offshore deposits, provided that the Lenders shall have
the right to fund LIBOR Loans in any manner in their sole discretion.
2.23 Non-Receipt of Funds by the Agent. Unless the Borrower or a
---------------------------------
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent (or the same date, in the case of
Reference Rate Loans) of (i) in the case of a Lender, the proceeds of a Loan or
(ii) in the case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or the
Borrower, as the case may be, has not in fact made such payment to the Agent,
the recipient of such payment shall, on demand by the Agent, repay to the Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (a) in the case of payment by a Lender, the Fed Funds Rate for such day
or (b) in the case of payment by the Borrower, the interest rate applicable to
the relevant Loan.
2.24 Withholding Tax Exemption. At least five Business Days prior to the
-------------------------
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to the
Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying
-31-
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
2.25 Optional Prepayment. The Borrower may at any time and from time to
-------------------
time, prepay the Loans, in whole or in part, without premium or penalty (except
amounts required by Section 3.1), upon at least three Business Days' irrevocable
written notice, in the case of LIBOR Loans, and upon at least one Business Day's
irrevocable written notice, in the case of Reference Rate Loans, from the
Borrower to the Agent, specifying the date and amount of prepayment and whether
the prepayment is of LIBOR Loans, Reference Rate Loans or a combination thereof,
the amount allocable to each. Any prepayment of a LIBOR Loan on a day other than
the last day of an Interest Period applicable thereto shall also be subject to
the payment of amounts due under Section 3.1 hereof. Upon receipt of any such
notice from the Borrower, the Agent shall promptly notify each Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable by the Borrower on the date specified therein, together with accrued
interest to such date on the amount prepaid. Partial prepayments of Loans shall
be in an aggregate principal amount of $5,000,000 or in increments of $1,000,000
above such amount. Optional prepayments shall be applied as directed by the
Borrower and, in the absence of such direction, as the Agent shall determine.
2.26 Mandatory Prepayments.
---------------------
(i) If at any time the aggregate principal amount of all Loans
outstanding, the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and the aggregate amount of unreimbursed drawings under all Letters
of Credit shall exceed the lesser of (a) the Aggregate Commitment and (b) the
Borrowing Base, the Borrower shall pay immediately upon demand made by the Agent
all amounts required in order to reduce such amounts outstanding to the lesser
of (a) the Aggregate Commitment and (b) the Borrowing Base, and if no Loans or
any unreimbursed drawings under Letters of Credit are then outstanding, shall
deposit with the Agent cash collateral in an amount equal to the amount by which
the aggregate Letter of Credit Amounts of all Letters of Credit outstanding
exceeds the lesser of (a) the Aggregate Commitment and (b) the Borrowing Base.
(ii) If at any time the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and the aggregate
-32-
amount of unreimbursed drawings under all Letters of Credit shall exceed
$15,000,000 for whatever reason, the Borrower shall immediately deposit with the
Agent cash collateral in an amount equal to the amount by which the aggregate
Letter of Credit Amount of all Letters of Credit outstanding and any aggregate
amount of unreimbursed drawings under all Letters of Credit shall exceed
$15,000,000.
(iii) Upon the sale, or a combination of sales, lease transfer or other
disposition (including securitizations or the issuance and sale of REMIC
Certificates) of the assets of the Borrower or its Subsidiaries (other than
sales in the ordinary course of business or sale of assets having a Book Value
of less than $5,000,000) which results in receipt by the Borrower or its
Subsidiaries of either (a) cash proceeds and/or (b) repayment of any Debt owing
to the Borrower or its Subsidiaries resulting from any such sale or combination
of sale of assets or otherwise, the Borrower shall prepay the Loans in an amount
equal to 100% of such cash proceeds received by the Borrower or its direct or
indirect wholly-owned Subsidiaries or Debt repaid (net of reasonable and
customary costs of sale and related income tax expense) or, if no Loans are
outstanding or if the Loans have been prepaid and if a Default shall have
occurred, the Borrower shall immediately deposit with the Agent cash collateral
in an amount equal to the lesser of such net proceeds or the aggregate Letter of
Credit Amount of all Letters of Credit outstanding. All such prepayments shall
be applied in accordance with Section 2.27.
(iv) Upon a Change of Control, the Borrower shall immediately prepay all
of the Loans or if no Loans are outstanding or if the Loans have been prepaid,
the Borrower shall immediately deposit with the Agent cash collateral in an
amount equal to the Aggregate Letter of Credit Amount for all Letters of Credit
outstanding.
(v) Upon the issuance or sale by the Borrower or any of its directly or
indirectly wholly-owned Subsidiaries after the Closing Date of any stock, any
warrants or options exercisable in respect of stock (other than any warrants or
options issued to current or former directors, officers, consultants or
employees of the Borrower or any of its Subsidiaries, any restricted stock plan
and the shares distributed thereunder, any stock issued upon exercise of such
warrants or options and other than stock issued pursuant to exchangeable limited
partnership interests), any other security or instrument representing an equity
interest, any Subordinated Indebtedness provided that if any new Subordinated
Indebtedness permitted by Section 8.1(iv)(b) is incurred to refinance any
Subordinated Indebtedness then outstanding, no mandatory prepayment will be
required hereunder), any Debt refinancing a portion or all of the Loans and
Letters of Credit or any capital contribution received, the Borrower shall
immediately prepay the Loans in an aggregate amount equal to 100% of the
proceeds from such equity
-33-
or debt issuance (net of reasonable and customary costs of sale and related
income tax expense) or, if no Loans are outstanding or if the Loans have been
prepaid and if a Default shall have occurred, the Borrower shall immediately
deposit with the Agent cash collateral in an amount equal to the lesser of such
net proceeds or the Aggregate Letter of Credit Amount of all Letters of Credit
outstanding. All such prepayments shall be applied in accordance with Section
2.27.
2.27 Application of Repayments. All repayments of principal made
-------------------------
pursuant to Section 2.26 (except as expressly set forth in Sections 2.26(i),
(ii) and (iii)) shall be applied, in the absence of instruction by the Borrower,
first to the principal of Reference Rate Loans and then to the principal of
LIBOR Loans. Each partial repayment shall be allocated among the Lenders in
proportion, as nearly as practicable, to their respective Commitment
Percentages, with adjustments to the extent practicable, to equalize any prior
repayments not exactly in proportion.
Notwithstanding the rights given to the Borrower pursuant to California
Civil Code Sections 1479 and 2822 or equivalent provisions in the laws in the
State of California, to designate how payments will be applied, the Borrower
hereby waives such rights and the Agent shall have the right in its sole
discretion, other than as specifically set forth herein, to determine the order
and method of application of payments to outstanding Obligations and to revise
such application prospectively or retroactively at its discretion.
ARTICLE 3
CHANGE IN CIRCUMSTANCES
-----------------------
3.1 Yield Protection.
----------------
(i) If any repayment of principal of, or conversion of, any LIBOR
Loan is made other than on the last day of an Interest Period therefor, as a
result of a prepayment, payment or conversion, or an acceleration of the
maturity of the Loan pursuant to Section 10, or for any other reason, or if the
Borrower shall fail to borrow a LIBOR Loan after requesting one, then the
Borrower shall, upon demand by the Agent upon request of any affected Lender pay
to the Agent for the account of such affected Lender any amounts required to
compensate it for any additional losses, costs or expenses that they may
reasonably incur as a result of such repayment, conversion or failure to borrow,
including any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by a Lender to fund or maintain such LIBOR Loan. A certificate as to
such amount, submitted to the Borrower by the Lenders through the
-34-
Agent, shall be conclusive and binding for all purposes, absent manifest error.
(ii) If, due to either (a) the introduction of or any change in or
in the interpretation of any Governmental Rule or (b) the compliance by the
Lenders with any Governmental Rule (whether or not having the force of law),
there is any increase in the cost to any Lenders of agreeing to make, making,
funding or maintaining any LIBOR Loan, then the Borrower shall from time to
time, upon written demand by the Agent upon request of any affected Lender, pay
to the Agent for the account of such affected Lender additional amounts
sufficient to compensate such affected Lender upon request of any Lender for
such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower by the Lenders through the Agent, shall be conclusive
and binding for all purposes, absent manifest error.
(iii) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any Governmental
Rule makes it unlawful, or any Governmental Person asserts that it is unlawful,
for any Lender to perform its obligations hereunder to make LIBOR Loans or to
continue to fund or maintain LIBOR Loans hereunder, then, on notice thereof and
demand therefor by the Lenders through Agent to the Borrower, (a) the obligation
of such Lender to make LIBOR Loans and to convert Reference Rate Loans into
LIBOR Loans shall terminate and (b) the Borrower shall forthwith prepay in full
all LIBOR Loans then outstanding, together with interest accrued thereon, unless
the Borrower, within five Business Days of such notice and demand, converts all
LIBOR Loans then outstanding into Reference Rate Loans in accordance with
Section 2.13.
(iv) If, with respect to any LIBOR Loan, the Agent notifies the
Borrower that LIBOR for such Loan will not adequately reflect the cost to one or
more Lenders (as determined by such Lender(s) in good faith on the basis of
market conditions then in effect) of making, funding or maintaining such Loan,
then (a) such Loan will automatically, on the last day of the then existing
Interest Period therefor, convert into a Reference Rate Loan on which interest
and principal shall be payable contemporaneously with the related LIBOR Loans
and (b) the obligation of the affected Lender to make, or to convert Reference
Rate Loans into LIBOR Loans shall be suspended until the Agent notifies the
Borrower that the circumstances causing such suspension no longer exist.
3.2 Taxes. Subject to the Lenders' compliance with Section 2.24, all
-----
payments by or on behalf of the Borrower hereunder shall be made without set-off
or counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of
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whatsoever nature imposed by any Governmental Person, other than any tax on or
measured by the overall net income of the Agent or a Lender pursuant to the
income tax laws of the United States, the jurisdiction where the Agent's or such
Lender's principal office is located or any political subdivision thereof
(collectively, the "Taxes")) shall not be less than the amounts otherwise
specified to be paid hereunder. A certificate as to any additional amounts
payable to the Agent or a Lender hereunder submitted to the Borrower by the
Agent shall show in reasonable detail the amount payable to the Agent or a
Lender and the calculations used to determine in good faith such amount and
shall be conclusive absent manifest error. Any amounts payable by the Borrower
hereunder with respect to past payments shall be due within ten days following
receipt by the Borrower of such certificate from the Agent; and such amounts
payable with respect to future payments shall be due concurrently with such
future payments. With respect to each deduction or withholding for or on account
of any Taxes, the Borrower shall promptly furnish to the Agent such
certificates, receipts and other documents as may be required (in the reasonable
judgment of the Agent) to establish any tax credit to which a Lender may be
entitled. The agreements and obligations of the Borrower under this paragraph
shall survive the payment in full of the Loans.
3.3 Changes in Capital Adequacy Regulations. If a Lender determines
---------------------------------------
that the amount of capital required to be maintained by such Lender, any
Applicable Lending Office of such Lender or any corporation controlling such
Lender is increased as a result of a Change,then, within 15 days of demand by
such Lender, the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its interest in the Letters of Credit, or its obligation
to make Loans, participate in or issue Letters of Credit hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means (i)
any change after the Closing Date in the Risk-Based Capital Guidelines or (ii)
any adoption of or change in any other law, governmental or quasi-governmental
rule, regulation, policy, guideline, interpretation, or directive (whether or
not having the force of law) after the Closing Date which affects the amount of
capital required or expected to be maintained by any Lender or any Applicable
Lending Office or any corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (a) the risk-based capital guidelines in effect in the United
States on the Closing Date, and (b) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices entitled "International Convergence of Capital Measurements and
Capital Standards" and any amendments to such regulations adopted prior to the
Closing Date.
-36-
3.4 Replacement of Lenders. If the Borrower is obligated to pay to any
----------------------
Lender (other than the Agent) any amount under Sections 3.1, 3.2 or 3.3 or if
any Lender requests that its LIBOR Loans be converted into Reference Rate Loans
pursuant to Section 3.1(iv), the Borrower may, so long as no Default or Event of
Default then exists, replace such Lender with another Lender which meets all of
the qualifications of being an Eligible Assignee and which complies with the
provisions of Section 14.3.
ARTICLE 4
CONDITIONS PRECEDENT
--------------------
4.1 Initial Loan or Letter of Credit. The Lenders shall not be
--------------------------------
required to make their initial Loans or issue or participate in the initial
Letter of Credit unless the Borrower has furnished to the Agent or unless the
following shall be in effect:
(i) this Agreement, the Notes and the Guaranties duly executed by the
Borrower and the Guarantors, as applicable;
(ii) the Articles or Certificates of Incorporation and Bylaws of the
Borrower and each Guarantor certified by the Secretary of State of its state of
incorporation;
(iii) the resolutions of the Board of Directors of the Borrower and each
Guarantor approving the execution, delivery and performance by the Borrower and
each Guarantor, of the Loan Documents to which it is a party, certified by the
Secretary of the Borrower and each Guarantor, to be true and correct and in full
force and effect;
(iv) an Incumbency Certificate of the Borrower and each Guarantor;
(v) one or more favorable legal opinions (in form and substance
satisfactory to the Agent and the Lenders) of counsel to the Borrower and each
Guarantor;
(vi) a Borrowing Base Certificate as of August 31, 1997;
(vii) all fees and expenses to be paid on the Closing Date;
(viii) no statute, rule, regulation, order, decree or preliminary or
permanent injunction of any court or administrative agency or, to the best
knowledge of the Borrower, any such action threatened by any Person, shall be in
effect that prohibits the Agent or the Lenders from consummating the
transactions contemplated by this Agreement and the other Loan Documents;
-37-
(ix) copies of the Borrower's Consolidated and Consolidating financial
statements for the period ending June 30, 1997;
(x) evidence satisfactory to the Agent and the Lenders that all
existing loan facilities (including, but not limited to any mortgage repurchase
facility and the Second Amended and Restated Revolving Credit dated as of May
21, 1996, as amended), shall have been canceled (or will be canceled upon
receipt of Loan proceeds hereunder) and all amounts thereunder shall have been
repaid in full (or will be repaid in full upon receipt of Loan proceeds
hereunder);
(xi) the completion of a prefunding exam of the Borrower's books and
records, all in form and substance reasonably satisfactory to the Lenders,
evidencing pro forma compliance with all provisions hereof;
(xii) a duly completed certificate (which may be included in the notice
of borrowing) executed by an Authorized Officer of the Borrower certifying that
no event has occurred, or condition exists, which could have a Material Adverse
Effect; and
(xiii) such other documents, instruments and opinions as the Agent, any
Lender or its respective counsel may have reasonably requested.
4.2 All Loans. The Lenders shall not be required to make any Loan
---------
(including the initial Loan) hereunder unless the Borrower shall have furnished
to the Agent:
(i) a duly completed certificate (which may be included in the notice
of borrowing) executed by an Authorized Officer of the Borrower certifying that:
(a) there exists no Default or Event of Default; and
(b) the representations and warranties contained in Article 5
hereof are true and correct as of the Borrowing Date except to the extent
any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true
and correct on and as of such earlier date.
4.3 All Letters of Credit. The Agent shall not be required to issue
---------------------
any Letter of Credit and the Lenders shall not be required to participate in any
Letter of Credit (including the initial Letter of Credit) hereunder unless the
Borrower shall have furnished to the Agent:
(i) a completed Letter of Credit Request with regard to each such
Letter of Credit; and
-38-
(ii) all fees to be paid to the Agent in connection with each Letter of
Credit shall have been paid.
Any Letter of Credit Request delivered to the Agent shall be deemed a
representation and warranty to the Agent and the Lenders that:
(a) there exists no Default or Event of Default; and
(b) the representations and warranties contained in Article 5 hereof
are true and correct as of the issuance date of each Letter of Credit except to
the extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true and
correct on and as of such earlier date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders that:
5.1 Authorization. The execution, delivery and performance by the
-------------
Borrower and each Guarantor of the Loan Documents to which it is a party are
within the Borrower's and the Guarantors' corporate powers, have been duly
authorized by all necessary corporate action and do not contravene any
applicable law, rule, regulation or order or any contractual restriction binding
on or affecting the Borrower or its Subsidiaries.
5.2 Enforceability. Each Loan Document is the legal, valid and binding
--------------
obligation of the Borrower and each Guarantor, enforceable against the Borrower
and the Guarantors in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors' rights
generally.
5.3 Use of Proceeds. The Borrower will use the proceeds of the Loans
---------------
solely as set forth in Section 7.2. No action has been taken or is currently
planned by the Borrower, or any agent acting on its behalf, which would cause
this Agreement or the Notes to violate Regulation U or any other regulation of
the Board of Governors of the Federal Reserve System or to violate the
Securities and Exchange Act of 1934, in each case as in effect now or as the
same may hereafter be in effect. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock as one
of its important activities and none of the proceeds of the Loans or Letters of
Credit will be used directly or indirectly for such purpose.
-39-
5.4 Litigation. Except as disclosed in writing to the Agent and the
----------
Lenders, there is no litigation, tax claim, proceeding, arbitration or dispute
pending, or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower or the Guarantors or their respective Property, an
adverse determination in which could reasonably be expected to have a Material
Adverse Effect.
5.5 Financial Statements. The Consolidated financial statements of the
--------------------
Borrower dated December 31, 1996 and June 30, 1997, copies of which have been
delivered to the Lenders, fairly and accurately reflect the financial condition
of the Borrower and its Subsidiaries as of such date, and since such date there
has been no Material Adverse Effect.
5.6 Taxes. To the best of its knowledge, the Borrower and each
-----
Subsidiary have filed all tax returns and reports required to be filed and have
paid all applicable federal, state and local franchise and income taxes which
are due and payable.
5.7 Subsidiaries. Schedule 2 hereto contains an accurate list of all
------------
of the presently existing Subsidiaries of the Borrower, setting forth their
respective jurisdictions of incorporation or organization and the percentage of
their respective capital stock or ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock
of such Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
5.8 ERISA. There are no Unfunded Liabilities of the Borrower or any
-----
Subsidiary. Each Single Employer Plan complies in all material respects with
all applicable requirements of law and regulations, except to the extent that
the failure to comply therewith does not have a Material Adverse Effect. No
Reportable Event has occurred with respect to any Single Employer Plan, except
to the extent that such Reportable Event has no Material Adverse Effect.
Neither the Borrower nor any Subsidiary (a) is a party to any Multiemployer Plan
or (b) has withdrawn from any Multiemployer Plan, except to the extent such
actions do not have a Material Adverse Effect.
5.9 Accuracy of Information. No information, exhibit or report
-----------------------
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contain any material misstatement of fact or omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading in any material respect.
5.10 Organization and Existence. The Borrower is duly organized,
--------------------------
validly existing and in good standing under the laws of the State of Maryland,
and each of the Guarantors is duly organized, validly existing and in good
standing under the laws
-40-
of its state of incorporation and each has the corporate power and authority,
and the legal right, to own and operate its respective Properties and to conduct
the business in which it is currently engaged and in which it proposes to be
engaged after the Closing Date and is duly qualified as a foreign entity and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification
except to the extent that the failure to comply thereunder could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.11 Consents. No consent or authorization of, or filing with or other
--------
act by or in respect of, any Governmental Authority, or any other Person is
required in connection with the Loans or Letters of Credit hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement,
the Notes or the other Loan Documents. The execution, delivery and performance
of this Agreement, the Notes and the other Loan Documents and the use of the
proceeds thereof will not violate any Requirement of Law or contractual
obligations of the Borrower or any of its Subsidiaries which could be reasonably
expected to have a Material Adverse Effect and will not result in, or require,
the creation or imposition of any Lien on any of its respective Properties or
revenues pursuant to any such Requirement of Law or contractual obligation,
except pursuant to the Loan Documents or otherwise as permitted hereunder, which
Lien could reasonably be expected to have a Material Adverse Effect.
5.12 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, all trademarks, tradenames, patents, copyrights,
material permits, licenses or other intangibles necessary for the conduct of its
business as currently conducted without conflict with the rights of others,
except to the extent that the failure to own or license such property could not
reasonably be expected to have a Material Adverse Effect.
5.13 Default. There exists no Default or Event of Default.
-------
5.14 Nature of Business. Neither the Borrower nor any of its
------------------
Subsidiaries is engaged in any material business other than as provided in this
Agreement or as set forth in the Report on Form 10-K pursuant to the Securities
Exchange Act of 1934 for the Borrower for fiscal year 1996.
5.15 Ranking of Loans. This Agreement and the other Loan Documents to
----------------
which the Borrower or any Guarantor is party, when executed, and the Loans, when
borrowed, are and will be the
-41-
direct and general obligations of the Borrower and the Guarantors. The
Borrower's and the Guarantors' Obligations hereunder and thereunder will rank at
least pari passu in priority of payment with all other Senior Debt, except to
---- -----
the extent otherwise permitted hereunder.
5.16 Investment Company Acts; Other Regulations. Neither the Borrower
------------------------------------------
nor any of its Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
5.17 Environmental Matters. Except as disclosed to the Agent, the
---------------------
Borrower and its Subsidiaries are in compliance in all material respects with
all applicable environmental laws, and there is no contamination at, under or
about any of their respective Properties, or violation of any environmental law
with respect to any of their respective Properties or the business conducted at
any of their respective Properties which involves a matter or matters which has
caused or reasonably likely to cause a Material Adverse Effect.
5.18 Title. Except for assets which may have been disposed of in the
-----
ordinary course of business, the Borrower and its Subsidiaries have good and
marketable title to all of the Property reflected in financial statements
delivered to the Lenders and to all Property acquired by the Borrower and its
Subsidiaries since the date of said financial statements, free and clear of all
Liens, encumbrances, security interests and adverse claims except (i) those
specifically referred to in said financial statements, (ii) those permitted by
Section 8.8 hereof and (iii) those that could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
5.19 REIT and REMIC Status. The Borrower is an REIT and each of the
---------------------
REMICs formed by the Borrower or any of its Subsidiaries is a REMIC.
ARTICLE 6
FINANCIAL COVENANTS
-------------------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Senior Leverage Ratio. The Borrower and its Subsidiaries on a
---------------------
Consolidated Basis shall not permit, at any time, the Senior Leverage Ratio to
be greater than 0.65:1.00.
6.2 Leverage Ratio. The Borrower and its Subsidiaries on a
--------------
Consolidated Basis shall not permit, at any time, the Leverage Ratio to be
greater than 1.25:1.00.
-42-
6.3 Minimum Tangible Net Worth. The Borrower and its Subsidiaries on a
--------------------------
Consolidated Basis shall at all times maintain Tangible Net Worth of not less
than $250,000,000 plus 75% of net cash proceeds of any new equity issuances or
----
any conversion of convertible Subordinated Indebtedness subsequent to June 30,
1997.
6.4 Debt Service Coverage Ratio. The Borrower and its Subsidiaries on
---------------------------
a Consolidated Basis shall maintain at all times a Debt Service Coverage Ratio
of not less than 2.25:1.0.
6.5 Minimum Cash Flow Coverage Ratio. The Borrower and its
--------------------------------
Subsidiaries on a Consolidated Basis shall not permit at any time the Cash Flow
Coverage Ratio to be less than 1.0:1.00.
ARTICLE 7
AFFIRMATIVE COVENANTS
---------------------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
7.1 Financial Reporting. The Borrower will maintain, for itself and
-------------------
each Subsidiary, a system of accounting established and administered in
accordance with Agreement Accounting Principles, and furnish to each of the
Lenders:
(i) As soon as available and in any event within 50 days after the end
of each quarterly fiscal period of each fiscal year of the Borrower
(except the last fiscal quarter), Consolidated statements of
income, retained earnings and cash flow of the Borrower and its
Subsidiaries and Consolidating statements of income and balance
sheet of the Borrower, its Significant Subsidiaries and its
Subsidiaries having assets in excess of 5% of the Borrower's
Consolidated total assets, each for such period and for the period
from the beginning of the respective fiscal year to the end of such
period, and the related Consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such period, setting forth in
each case in comparative form the corresponding Consolidated
figures for the corresponding period in the preceding fiscal year,
accompanied by a certificate of an Authorized Officer of the
Borrower, which certificate shall state that those Consolidated
financial statements fairly present, respectively, the Consolidated
financial condition and results of operations of the Borrower and
its Subsidiaries and the Consolidating financial condition and
results of operations of the Borrower, its Significant Subsidiaries
and Subsidiaries having assets in
-43-
excess of 5% of the Borrower's Consolidated total assets, in each
case in accordance with Agreement Accounting Principles,
consistently applied, as at the end of, and for, such period
(subject to normally recurring audit adjustments).
(ii) As soon as available and in any event within 95 days after the end
of each fiscal year of the Borrower, Consolidated statements of
income, retained earnings and cash flow of the Borrower and its
Subsidiaries and Consolidating statements of income and balance
sheet of the Borrower, its Significant Subsidiaries and
Subsidiaries having assets in excess of 5% of the Borrower's
Consolidated total assets, each for such fiscal year and the
related Consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, setting forth in
each case in comparative form the corresponding Consolidated
figures for the preceding fiscal year, and accompanied, in the case
of the Consolidated balance sheet of the Borrower, by an
unqualified opinion of independent certified public accountants of
recognized national standing, which opinion shall state that those
Consolidated financial statements fairly present, respectively, the
Consolidated financial condition and results of operations of the
Borrower and its Subsidiaries, as at the end of, and for, such
fiscal year in accordance with Agreement Accounting Principles,
consistently applied.
(iii) Together with the financial statements required in Sections 7.1(i)
and (ii), a compliance certificate in substantially the form of
Exhibit B hereto (a "Compliance Certificate") signed by an
Authorized Officer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Event
of Default exists, or if any Default or Event of Default exists,
stating the nature and status thereof.
(iv) As soon as possible and in any event within 50 days after the end
of each calendar quarter, a report setting forth the aging of the
Mortgage Loans and any Mortgage securing a REMIC Certificate and
each Operator which operates, leases or has Mortgage Loans in
excess of 15% of the Borrower's Total Investments, together with a
Borrowing Base Certificate signed by an Authorized Officer showing
the calculations necessary to determine compliance with this
Agreement and stating that no Default or Event of Default exists,
or if any Default or Event
-44-
of Default exists, stating the nature and status thereof.
(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect
to any Single Employer Plan, a statement, signed by an Authorized
Officer, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste
or substance into the environment and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its
Subsidiaries, which, in either case, could have a Material Adverse
Effect.
(vii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(viii) Promptly upon the filing thereof, copies of all registration
statements and all other filings and annual, quarterly, monthly or
other regular reports or statutory statements which the Borrower or
any of its Subsidiaries files with the SEC or any insurance or
regulatory agency.
(ix) As soon as possible and in any event as soon as the Borrower knows
of any litigation or administrative or regulatory proceeding
affecting the Borrower where the amount claimed against the
Borrower or where the granting of relief requested could have a
Material Adverse Effect.
(x) As soon as possible and in any event within 10 days, any change in
the location of any of the Borrower's places of business or the
establishment of any, or the discontinuance of any existing, places
of businesses.
(xi) As soon as available and in any event within 95 days after the end
of each fiscal year of any Operator which is not a publicly traded
company and which operates 10% or more of the Borrower's Total
-45-
Investments, statements of income, retained earnings and cash flow
of such Operator for such fiscal year and the related balance sheet
of such Operator as of the end of such fiscal year, accompanied by
an unqualified opinion of independent certified public accountants
of recognized national standing, which opinion shall state that
such financial statements fairly present the financial condition
and results of operations of such Operator as at the end of, and
for, such fiscal year in accordance with Agreement Accounting
Principles, consistently applied.
(xii) As soon as available and in any event within 95 days after the end
of each fiscal year of the Borrower, the Borrower's Consolidated
financial projections for the next two fiscal years of the Borrower
and its Subsidiaries.
(xiii) As soon as available, but prior to the effective date of any
Acquisition of $25,000,000 or more (which is not in the ordinary
course of the Borrower's business, but which is permitted pursuant
to Section 8.5), historical financial statements of the Person to
be acquired and information regarding terms of the Acquisition as
the Agent may from time to time reasonably request.
(xiv) Such other statements, lists of property and accounts, budgets,
forecasts, reports or other information (including non-financial
information) as the Agent may from time to time reasonably request
in form satisfactory to the Agent.
7.2 Use of Proceeds. The Borrower will use the proceeds of the Loans
---------------
(i) to fund investments in Owned Properties, related Mortgage Loans and to make
Distribution payments and (ii) for general corporate purposes or other permitted
Acquisitions hereunder. The Borrower will not, nor will they permit any
Subsidiary to, use any of the proceeds of the Loans or Letters of Credit to
purchase or carry any "margin stock" (as defined in Regulation U).
7.3 Notice of Default. The Borrower will, and will cause each
-----------------
Subsidiary to, give prompt (but in any case, within 5 Business Days) notice in
writing to the Lenders of the occurrence of any Default or Event of Default and
of any other development, financial or otherwise, which could have a Material
Adverse Effect.
7.4 Conduct of Business. The Borrower will, and will cause each
-------------------
Subsidiary to, maintain its corporate existence, to carry on and conduct its
business in the business and related fields and to do all things necessary to
remain in good standing
-46-
in its respective jurisdiction of organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its respective
businesses are conducted. The Borrower shall not, and shall not permit any of
its Subsidiaries to, make any material change in the nature of its business as
presently conducted.
7.5 Records. The Borrower will, and will cause each Subsidiary to,
-------
keep adequate records and books of account, in which full and correct entries
shall be made in accordance with Agreement Accounting Principles of all
financial transactions of the Borrower, its Subsidiaries, its assets and its
business.
7.6 Insurance. The Borrower will, and will cause each Subsidiary to,
---------
maintain insurance on all its Property in such amounts and covering such risks
as is consistent with sound business practice, and the Borrower will furnish to
the Agent upon request full information as to the insurance carried.
7.7 Compliance with Laws. The Borrower will, and will cause each
--------------------
Subsidiary to, comply in all material respects with all applicable laws, rules,
regulations and orders (including without limitation, all applicable
environmental laws and the rules and regulations thereunder), such compliance to
include, without limitation, paying before the same become delinquent, all
taxes, assessments and governmental charges imposed upon it or upon its
Property, except such taxes, assessments and governmental charges as are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves are maintained.
7.8 Maintenance of Properties. The Borrower will, and will cause each
-------------------------
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its respective Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so that its
respective business carried on in connection therewith may be properly conducted
at all times.
7.9 Inspection/Audits. At any reasonable time and from time to time
-----------------
upon reasonable notice, the Borrower will, and will cause each Subsidiary to,
permit the Agent and any Lender, by its respective representatives and agents,
to inspect and audit any of the Property, corporate books and financial records
of the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, its respective officers at such
reasonable times and intervals as any Lender may designate. The Borrower will
also, and will cause its Subsidiaries to, cooperate in all audits of the books
and records of the Borrower and its Subsidiaries, all at the Borrower's expense
and will deliver to the Agent and the Lenders, at least on an annual
-47-
basis, an audit (in form and substance satisfactory to the Agent) on the books
and records of the Borrower and its Subsidiaries.
7.10 Payment of Obligations. The Borrower and each of its Subsidiaries
----------------------
will pay and discharge promptly all taxes, assessments and other governmental
charges and claims levied or imposed upon it or its respective Property, or any
part thereof, provided, however, that the Borrower and its Subsidiaries shall
have the right in good faith to contest any such taxes, assessments, charges or
claims and, pending the outcome of such contest, to delay or refuse payment
thereof provided that adequately funded reserves are established by it to pay
and discharge any such taxes assessments, charges and claims.
7.11 REIT Status. The Borrower shall at all times maintain its status
-----------
as a REIT.
7.12 New Significant Subsidiaries. The Borrower shall cause any new
----------------------------
Significant Subsidiaries acquired or formed after the Closing Date to execute a
guaranty in favor of the Lenders (in form and substance similar to the
Guaranties).
7.13 Management. The Borrower shall cause a person (reasonably
----------
acceptable to the Required Lenders) to be appointed Chairman and Chief Executive
Officer within 6 months after the departure of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ from the
Borrower.
ARTICLE 8
NEGATIVE COVENANTS
------------------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
8.1 Debt. The Borrower will not, nor will it permit any Subsidiary to,
----
create, incur or suffer to exist any Debt, except:
(i) Debt of the Borrower and the Guarantors under the Loan Documents;
(ii) Debt in existence on the date hereof, as set forth on Schedule 3;
(iii) trade Debt incurred to acquire goods, supplies, and services and
incurred in the ordinary course of business;
(iv) Subordinated Indebtedness incurred either (a) to refinance all or a
portion of the Loans and/or Letters of Credit as long as all proceeds are used
to repay the Loans (or apply as cash collateral for outstanding Letters of
Credit) or (b) to refinance Subordinated Indebtedness outstanding, provided such
-48-
refinancing occurs substantially simultaneously with the repayment of such
outstanding Subordinated Indebtedness, and provided further, that all such
Subordinated Indebtedness permitted under this subsection (iv) does not mature
prior to the maturity of Loans and/or Letters of Credit remaining outstanding;
(v) Debt, including contingent liabilities and medium term notes, that
is pari passu with the Loans and Letters of Credit outstanding hereunder, not to
---- -----
exceed in aggregate principal amount $25,000,000 at any time outstanding prior
to the issuance of a Rating by either S&P or ▇▇▇▇▇'▇ equal to BBB-/Baa3, as
applicable, so long as the terms (including maturity, interest rate, covenants
and events of default) of such pari passu Debt are not more favorable than those
---- -----
applicable to the Loans and the Letters of Credit;
(vi) Debt under operating leases for real or personal property used in
the Borrower's business as presently conducted;
(vii) Capitalized Leases incurred subsequent to the Closing Date not to
exceed in aggregate principal amount $5,000,000;
(viii) The endorsement of negotiable instruments for deposit or collection
in the ordinary course of the Borrower's business as presently conducted;
(ix) non-recourse Debt;
(x) interest rate protection agreements not to exceed in aggregate
amount the sum of (a) an amount equal to 100% of the unpaid principal balance of
all Mortgage Loans and (b) outstanding Loans hereunder; and
(xi) Debt incurred by a Subsidiary as a result of its position as a
general partner in a limited partnership which has borrowed amounts from the
Borrower pursuant to Section 8.9(iii).
8.2 Merger. The Borrower will not, nor will it permit any Subsidiary
------
to, enter into any merger, consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, all or substantially all of its
Property, business or assets; provided that the Borrower may merge or
consolidate with another Person, including, without limitation, a Subsidiary, if
(i) the Borrower is the surviving corporation, (ii) the Borrower will be in pro
forma compliance with all provisions of this Agreement subsequent to such merger
or consolidation, (iii) the Borrower shall have filed an SEC Report (if required
to do so by law) and (iv) the Borrower will not engage in any material line of
business substantially different from that engaged in the Closing Date.
-49-
8.3 Sale of Assets. The Borrower will not, nor will it permit any
--------------
Subsidiary to, lease, sell or otherwise dispose of its respective Property, to
any other Person except for (i) sales of Property in the ordinary course of
business for fair consideration and (ii) leases, sales or other dispositions of
its respective Property that, together with all other Property of the Borrower
and its Subsidiaries previously leased, sold or disposed of (other than
inventory in the ordinary course of business) as permitted by this Section
during the term of this Agreement do not require the Borrower to file an SEC
Report; provided that the foregoing shall not be construed as prohibiting a
transfer of assets from a Subsidiary to the Borrower or the merger of a
Subsidiary into the Borrower.
8.4 Prepayments of Convertible Subordinated Debt. The Borrower will not,
--------------------------------------------
and will not permit any of its Subsidiaries to, prepay any convertible
Subordinated Indebtedness in an aggregate amount in excess of $10,000,000,
unless such prepayment is as the result of a refinancing due to the issuance of
Subordinated Indebtedness and/or the issuance of equity.
8.5 Acquisitions. Except for Owned Properties and Mortgage Loans (subject
------------
to the limitations set forth in Section 8.12) and Investments permitted under
Section 8.10, the Borrower will not, nor will it permit any Subsidiary to, enter
into any agreement, contract, binding commitment or other arrangement providing
for any acquisition, or take any action to solicit the tender of securities or
proxies in respect thereof in order to effect any acquisition, unless:
(i) the Person to be (or whose assets are to be) acquired does not oppose
such Acquisition and the line or lines of business of the Person to be acquired
are in healthcare-related businesses,
(ii) no Default or Event of Default shall have occurred and be continuing
either immediately prior to or immediately after giving effect to such
acquisition on a pro forma basis,
(iii) during the period from and including the Closing Date until the
Facility Termination Date the aggregate consideration for all Acquisitions which
are not Mortgage Loans or Owned Properties (but which must still be in health-
related areas) shall not exceed an amount equal to 10% of the Borrower's
Consolidated total assets (as determined in accordance with Agreement Accounting
Principles), of which no more than $20,000,000 in aggregate amount shall be paid
in cash and
(iv) the Borrower's REIT status is not adversely affected.
8.6 Affiliates. The Borrower will not, and will not permit any Subsidiary
----------
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or
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service) with, or make any payment or transfer to, any Affiliate except in the
ordinary course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary would obtain in a comparable arms-length transaction; provided that
the foregoing shall not be construed as prohibiting a transfer of assets from a
Subsidiary to the Borrower or the merger of a Subsidiary into the Borrower.
Notwithstanding the foregoing, the Borrower may make capital contributions to
Significant Subsidiaries for the purpose of establishing such Significant
Subsidiaries and providing assets for such Significant Subsidiaries to meet
their respective obligations.
8.7 ERISA. The Borrower will not, and will not permit any Subsidiary, to
-----
have Unfunded Liabilities for any and all Plans maintained for or covering
employees of the Borrower or any Subsidiary to exceed $2,000,000 in the
aggregate at any time.
8.8 Encumbrances and Liens. The Borrower and its Subsidiaries on a
----------------------
Consolidated Basis will not create, assume or suffer to exist any Lien (other
than for taxes not delinquent and for taxes and other items being contested in
good faith, with appropriate reserves maintained) on Property of any kind,
whether real, personal or mixed, now owned or hereafter acquired by the Borrower
or any of its Subsidiaries, or upon the income or profits thereof, except for
(i) minor encumbrances and easements on real property which do not materially
affect its market value, (ii) existing Liens on the Borrower's Property as set
forth on Schedule 4; (iii) future purchase money security interests encumbering
only the Property purchased or security interests relating to any refinancing of
any such purchase money security interests as long as the Lien encumbers only
the original Property and such additional related personal Property acquired in
the ordinary course of the Borrower's or such Subsidiary's business; (iv)
statutory liens of bankers, carriers, warehousemen, mechanics, materialmen, and
other similar Liens imposed by law, which are incurred in the ordinary course of
business for sums not more than 30 days delinquent or which are being contested
in good faith by appropriate proceedings; (v) deposits made in the ordinary
course of business to secure liability to insurance carriers; (vi) attachment
and judgment Liens securing claims less than $5,000,000 in the aggregate
(excluding for purposes of said calculation any such Liens for which execution
has been stayed, payment is covered in full by insurance, or the Borrower is
prosecuting an appeal in good faith by appropriate proceedings); (vii) monetary
obligations of the Borrower under any leasing or similar arrangement which, in
accordance with Agreement Accounting Principles, is classified as a Capitalized
Lease; (viii) Liens securing non-recourse Debt; and (ix) Liens existing
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on Property when it is acquired by the Borrower or any of its Subsidiaries.
8.9 Loans, Advances and Guaranties. The Borrower will not, and will not
------------------------------
permit any Subsidiary to, except in the ordinary course of business, make any
loans or advances, become a guarantor or surety, pledge its credit or Properties
in any manner or extend credit, except that (i) the Borrower may make loans and
enter into sale/leaseback transactions with HCI in an aggregate amount not to
exceed $25,000,000 (as long as HCI remains an Affiliate of the Borrower) for the
financing of assisted living facilities (with such limitation to be increased to
$50,000,000 subsequent to the Borrower obtaining additional shareholders' equity
of at least $50,000,000), (ii) the Borrower may make loans or advances to its
current and former officers, directors, consultants and employees in an
aggregate amount not to exceed at any time $15,000,000 for the purpose of
exercising stock options or warrants (of which up to $2,000,000 may be used as
employment incentives) and (iii) loans permited under Section 8.10(vii)(c). Any
such loan and/or sale/leaseback transaction to HCI shall be secured by assets of
HCI. Notwithstanding the foregoing, at any time that HCI ceases to be an
Affiliate, the aggregate loan amount which may be outstanding at any time by the
Borrower to HCI shall not exceed $35,000,000.
8.10 Investments. The Borrower will not purchase the Debt of another
-----------
Person or entity or make any Investment except for:
(i) certificates of deposit, time deposits, Eurodollar time deposits,
repurchase agreements, reverse repurchase agreements, or bankers' acceptances,
having in each case a maturity date of not more than twelve months from the date
of acquisition by the Borrower, issued by a Lender or any U.S. commercial bank
or any branch or agency of a non-U.S. bank licensed to conduct business in the
U.S. having combined capital and surplus or not less than $50,000,000 whose
short term securities are rated at least "A-1" by S&P (or the equivalent rating
provided by any of ▇▇▇▇▇'▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co. or Fitch Investors
Services, Inc.);
(ii) interest bearing or discounted obligations of the United States
Government, any agency thereof (including without limitation the Federal Home
Loan Mortgage Corporation, the Government National Mortgage Association, the
Federal National Mortgage Association and the Federal Farm Credit System) or any
entities or pools of mortgages or other instruments formed by the United States
Government or any such agencies, and in any case only if such obligation has a
maturity date not more than twelve months from the date of acquisition by the
Borrower;
(iii) obligations issued by state and local governments or its agencies,
instrumentalities, authorities or subdivisions, if such issuer has received a
rating of at least "A-1" by S&P
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(or the equivalent rating provided by any of ▇▇▇▇▇'▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit
Rating Co. or Fitch Investors Services, Inc.), and in any case only if such
obligation has a maturity date of not more than twelve months from the date of
acquisition by Borrower;
(iv) commercial paper of an issuer rated at least "A-1" by S&P (or the
equivalent rating provided by any of ▇▇▇▇▇'▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co. or
Fitch Investors Services, Inc.), and in any case only if such obligation has a
maturity date not more than twelve months from the date of acquisition by the
Borrower;
(v) Investments in money market funds including short-term adjustable
rate money market funds;
(vi) Investments by the Borrower in REMICs formed by the Borrower and
REMIC Certificates issued by REMICs formed by the Borrower not to exceed at any
time an aggregate amount equal to $125,000,000 plus 25% of any increase in the
----
Borrower's Tangible Net Worth subsequent to June 30, 1997;
(vii) subsequent to the Closing Date, the sum of (a) loans, advances to
and investments in Subsidiaries which are not, directly or indirectly, wholly-
owned by the Borrower and Affiliates of the Borrower and/or real estate limited
partnerships plus (b) Investments in stock, now owned or hereafter acquired, of
publicly-traded companies (but not more than 10% of the stock of any single
company), plus (c) loans or advances to limited partners (of partnerships of
which the general partner is a Subsidiary of the Borrower) and limited
partnerships (of which the general partner is a Subsidiary of the Borrower) for
the purposes of funding the limited partners' tax obligations resulting from the
sale of limited partnership facilities and paying previously agreed-upon
Distributions to such limited partners, shall not exceed in aggregate principal
amount at any time outstanding $20,000,000. (For purposes of calculating the
$20,000,000 amount, a $5,000,000 equity investment by the Borrower in HCI shall
not be included and, even if otherwise permitted under this Section, the
Borrower shall be prohibited from making working capital loans, advances and
additional equity investments in HCI);
(viii) subsequent to the acquisition of HCI by Assisted Living Concepts,
stock of Assisted Living Concepts received by the Borrower as a result of such
acquisition;
(ix) loans and advances permitted under Section 8.9 (to the extent such
loans or advances may be deemed Investments);
(x) Investments in current and all future Subsidiaries, directly or
indirectly wholly-owned by the Borrower;
(xi) Acquisitions permitted under Section 8.5;
-53-
(xii) Investments of the Borrower and its Subsidiaries in existence on
the date hereof, as set forth on Schedule 5; and
(xiii) Investments as a result of the purchase (by the payment of cash or
the issuance of Borrower stock), of limited partner interests of partnerships of
which the general partner is a Subsidiary of the Borrower.
8.11 Dividends and Distributions. The Borrower will not, and will not
---------------------------
permit any of its Subsidiaries to, declare or pay any Distribution (other than
Distributions payable solely in common stock), provided that (i) each Subsidiary
that is a wholly-owned Subsidiary of the Borrower may declare and pay
Distributions to its shareholder and (ii) the Borrower may declare and pay
Distributions in any fiscal year in an aggregate amount not to exceed 95% of its
Cash Flow (minus Interest Expense) for such fiscal year. In addition, the
Borrower shall not, and shall not permit any of its Subsidiaries to, redeem,
convert, retire or otherwise acquire shares of any class of its capital stock,
except that the Borrower may repurchase up to $5,000,000 of its capital stock in
any fiscal year. The Borrower shall not effect or permit any change in or
amendment to any document or instrument pertaining to the terms of the capital
stock of the Borrower, except to increase the authorized capital of the
Borrower.
8.12 Concentrations. (i) The Borrower shall not invest in or acquire any
--------------
Owned Property or Mortgage Loan where a single Operator (excluding Affiliates)
operates or leases more than 15% of the Borrower's Total Investments, except
that the Borrower may invest up to 45% of its Total Investments in Sun
Healthcare, Inc. (pursuant to a merger of Sun Healthcare, Inc. with Retirement
Care Associates) and Assisted Living Concepts, Inc. (pursuant to a merger of
Assisted Living Concepts, Inc. with HCI), provided that the maximum
concentration to either of such Operators shall not exceed 25% of the Borrower's
Total Investments.
(ii) The Borrower shall not invest in or acquire any single Owned
Property or Mortgage Loan secured by a single Property in an aggregate amount in
excess of $20,000,000.
ARTICLE 9
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
9.1 Payment Defaults. The Borrower shall fail to pay when due any
----------------
payment of principal of any Loan, any reimbursement obligation (with respect to
a drawing under a Letter of Credit)
-54-
or shall fail to pay within 3 days when due, any interest or any other charge or
fee required under the terms of this Agreement or the other Loan Documents.
9.2 Representations and Warranties. Any representation or warranty made
------------------------------
by the Borrower or any Guarantor under any Loan Document shall prove to have
been incorrect or misleading in any material respect when made.
9.3 Other Loan Document Defaults. The Borrower shall fail to perform (i)
----------------------------
any obligation set forth in Sections 7.2, 7.13, 8.1, 8.2, 8.3, 8.4, 8.5, 8.9,
8.10, 8.11 or 8.12(ii) of this Agreement; or (ii) any obligation set forth in
Section 8.12(i) and such failure shall continue for 180 days after the earlier
of actual knowledge by the Borrower or written notice thereof from the Agent; or
(iii) any other obligation contained in this Agreement or the other Loan
Documents, and such failure shall continue for 30 days after the earlier of
actual knowledge by the Borrower or written notice thereof from the Agent.
9.4 Bankruptcy. (i) The Borrower or any Guarantor shall fail to pay its
----------
Debts generally as they become due or shall file any petition or action for
relief under any bankruptcy, insolvency, reorganization, moratorium, creditor
composition law, or any other law for the relief of or relating to debtors; (ii)
an involuntary petition under any bankruptcy law shall be filed against the
Borrower or any Guarantor and shall not be dismissed or discharged within 45
days of filing; or (iii) a custodian, receiver, trustee, assignee for the
benefit or creditors, or other similar official, shall be appointed to take
possession, custody or control of the Properties of the Borrower or any
Guarantor and not be dismissed or discharged with 60 days of appointment.
9.5 Other Agreements. The Borrower or any Guarantor shall fail to pay
----------------
when due principal or interest payments required under the terms of any bonds,
notes, debentures or other agreements evidencing, in the aggregate, at least
$2,000,000 of Debt (excluding, for purposes of this calculation, payments
required under this Agreement or any of the other Loan Documents) and such non-
payment shall continue beyond any period of grace provided with respect thereto,
or the Borrower or any Guarantor shall default in the observance or performance
of any other agreement contained in any such bonds, notes, debentures or other
agreements evidencing indebtedness, and the effect of such failure or default is
to permit the holders thereof the right to cause the indebtedness evidenced
thereby to become due prior to its stated date of maturity.
9.6 ERISA. Any Governmental Person shall take any action under ERISA or
-----
the Borrower or any Guarantor fails to meet minimum funding requirements or any
other event shall occur with respect to any Plan, that could have a Material
Adverse Effect or that the unfunded liabilities exceed $2,000,000.
-55-
9.7 Judgments. A final judgment or order for the payment of money in
---------
excess of $10,000,000 (exclusive of amounts covered by insurance) shall be
rendered against the Borrower or any Guarantor and the same shall remain
undischarged for a period of 60 days during which execution shall not be
effectively stayed, or any judgment, writ, warrant of attachment, or execution
or similar process, shall be issued or levied against a substantial part of the
Borrower's or any Guarantor's property and such judgment, writ, warrant of
attachment, or execution or similar process, shall not be released, stayed,
vacated, bonded or otherwise dismissed within 20 days after its issue or levy.
9.8 Loan Documents. Any Loan Document shall fail to remain in full force
--------------
or effect or any action shall be taken by the Borrower or any Guarantor to
discontinue or to assert the invalidity or unenforceability of any Loan Document
or any Guarantor shall be in default of any of its obligations under its
Guaranty.
9.9 Change of Control. A Change of Control shall have occurred.
-----------------
9.10 REIT Status. The Borrower shall at any time fail to maintain its
-----------
REIT status.
ARTICLE 10
ACCELERATION, WAIVERS AND AMENDMENTS
------------------------------------
10.1 Acceleration. If any Event of Default described in Section 9.4
------------
occurs with respect to the Borrower or any Guarantor, the obligations of the
Lenders to make Loans and issue and participate in new Letters of Credit
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Event of Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans and issue and
participate in new Letters of Credit hereunder, or declare the Obligations to be
due and payable, or both, whereupon the Obligations shall become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives. The Agent agrees to promptly
notify the Borrower of any Event of Default, but failure by the Agent to give
such notice shall not affect any of the Borrower's obligations or any of the
Agent's or the Lenders' rights and remedies hereunder.
10.2 Cash Collateral. To the extent that any Letters of Credit are
---------------
outstanding at the time of any Event of Default, the Borrower shall deliver to
the Agent, for the benefit of the
-56-
Lenders, a cash collateral deposit in an amount equal to the aggregate Letter of
Credit Amount for all Letters of Credit then outstanding.
10.3 Additional Remedies. The rights, powers and remedies given to the
-------------------
Agent and the Lenders hereunder shall be cumulative and not alternative and
shall be in addition to all rights, powers and remedies given to the Agent and
the Lenders by law against the Borrower or any other Person, including but not
limited to any Lender's right of setoff or banker's lien.
10.4 Amendments and Waivers. Subject to the provisions of this Article
----------------------
10, the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding, waiving or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrower
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement or waiver shall, without the consent of each Lender
affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any portion
of the principal amount thereof, or reduce the rate or extend the
time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Increase the amount of, or extend, the Commitment of any Lender
hereunder or permit the Borrower to assign its rights under this
Agreement.
(iv) Amend in any respect the Borrowing Base (or any components thereof or
definitions related thereto) or any change to the advance rate
thereunder.
(v) Amend or waive the provisions of Section 4.1(x).
(vi) Release of any of the Guarantors from their obligations under the
Guaranties.
(vii) Amend this Section 10.4.
No amendment of any provision of this Agreement relating to the Agent's specific
rights and responsibilities hereunder shall be effective without the written
consent of the Agent. No amendment of any provision of this Agreement relating
to the Documentation Agent's specific rights and responsibilities hereunder
shall be effective without the written consent of the Documentation Agent. No
amendment of any provision of this Agreement relating to the Syndication Agent's
specific rights and responsibilities hereunder shall be effective without the
written consent of the Syndication Agent. The Agent may waive
-57-
payment of the fees required under Section 14.3(ii) without obtaining the
consent of any other party to this Agreement.
10.5 Preservation of Rights. No delay or omission of the Lenders or the
----------------------
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or the issuance of a Letter of Credit notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan or such Letter of Credit shall not constitute
any waiver or acquiescence. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 10.4, and then
only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.
ARTICLE 11
GENERAL PROVISIONS
------------------
11.1 Survival of Representations. All representations and warranties of
---------------------------
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans and issuance of the Letters of Credit herein
contemplated.
11.2 Governmental Regulation. Anything contained in this Agreement to the
-----------------------
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
11.3 Headings. Section headings in the Loan Documents are for convenience
--------
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
11.4 Entire Agreement. The Loan Documents embody the entire agreement and
----------------
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof.
11.5 Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
-58-
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
its respective successors and assigns.
11.6 Expenses; Indemnification. The Borrower shall reimburse the Agent for
-------------------------
any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent, the Syndication
Agent and the Documentation Agent and audit and exam expenses), paid or incurred
by the Agent, the Syndication Agent and the Documentation Agent in connection
with the negotiation, documentation and syndication of this Agreement. The
Borrower shall also reimburse the Agent and each Lender for any costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and each Lender) paid or incurred by the
Agent or any Lender in connection with the collection and enforcement of the
Loan Documents. The Borrower further agrees to indemnify the Agent, the
Documentation Agent, the Syndication Agent and each Lender, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Agent, the
Documentation Agent, the Syndication Agent or any Lender is a party thereto)
which any of them may pay or incur arising out of or relating to this Agreement,
the other Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Loan or
Letter of Credit hereunder, provided that no Person shall have the right to be
indemnified hereunder for such Person's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
11.7 Numbers of Documents. All statements, notices, closing documents, and
--------------------
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
11.8 Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
11.9 Nonliability of Lenders. The relationship between the Borrower and
-----------------------
the Lenders, the Documentation Agent, the Syndication Agent and the Agent shall
be solely that of borrower and lender. Neither the Agent, the Documentation
Agent, the Syndication Agent nor any Lender shall have any fiduciary
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responsibilities to the Borrower. Neither the Agent, the Documentation Agent,
the Syndication Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations.
11.10 Choice of Law. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF CALIFORNIA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
11.11 Consent to Jurisdiction. SUBJECT TO SECTION 11.15 BELOW, THE
-----------------------
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR CALIFORNIA STATE COURT SITTING IN LOS ANGELES IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM SUBJECT TO SECTION 11.15 BELOW, NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION SUBJECT TO SECTION 11.15 BELOW. ANY JUDICIAL PROCEEDING BY THE
BORROWER AGAINST THE AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION AGENT OR
ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE DOCUMENTATION AGENT, THE
SYNDICATION AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN LOS ANGELES, CALIFORNIA.
11.12 Waiver of Jury Trial. SUBJECT TO SECTION 11.15 BELOW, THE BORROWER,
--------------------
THE AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
11.13 Integration Clause. Except for documents and instruments
------------------
specifically referenced herein, this Agreement constitutes the entire agreement
among the Agent, the Documentation Agent, the Syndication Agent, the Lenders and
the Borrower regarding the Loans and Letters of Credit and all prior
communications verbal or written between the Borrower and the Agent, the
Documentation Agent, the Syndication Agent or any Lender shall be of no further
effect or evidentiary value.
11.14 Confidentiality. The Lenders shall take normal and reasonable
---------------
precautions to maintain the confidentiality of all non-public information
obtained pursuant to the requirements of
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this Agreement which has been identified as such by the Borrower but may, in any
event, make disclosures (i) reasonably required by any bona fide transferee,
assignee or participant in connection with the contemplated transfer or
assignment of any of the Commitments or Loans or participations therein or
participations in Letters of Credit or (ii) as required or requested by any
governmental agency or representative thereof or as required pursuant to any
legal process or (iii) to its attorneys and accountants or (iv) as required by
law or (v) in connection with litigation involving any Lender.
11.15 Dispute Resolution. It is understood and agreed that upon the
------------------
request of any party hereto any dispute, claim, or controversy of any kind,
whether in contract or in tort, statutory or common law, legal or equitable now
existing or hereinafter arising out of, pertaining to or in connection with this
Agreement or the other Loan Documents, or any related agreements, documents, or
instruments, shall be resolved through final and binding arbitration
administered by Judicial Arbitration & Mediation Services, Inc. ("J.A.M.S.").
The hearing shall be conducted at a location determined by the arbitrator in Los
Angeles, California and shall be administered by and in accordance with the then
existing Rules of Practice and Procedure of Judicial Arbitration & Mediation
Services, Inc., and judgment upon any award rendered by the arbitrator may be
entered by an State or Federal Court having jurisdiction thereof. The
arbitrator shall determine which is the prevailing party or parties and shall
include in the award that party's or parties' reasonable attorneys' fees and
costs. As soon as practicable after selection of the arbitrator, the arbitrator
or his/her designated representative shall determine a reasonable estimate of
anticipated fees and costs of the arbitrator, and render a statement to each
party setting forth that party's pro-rata share of said fees and costs.
Thereafter each party shall, within ten days of receipt of said statement,
deposit said sum with the arbitrator. Failure of any party to make such a
deposit shall result in a forfeiture by the non-depositing party of the right to
prosecute or defend that claim which is the subject of the arbitration, but
shall not otherwise serve to ▇▇▇▇▇, stay under this paragraph, nor any other
provision of this dispute resolution provision, or limit the right of any party
to obtain provisional or ancillary remedies such as injunctive relief from any
court having jurisdiction before, during or after the pendency of any
arbitration. The institution and maintenance of any action for the pursuit of
provisional or ancillary remedies shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration.
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ARTICLE 12
THE AGENT
---------
12.1 Appointment. Sanwa is hereby appointed Agent hereunder and under
-----------
each other Loan Document, and each of the Lenders irrevocably authorizes the
Agent to act as the agent of such Lender. The Agent agrees to act as such upon
the express conditions contained in this Article 12. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender by reason of
this Agreement.
12.2 Powers. The Agent shall have and may exercise such powers under the
------
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
12.3 General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to the Borrower or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except for its or its
own gross negligence or willful misconduct.
12.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any
-------------------------------------------
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article 4 except
receipt of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Agent shall have no duty to
disclose to the Lenders information that is not required to be furnished by the
Borrower to the Agent at such time, but is voluntarily furnished by the Borrower
to the Agent (either in its capacity as Agent or in its individual capacity).
12.5 Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders
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and on all holders of Notes. At the request of the Required Lenders the Agent
shall give any notice described in Section 9.3. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
12.6 Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
12.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
------------------------------
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
12.8 Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to its respective
Commitments (i) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents and (ii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 12.8 shall survive payment of the Obligations and termination of this
Agreement.
12.9 Rights as a Lender. In the event the Agent is a Lender, the Agent
------------------
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the
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Agent in its individual capacity. The Agent may accept deposits from, lend money
to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person.
12.10 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
12.11 Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and the Borrower and the Agent may be
removed at any time with or without cause by the Required Lenders, such
resignation or removal to be effective upon the appointment of a successor Agent
or, if no successor Agent has been appointed, forty-five days after the retiring
Agent gives notice of its intention to resign or thirty days after removal
notice has been given to the Agent. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, with the consent (which shall
not be unreasonably withheld) of the Borrower, if no Default has occurred and is
continuing, on behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Agent. If the Agent has resigned or been removed and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $150,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation or removal of the
Agent, the departing Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness of the
resignation or
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removal of an Agent, the provisions of this Article 12 shall continue in effect
for the benefit of such Agent in respect of any actions taken or omitted to be
taken by it while it was acting as the Agent hereunder and under the other Loan
Documents.
12.12 Documentation Agent. None of the financial institutions identified
-------------------
on the facing page, preamble or signature pages of this Agreement as a
"documentation agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders so
identified as a "documentation agent" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has
not relied, and will not rely, on any of the financial institutions so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE 13
SETOFF; RATABLE PAYMENTS
------------------------
13.1 Setoff. Upon the occurrence and during the continuance of any Event
------
of Default, the Lenders are hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by any Lender to or for the credit
or the account of the Borrower against any and all obligations of the Borrower
now or hereafter existing under the Loan Documents, irrespective of whether or
not any Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of the Lenders under this Section are
in addition to other rights and remedies (including other rights of setoff) that
the Lenders may have.
13.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
----------------
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1 or 3.2) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to its Loans.
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In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
ARTICLE 14
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
14.1 Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and its respective successors and assigns, except that (i) the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by any Lender must be made in compliance with
Section 14.3. Notwithstanding clause (ii) of this Section, any Lender may at
any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any
Note as the owner thereof for all purposes hereof unless and until such payee
complies with Section 14.3 in the case of an assignment thereof or, in the case
of any other transfer, a written notice of the transfer is filed with the Agent.
Any assignee or transferee of a Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
14.2 Participations.
--------------
(i) Permitted Participants; Effect. Any Lender may, in the ordinary
------------------------------
course of its business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest of such Lender under
the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall continue
to deal solely and directly
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with such Lender in connection with such Lender's rights and obligations under
the Loan Documents.
(ii) Voting Rights. Each Lender shall retain the sole right to
-------------
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment, which postpones any date fixed
for any regularly-scheduled payment of principal of, or interest or fees
on, any such Loan or Commitment or which is otherwise subject to 100%
Lender approval under Section 10.4.
(iii) Benefit of Setoff. The Borrower agrees that each Participant
-----------------
shall be deemed to have the right of setoff provided in Section 13.1 in
respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under the Loan Documents, provided
that each Lender shall retain the right of setoff provided in Section 13.1
with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 13.1,
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 13.2 as if each Participant were a Lender.
14.3 Assignments.
-----------
(i) Permitted Assignments. Any Lender may, in the ordinary course
---------------------
of its business and in accordance with applicable law, at any time assign
to one or more Eligible Assignees ("Purchasers") all or any part of its
rights and obligations under the Loan Documents, provided, however, such
assignments must be in a minimum amount at least equal to $10,000,000 and
must be on a pro rata basis of all Obligations hereunder; provided,
however, that if such Purchaser is a Lender or an Affiliate thereof, no
minimum amount shall be applicable. Such assignment shall be substantially
in the form of Exhibit C hereto. The consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with respect to
a Purchaser which is not a Lender or an Affiliate thereof; provided,
however, that if an Event of Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such consent shall not be
unreasonably withheld or delayed.
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(ii) Effect; Effective Date. Upon (i) delivery to the Agent of a
----------------------
notice of assignment, substantially in the form attached as Exhibit I to
Exhibit C hereto (a "Notice of Assignment"), together with any consents
required by Section 14.3(i), and (ii) payment of a $3,000 fee to the Agent
for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that it is an Eligible Assignee and that none of the consideration used to
make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will
not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall
have all the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of
the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section
14.3(ii), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are
issued to such Purchaser, in each case in principal amounts reflecting its
Commitment, as adjusted pursuant to such assignment.
14.4 Dissemination of Information. The Borrower authorizes each Lender to
----------------------------
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, provided
that each prospective Transferee shall execute and deliver to the Agent a
confidentiality agreement (in form and substance reasonably satisfactory to the
Borrower and the Agent).
14.5 Tax Treatment. If any interest in any Loan Document is transferred to
-------------
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.21.
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ARTICLE 15
NOTICES
-------
15.1 Giving Notice. Except as otherwise permitted by Section 2.13 with
-------------
respect to notices regarding conversion or continuation of Advances and Section
2.14 with respect to notices regarding Advances, all notices and other
communications provided to any party hereto under this Agreement or any other
Loan Document shall be in writing or by facsimile and addressed or delivered to
the Borrower and the Agent at its respective addresses set forth below its
signature hereto and to each Lender at its address set forth on Schedule 1
hereto or at such other address as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted (answerback confirmed in the
case of telexes).
15.2 Change of Address. The Borrower, the Agent and any Lender may each
-----------------
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE 16
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
LTC PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SANWA BANK CALIFORNIA,
as Administrative Agent and Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
BANQUE NATIONALE DE PARIS
Los Angeles Branch
as Syndication Agent and Lender
By: /s/ ▇. ▇▇▇▇▇▇▇
----------------------------------
Print Name: ▇. ▇▇▇▇▇▇▇
Title: Sr V.P & Manager
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Print Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: V.P
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
THE SUMITOMO BANK, LIMITED
Chicago Branch
as Documentation Agent and Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President & Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chicago Administration
Center Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 1
LENDERS AND APPLICABLE LENDING OFFICES
Lender Commitment Applicable Lending Office
------ ----------- -------------------------
Sanwa Bank $ 35,000,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Administrative
Agent and Lender
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Banque Nationale $ 85,000,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
de Paris, Suite ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Syndication Agent Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and Lender Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Sumitomo Bank, $ 50,000,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ Branch ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chicago
Administration Center
Vice President
Documentation Agent and Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lender
With a copy to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
_____________________________
Total Commitments $170,000,000
EXHIBIT A
FORM OF NOTE
$_______________ _______________, 19__
LTC PROPERTIES, INC., a Maryland corporation (the "Borrower"), promises to
pay to the order of ___________________ (the "Lender") the principal sum of
___________________________ Dollars or such lesser amount as loaned under the
Agreement referred to below, in immediately available funds at the main office
of Sanwa Bank California, as Agent, together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the Agreement
hereinafter referred to. The Borrower shall pay the principal of and accrued and
unpaid interest on the Loans in full on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of October 3, 1997 (the "Agreement")
among the Borrower, Sanwa Bank California, individually and as Administrative
Agent, and the lenders named therein, including the Lender, to which Agreement,
as it may be amended from time to time, reference is hereby made for a statement
of the terms and conditions governing this Note, including the terms and
conditions under which this Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise defined herein are
used with the meanings attributed to them in the Agreement.
The Borrower waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor or any other notices or demands.
The Borrower shall reimburse the Lender for all costs and expenses,
including without limitation reasonable attorneys' fees, as set forth in the
Agreement.
LTC PROPERTIES, INC.
By: __________________________
Print Name:___________________
Title: _______________________
-2-
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF LTC PROPERTIES, INC.
DATED OCTOBER 3, 1997
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Maturity Paid Balance
---- ---------- ----------- -------- --------- -------
-3-
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of October 3, 1997 (as amended, modified, renewed or extended
from time to time, the "Agreement") among LTC PROPERTIES, INC. (the "Borrower"),
the lenders party thereto and Sanwa Bank California, as Administrative Agent for
the Lenders. Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly [elected/appointed] _________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower during the accounting period covered by the
attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or an Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with Sections 6.1-6.5, 8.5 and 8.10 in the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of ______________,
19___.
________________________
-2-
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of _____________, 19__ with
Article 6
off the Agreement
-3-
EXHIBIT C
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________________________ (the "Assignor") and __________________ (the
"Assignee") is dated as of _________________, 19__. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
---------------------
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
-------------------------
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loan, if
the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
--------------
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after a
Notice of Assignment substantially in the form of Exhibit "I" attached hereto
has been delivered to the Agent. Such Notice of Assignment must include any
consents required to be delivered to the Agent by Section 14.3(i) of the Credit
Agreement. In no event will the Effective Date occur if the payments required
to be made by the Assignee to the Assignor on the Effective Date under Sections
4 and 5 hereof are not made on the proposed Effective Date. The Assignor will
notify the Assignee of the proposed Effective Date no later than the Business
Day prior to the proposed Effective Date. As of the Effective Date, (i) the
Assignee shall have the rights and obligations of a Lender under the Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder and (ii) the Assignor shall relinquish its rights and be released from
its corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
--------------------
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby. The Assignee shall
advance funds directly to the Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. [In consideration for the sale and assignment of Loans
hereunder, with respect to any Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (a) on the last
day of the Interest Period therefor or (b) on such earlier date agreed to by the
Assignor and the Assignee or (c) on the date on which any Loan either becomes
due (by acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment
Date"), the Assignee shall pay the Assignor an amount equal to the principal
amount of the portion of such Loan assigned to the Assignee which is outstanding
on the Payment Date. If the Assignor and the Assignee agree that the Payment
Date for such Loan shall be the Effective Date, they shall agree to the interest
rate applicable to the portion of such Loan assigned hereunder for the period
from the Effective Date to the end of the existing Interest Period applicable to
any Loan (the "Agreed Interest Rate") and any interest received by the Assignee
in excess of the Agreed Interest Rate shall be remitted to the Assignor. In the
event interest for the period from the Effective Date to but not including the
Payment Date is not paid by the Borrower with respect to any Loan sold by the
Assignor to the Assignee hereunder, the Assignee shall pay to the Assignor
interest for such period on the portion of such Loan sold by the Assignor to the
Assignee hereunder at the applicable rate provided by the Credit Agreement. In
the event a prepayment of any Loan which is existing on the Payment Date and
assigned by the Assignor to the Assignee hereunder occurs after the Payment Date
but before the end of the Interest Period applicable to such Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid with
respect to the portion of such Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to a
Loan prior to the Payment Date and (ii) any amounts of interest on Loans and
fees received from the Agent which relate to the portion of the Loans assigned
to the Assignee hereunder for periods prior to the Payment Date, and not
previously paid by the Assignee to the Assignor.]* In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the payment
terms included in this Exhibit.
-2-
[ 5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor a
----------------------------
fee on each day on which a payment of interest or ________________ fees is made
under the Credit Agreement with respect to the amounts assigned to the Assignee
hereunder (other than a payment of interest or ___________ fees for the period
prior to the Payment Date, which the Assignee is obligated to deliver to the
Assignor pursuant to Section 4 hereof). The amount of such fee shall be the
difference between (i) the interest or fee, as applicable, paid with respect to
the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as
applicable, which would have been paid with respect to the amounts assigned to
the Assignee hereunder if each interest rate was ___ of 1% less than the
interest rate paid by the Borrower or if the ______________ fee was ___ of 1%
less than the _____________ fee paid by the Borrower, as applicable. In
addition, the Assignee agrees to pay ___% of the recordation fee required to be
paid to the Agent in connection with this Assignment Agreement.]
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
--------------------------------------------------------------
LIABILITY. The Assignor represents and warrants that it is the legal and
---------
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrowers or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrowers or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrowers, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
-------------------------------
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem appropriate
at the time, continue
-3-
to make its own credit decisions in taking or not taking action under the Loan
Documents, (iii) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes].*
*to be inserted if the Assignee is not incorporated under the laws of the United
States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
---------
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
----------------------
have the right pursuant to Section 12.3(i) of the Credit Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
----------------------------------
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
----------------
of Assignment embody the entire agreement and
-4-
understanding between the parties hereto and supersede all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
-------------
internal law, and not the law of conflicts, of the State of California.
13. NOTICES. Notices shall be given under this Assignment Agreement in
-------
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:_________________________
Title:______________________
____________________________
____________________________
[NAME OF ASSIGNEE]
By:________________________
Title:_____________________
___________________________
___________________________
-5-
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement: Credit Agreement dated as of
October 3, 1997 among LTC Properties, Inc., the Lenders party thereto and
Sanwa Bank California, as Agent.
2. Date of Assignment Agreement: _____________, 19__
3. Amounts (As of Date of Item 2 above):
a. Total of Commitments
(Loans/Letters of
Credit)* under
Credit Agreement $________
b. Assignee's Percentage
of Facility purchased
under the Assignment
Agreement** ________%
c. Amount of Assigned Share in
Facility purchased under
the Assignment
Agreement $________
d. Amount of Assigned
Share in Letters of
Credit Outstanding $________
4. Assignee's Aggregate (Loan/
Letter of Credit Amount)*
Commitment Amount
Purchased Hereunder: $_________
5. Proposed Effective Date: _____________, 19__
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: _________________________ By:_________________________
Title:_______________________ Title:______________________
* If a Commitment has been terminated, insert outstanding Loans/Letters of
Credit in place of Commitment
** Percentage taken to 10 decimal places
-6-
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
-7-
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
-------------
_______________, 19__
To: LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sanwa Bank California, as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement") described
in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
the Borrowers and the Agent pursuant to Section 14.3(ii) of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of ___________, 19__ (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstanding, rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment
shall be the later of the date specified in Item 5 of Schedule 1 or two Business
Days (or such shorter period as agreed to by the Agent) after this Notice of
Assignment and any consents and fees required by Sections 14.3(i) and 14.3(ii)
of the Credit Agreement have been delivered to the Agent, provided that the
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the Agent
-8-
before the date specified in Item 5 of Schedule 1 to determine if the Assignment
Agreement will become effective on such date pursuant to Section 3 hereof, and
will confer with the Agent to determine the Effective Date pursuant to Section 3
hereof if it occurs thereafter. The Assignor shall notify the Agent and the
Borrower if the Assignment Agreement does not become effective on any proposed
Effective Date as a result of the failure to satisfy the conditions precedent
agreed to by the Assignor and the Assignee. At the request of the Agent and/or
the Borrower, the Assignor will give the Agent and the Borrower written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $3,000 required by Section 14.3(ii) of the
Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Agent prepare and cause the Borrower to
execute and deliver new Notes or, as appropriate, replacements notes, to the
Assignor and the Assignee. The Assignor and, if applicable, the Assignee each
agree to deliver to the Agent the original Note received by it from the Borrower
upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment instructions
are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the Loan
Documents in accordance with the terms thereof. The Assignee acknowledges that
the Agent has no duty to supply information with respect to the Borrower or the
Loan Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior to the
Effective Date.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:____________________ By:____________________
Title: ________________ Title:_________________
-9-
ACKNOWLEDGED AND CONSENTED ACKNOWLEDGED AND CONSENTED
TO BY: SANWA BANK TO BY: LTC PROPERTIES, INC.,
CALIFORNIA, as Agent a Maryland corporation
By________________________ By_________________________
Name:_____________________ Name:______________________
Title:____________________ Title:_____________________
[Attach photocopy of Schedule 1 to Assignment]
-10-
EXHIBIT D
FORM OF NOTICE OF BORROWING
[Date]
Sanwa Bank California, as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
Re: Credit Agreement dated as of October 3, 1997 (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.14 of the Credit Agreement, LTC
Properties, Inc. (the "Borrower") hereby gives irrevocable and binding notice to
you, as Agent, that the Borrower is requesting a Loan to be made under the
Credit Agreement as follows (capitalized terms have the definitions set forth in
the Credit Agreement):
Type of Loan: ____________________________________
1. Aggregate Loan Amount: $____________.
[At least $5,000,000 or multiple of $1,000,000]
2. Borrowing Date: ____________, ____.
[Same date for Reference Rate Loans; at least 3 Business Days for
LIBOR Loans]
3. Loans will be [LIBOR Loans ($______) and/or Reference Loans ($______).
4. LIBOR Loans will have the following Interest Periods [1, 2, 3 or 6
months]:
$_________: _____ months
$_________: _____ months
[no more than __ Interest Periods in aggregate to be outstanding]
5. The undersigned certifies that:
A. There exists no Default or Event of Default.
B. The representations and warranties contained in Article 5 of the
Credit Agreement are true and correct as of the Borrowing Date.
C. [Only in First Loan or Letter of Credit] No event has occurred,
or condition exists, which could have a Material Adverse Effect.
Sincerely,
LTC PROPERTIES, INC.
By:__________________________
Name:________________________
Title:_______________________
-2-
EXHIBIT E
FORM OF BORROWING BASE CERTIFICATE
Accounting period ended _______, 19__
Reference is made to the Credit Agreement dated as of October 3, 1997 (as
modified and supplemented and in effect from time to time, the "Credit
------
Agreement"), among LTC Properties, Inc. (the "Borrower"), the Lenders and Sanwa
---------
Bank California, as agent for the Lenders. Capitalized terms used in this
certificate have the respective meanings assigned to them in the Credit
Agreement.
Pursuant to Section 7.1(iv) of the Credit Agreement, the undersigned, the
_____ of the Borrower, hereby certifies that, to the best of his/her knowledge,
attached as Annex 1 is a true and accurate calculation of the Borrowing Base as
of ______, 19__ determined in accordance with the requirements of the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the __ day of ________, ___.
___________________________
Name:
Title:
Annex 1
-------
Borrowing Base
--------------
Total Applicable Value of Eligible Mortgage Loans $_________
Total Book Value of Eligible Owned Properties $________
Less Allowance for Depreciation (on a prorated basis) $________
Total Applicable Value of Eligible Owned Properties $_________
Less Senior Debt Outstanding (other than amounts
outstanding under the Credit Agreement) $_________
Aggregate Borrowing Base $_________
(Total Applicable Value of Eligible Mortgage
Loans and Eligible Owned Properties less other Senior
Debt Outstanding (other than amounts outstanding under
the Credit Agreement) - Not to exceed $170 million)
Aggregate Borrowing Base $_________
Less Loan Balance Outstanding $_________
Less Letters of Credit Outstanding $_________
Availability as of:_______________ $_________
EXHIBIT F
FORM OF GUARANTY
GUARANTY AGREEMENT
------------------
This GUARANTY AGREEMENT (this "Guaranty"), dated as of October 3, 1997, is
--------
made between [GUARANTOR] (the "Guarantor") and Sanwa Bank California, as the
---------
Administrative Agent (in such capacity, the "Agent") for the Lenders identified
in the Credit Agreement referred to below.
The Credit Agreement, dated as of October 3, 1997 (as amended, supplemented
or modified, the "Credit Agreement") among LTC Properties, Inc. (the
----------------
"Borrower"), the lenders identified in the Credit Agreement (the "Lenders") and
-------- -------
the Agent provides, subject to its terms and conditions, for certain extensions
of credit to the Borrower. It is a condition to the obligations of the Agent
and the Lenders under the Credit Agreement that each Subsidiary of the Borrower
(with certain limited exceptions) shall have executed and delivered this
Guaranty.
To induce the Lenders to enter into, and to extend credit under, the Credit
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor has agreed to
guarantee the Guaranteed Obligations (as hereinafter defined) upon the terms and
conditions of this Guaranty. Accordingly, the Guarantor agrees with the Agent as
follows:
Section 1. Definitions.
-----------
1.1 Definitions. Unless otherwise defined, all capitalized terms used in
-----------
this Guaranty that are defined in the Credit Agreement (including those terms
incorporated by reference) shall have the respective meanings assigned to them
in the Credit Agreement. In addition, the following terms shall have the
following meanings under this Guaranty:
"Loan Documents" shall have the meaning assigned to the term "Loan
--------------
Documents" in the Credit Agreement and shall also mean any other agreement (oral
or written), instrument, document or book entry evidencing, creating, securing
or otherwise relating to all or any part of the Guaranteed Obligations that are
intended by the Borrower and the Agent and the Lenders or any such Person
individually (as the case may be) to be guaranteed by this Guaranty.
"Guaranteed Obligations" shall mean (a) any and all Obligations and any and
----------------------
all obligations of the Borrower for the performance by it of its agreements,
covenants and undertakings under or in respect of the Loan Documents referred to
in the Credit Agreement, it being acknowledged by the Guarantor that
-1-
extensions of credit under the Credit Agreement are available on a revolving
basis, and (b) any and ail other obligations of the Borrower for the payment of
all amounts, liabilities and indebtedness (whether for principal, interest,
reimbursement, fees, charge, indemnification or otherwise) now or in the future
owed to the Agent, the Lenders or any such person individually, and for the
performance by the Borrower of its agreements, covenants and undertakings, under
or in respect of any and all the Loan Documents, it being acknowledged by the
Guarantor that such other obligations may arise or be created, incurred or
assumed at any time and from time to time and in such manner and such
circumstances and with such terms and provisions as the Borrower and the Agent
and the Lenders or any such Person individually may agree without notice or
demand of any kind or nature whatsoever to the Guarantor.
1.2 Interpretation. In this Guaranty, unless otherwise indicated, the
--------------
singular includes the plural and plural the singular; words importing any gender
include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Guaranty; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions or modifications by
the terms of this Agreement); and references to persons include their respective
successors and permitted assigns and, in the case of Governmental Persons,
Persons succeeding to their respective functions and capacities.
Section 2. The Guaranty.
------------
2.1 Guaranty. Subject to the limitation set forth in Section 2.8, the
--------
Guarantor hereby guarantees to each Lender and the Agent the timely payment in
full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Guaranteed Obligations in each case strictly in accordance
with their terms. The Guarantor hereby further agrees that if the Borrower
shall fail to pay in full when due (whether at stated maturity, by acceleration
or otherwise) all or any part of the Guaranteed Obligations, the Guarantor will
immediately pay the same, without any demand or notice whatsoever, and that in
the case of any extension of time of payment or renewal of all or any part of
the Guaranteed Obligations, the same will be timely paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal. This Guaranty is irrevocable and
unconditional in
-2-
nature and is made with respect to any Guaranteed Obligations now existing or in
the future arising. The Guarantor's liability under this Guaranty shall continue
until full satisfaction of all Guaranteed Obligations. This Guaranty is a
guaranty of due and punctual payment and performance and is not merely a
guaranty of collection.
2.2 Acknowledgements, Waivers and Consents The Guarantor acknowledges
--------------------------------------
that the obligations undertaken by it under this Guaranty involve the guaranty
of obligations of Persons other than the Guarantor and that such obligations of
the Guarantor are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, the
Guarantor agrees that:
(a) Without affecting the enforceability or effectiveness of this
Guaranty in accordance with its terms and without affecting, limiting, reducing,
discharging or terminating the liability of the Guarantor, or the rights,
remedies, powers and privileges of the Agent and the Lenders under this
Guaranty, the Agent and the Lenders may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever:
(i) amend, supplement, modify, extend, renew, waive, accelerate
or otherwise change the time for payment or performance of, or the terms of, all
or any part of the Guaranteed Obligations (including any increase or decrease in
the rate or rates of interest on all or any part of the Obligations);
(ii) amend, supplement, modify, extend, renew, waive or
otherwise change, or enter into or forgive, any Loan Document or any agreement,
security document, guaranty, approval, consent or other instrument with respect
to all or any part of the Guaranteed Obligations, any Loan Document or any such
other instrument or any term or provision of the foregoing;
(iii) accept or enter into new or additional agreements,
security documents, guarantees (including letters of credit) or other
instruments in addition to, in exchange for or relative to any Loan Document,
all or any part of the Guaranteed Obligations or any collateral now or in the
future serving as security for the Guaranteed Obligations;
(iv) accept or receive (including from any other guarantor)
partial payments or performance on the Guaranteed Obligations (whether as a
result of the exercise of any right, remedy, power or privilege or otherwise);
(v) accept, receive and hold any additional collateral for all
or any part of the Guaranteed Obligations (including from any other guarantor);
-3-
(vi) release, reconvey, terminate, waive, abandon, allow to
lapse or expire, fail to perfect, subordinate, exchange, substitute, transfer,
foreclose upon or enforce any collateral, security documents or guarantees
(including letters of credit or the obligations of any other guarantor) for or
relative to all or any part of the Guaranteed Obligations;
(vii) apply any collateral or the proceeds of any collateral or
guaranty (including any letter of credit or the obligations of any other
guarantor) to all or any part of the Guaranteed Obligations in such manner and
extent as the Agent or any Lender may in its discretion determine;
(viii) release any Person (including any other guarantor) from
any personal liability with respect to all or any part of the Guaranteed
Obligations;
(ix) settle, compromise, release, liquidate or enforce upon such
terms and in such manner as the Agent or the Lenders may determine or as
applicable law may dictate all or any part of the Guaranteed Obligations or any
collateral on or guaranty of (including any letter of credit issued with respect
to) all or any part of the Guaranteed Obligations (including with any other
guarantor);
(x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Borrower or any other Person (including any other guarantor);
(xi) proceed against Borrower, or any other guarantor of
(including any issuer of any letter of credit issued with respect to) all or any
part of the Guaranteed Obligations or any collateral provided by any Person and
exercise the rights, remedies, powers and privileges of the Agent and the
Lenders under the Loan Documents or otherwise in such order and such manner as
the Agent or any Lender may, in its discretion, determine, without any necessity
to proceed upon or against or exhaust any collateral, right, remedy, power or
privilege before proceeding to call upon or otherwise enforce this Guaranty as
to the Guarantor;
(xii) foreclose upon any deed of trust, mortgage or other
instrument creating or granting liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure, bid any amount
or make no bid in any foreclosure sale or make any other election of remedies
with respect to such liens or exercise any right of set off;
(xiii) obtain the appointment of a receiver with respect to any
collateral for all or any part of the Guaranteed Obligations and apply the
proceeds of such receivership as the Agent or any Lender may in its discretion
determine (it being agreed that nothing in this clause (xiii) shall be deemed to
make
-4-
the Agent or any Lender a party in possession in contemplation of law, except at
its option); and
(xiv) enter into such other transactions or business dealings
with any other guarantor, either Borrower, any Subsidiary or Affiliate of the
Borrowers or any other guarantor of all or any part of the Guaranteed
Obligations as the Agent or any Lender may desire.
(xv) do all or any combination of the actions set forth in this
Section 2.2(a).
(b) The enforceability and effectiveness of this Guaranty and the
liability of the Guarantor, and the rights, remedies, powers and privileges of
the Agent and the Lenders, under this Guaranty shall not be affected, limited,
reduced, discharged or terminated, and the Guarantor hereby expressly waives to
the fullest extent permitted by law any defense now or in the future arising, by
reason of:
(i) the illegality, invalidity or unenforceability of all or any
part of the Guaranteed Obligations, any Loan Document or any agreement, security
document, guarantee or other instrument relative to all or any part of the
Guaranteed Obligations;
(ii) any disability or other defense with respect to all of any
part of the Guaranteed Obligations of the Borrower, any other guarantor of all
or any part of the Guaranteed Obligations (including any issuer of any letters
of credit), including the effect of any statute of limitations that may bar the
enforcement of all or any part of the Guaranteed Obligations or the obligations
of any such other guarantor;
(iii) the illegality, invalidity or unenforce ability of any
security or guaranty (including any letter of credit) for all or any part of the
Guaranteed Obligations or the lack of perfection or continuing perfection or
failure of the priority of any lien or of any collateral for all or any part of
the Guaranteed Obligations;
(iv) the cessation, for any cause whatsoever, or the inability
of the Borrower or any other guarantor of all or any part of the Guaranteed
Obligations (other than, subject to Section 2.5, by reason of the full payment
and performance of all Guaranteed Obligations);
(v) any failure of the Agent or any Lender to marshal assets in
favor of the Borrower or any other Person (including any other guarantor), to
exhaust any collateral for all or any part of the Guaranteed Obligations, to
pursue or exhaust any right, remedy, power or privilege it may have against the
Borrower, any other guarantor of all or any part of the Guaranteed Obligations
(including any issuer of any letter of
-5-
credit) or any other Person or to take any action whatsoever to mitigate or
reduce such or any other guarantor's liability, neither the Agent nor any Lender
being under any obligation to take any such action notwithstanding the fact that
all or any part of the Guaranteed Obligations may be due and payable and that
the Borrower may be in default of its obligations under any Loan Document;
(vi) any failure of the Agent or any Lender to give notice of
sale or other disposition of any collateral (including any notice of any
judicial or nonjudicial foreclosure or sale of any interest in real property
serving as collateral for all or any part of the Guaranteed Obligations) for all
or any part of the Guaranteed Obligations to the Borrower, the Guarantor or any
other Person or any defect in, or any failure by any Guarantor or any other
Person to receive, any notice that may be given in connection with any sale or
disposition of any collateral;
(vii) any failure of the Agent or any Lender to comply with
applicable laws in connection with the sale or other disposition of any
collateral for all or any part of the Guaranteed Obligations;
(viii) any judicial or nonjudicial foreclosure or sale of, or
other election of remedies with respect to, any interest in real property or
other collateral serving as security for all or any part of the Guaranteed
Obligations, even though such foreclosure, sale or election of remedies may
impair the subrogation rights of any guarantor or may preclude any guarantor
from obtaining reimbursement, contribution, indemnification or other recovery
from the Borrower, any other guarantor or any other Person and even though the
Borrower may not, as a result of such foreclosure, sale or election of remedies,
be liable for any deficiency;
(ix) any benefits the Borrower, the Guarantor or any other
guarantor may otherwise derive from Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure or any comparable provisions of the laws of
any other jurisdiction;
(x) any act or omission of the Agent, any Lender or any other
Person that directly or indirectly results in or aids the discharge or release
of the Borrower or any other Guarantor of all or any part of the Guaranteed
Obligations or any security or guarantee (including any letter of credit) for
all or any part of the Guaranteed Obligations by operation of law or otherwise;
(xi) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation;
-6-
(xii) the possibility that the obligations of the Borrower to
the Agent and the Lenders may at any time and from time to time exceed the
aggregate liability of the Guarantor under all Guarantys;
(xiii) any counterclaim, set-off or other claim which the
Borrower or any other guarantor has or alleges to have with respect to all or
any part of the Guaranteed Obligations;
(xiv) any failure of the Agent or any Lender to file or enforce
a claim in any bankruptcy or other proceeding with respect to any Person;
(xv) election by the Agent or any Lender, in any bankruptcy
proceeding of any Person, of the application or non-application of Section
1111(b)(2) of the Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 354 of the Bankruptcy Code;
(xvii) any use of cash collateral under Section 363 of the
Bankruptcy Code;
(xviii) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any Lien in favor of the Agent or any
Lender for any reason;
(xx) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, including any discharge of, or bar or stay against
collecting, all or any part of the Guaranteed Obligations (or any interest on
all or any part of the Guaranteed Obligations) in or as a result of any such
proceeding;
(xxi) any action taken by the Agent or any Lender that is
authorized by this Section or otherwise in this Guaranty or by any other
provision of any Loan Document or any omission to take any such action; or
(xxii) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
including by reason of Sections 2809, 2810, 2819, 2839, 2845,, 2850, 2899, 3275
and 3433 of the California Civil Code, and any future judicial decisions or
legislation or of any comparable provisions of the laws of any other
jurisdiction.
(c) the Guarantor expressly waives, for the benefit of the Agent and
the Lenders, all set-offs and counterclaims and all presentments, demands for
payment or performance, notices of
-7-
nonpayment or nonperformance, protests, notices of protest, notices of dishonor
and all other notices or demands of any kind or nature whatsoever with respect
to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or
of the existence, creation, incurring or assumption of new or additional
Guaranteed Obligations. the Guarantor further expressly waives the benefit of
any and all statutes of limitation and any and all laws providing for the
exemption of property from execution or for valuation and appraisal upon
foreclosure, to the maximum extent permitted by applicable law.
(d) The Guarantor represents and warrants to the Agent and the
lenders that it has established adequate means of obtaining financial and other
information pertaining to the business, operations and condition (financial and
otherwise) of the Borrower and its properties on a continuing basis and that the
Guarantor is now and will in the future remain fully familiar with the business,
operations and condition (financial and otherwise) of the Borrower and its
properties. The Guarantor further represents and warrants that it has reviewed
and approved each of the Loan documents and is fully familiar with the
transaction contemplated by the Loan Documents and that it will in the future
remain fully familiar with such transaction and with any new Loan Documents and
the transactions contemplated by such Loan Documents. The Guarantor hereby
expressly waives and relinquishes any duty on the part of the Agent or the
Lenders (should any such duty exist) to disclose to such or any other guarantor
any matter of fact or other information related to the business, operations or
condition (financial or otherwise) of the Borrower or its properties or to any
Loan Documents o the transactions undertaken pursuant to, or contemplated by,
any such Loan Document, whether now or in the future known by the Agent or any
Lender.
(e) The Guarantor intends that its rights and obligations shall be
those expressly set forth in this Guaranty and that its obligations shall not be
affected, limited, reduced, discharged or terminated by reason of any principles
or provisions of law which conflict with the terms of this Guaranty.
2.3 Understanding With Respect to Waivers and Consents. The Guarantor
--------------------------------------------------
warrants and agrees that each of the waivers and consents set forth in this
Guaranty is made voluntarily and unconditionally after consultation with outside
legal counsel and with full knowledge of its significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such or any other
Guarantor otherwise may have against the Borrower, the Agent, any Lender or any
other Person or against any collateral. If, notwithstanding the intent of the
parties that the terms of this Guaranty shall control in any and all
circumstances, any such waivers or consents are determined to be unenforceable
under applicable law, such waivers and consents shall be effective to the
maximum extent permitted by law.
-8-
(a) Subrogation. The Guarantor hereby waives, until the payment and
-----------
satisfaction in full of all of the Guaranteed Obligations and the expiration and
termination of the Commitments of the Lenders, under the Credit Agreement, any
right, remedy, power or privilege, such as any right of subrogation,
contribution or indemnity or related remedy, power or privilege, arising
(whether by contract or operation of law, including under the Bankruptcy Code)
against the Borrower or any other guarantor of all or any part of the Guaranteed
Obligations or any collateral for all or any part of the Guaranteed Obligations
by reason of any payment or other performance pursuant to the provisions of this
Guaranty and, if any amount shall be paid to such Guarantor on account of such
rights, remedies, powers or privileges, it shall hold such amount in trust for
the benefit of, and pay the same over to, the Agent (for the benefit of the
Lenders) on account of the Guaranteed Obligations. Each Guarantor understands
that the exercise by the Agent or any Lender of any right, remedy, power or
privilege that it may have under the Loan Documents, any agreement, security
document, guarantee or other instrument relative to all or any part of the
Guaranteed Obligations or otherwise may affect or eliminate such or any other
guarantor's right of subrogation or similar recovery against the Borrower, any
other guarantors or any collateral and that such and the Borrower may therefore
incur partially or totally nonreimbursable liability under this Guaranty.
Nevertheless, the Borrower hereby authorizes and empowers the Agent and the
Lenders to exercise, in its or their sole discretion, any combination of such
rights, remedies, powers and privileges
2.4 Reinstatement. The obligations of the Guarantor under this Guaranty
-------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the Borrower, any other guarantor or any other Person
or any other application of funds (including the proceeds of any collateral for
all or any part of the Guaranteed Obligations) in respect of all or any part of
the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of such Guaranteed obligations, whether as a result of any proceedings in
bankruptcy, reorganization or otherwise and the Guarantor agrees that it will
indemnify the Agent and each Lender on demand for all reasonable costs and
expenses (including fees and expenses of counsel) incurred by the Agent or such
Lender in connection with such rescission or restoration.
2.5 Remedies. The Guarantor hereby agrees that, between it and the
--------
Lenders, the obligations of the Borrower under the Credit Agreement and the
other Loan Documents may be declared to be forthwith (or may become
automatically) due and payable as provided in Article 10 of the Credit Agreement
for purposes of Section 2.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations becoming due and
payable as against the Borrower) and that, in the event of such declaration or
such obligation being deemed
-9-
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable for purposes of Section 2.1.
2.6 Separate Action. The Agent may bring and prosecute a separate action
---------------
or actions against the Guarantor whether or not the Borrower, any other
guarantor or any other Person is joined in any such action or a separate action
or actions are brought against the Borrower, any other guarantor, any other
Person, or any collateral for all or any part of the Guaranteed Obligations.
The obligations of the Guarantor under, and the effectiveness of, this Guaranty
are not conditioned upon the existence or continuation of any other guarantee
(including any letter of credit) of all or any part of the Guaranteed
Obligations.
2.7 Subordination of Indebtedness of the Borrower. The Guaranty agrees
---------------------------------------------
that any indebtedness of the Borrower now or in the future owed to the Guarantor
is hereby subordinated to the Guaranteed Obligations. If the Agent so requests,
any such indebtedness shall be collected, enforced and received by the Guarantor
as trustee for the Agent and shall be paid over to the Agent (for the benefit of
the Lenders) in kind on account of the Guaranteed Obligations. If, after the
Agent's request, the Guarantor fails to collect or enforce any such indebtedness
or to pay the proceeds of such indebtedness to the Agent, the Agent as the
Guarantor's attorney-in-fact may do such acts and sign such documents in the
Guarantor's name and on the Guarantor's behalf as the Agent considers necessary
or desirable to effect such collection, enforcement or payment, the Agent being
hereby appointed the Guarantor's attorney-in-fact for such purpose.
2.8 Limitation on Guaranty. In any proceeding involving any state
----------------------
corporate law or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of the
Guarantor under Section 2.1 would otherwise, taking into account the provisions
of Section 2.9, be held or determined to be void, invalid or unenforceable or if
the claims of the Lenders in respect of such obligations would be subordinated
to the claims of any other creditors on account of the Guarantor's liability
under Section 2.1, then, notwithstanding any other provision of this Guaranty to
the contrary, the amount of such liability shall, without any further action by
the Guarantor, and Lender, the Agent or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
2.9 Rights of Contribution. The Guarantor hereby agrees that if any other
----------------------
guarantor (an "Excess Funding Guarantor") shall pay a portion of the Guaranteed
------ -----------------
Obligations in excess of the Excess Funding Guarantor's Pro Rata Share (as
defined below) of the Guaranteed Obligations, the other guarantors shall, on
demand (but subject to the next sentence), pay to the Excess Funding
-10-
Guarantor an amount equal to their respective Pro Rata Shares of such Excess
Funding Guarantor's payment. The payment obligations of the Guarantor under this
Section 2.9 shall be subordinate and subject in right of payment to the prior
payment in full and in cash of the obligations of the Guarantor under the other
provision of this Section 2, and such Excess Funding Guarantor shall not
exercise any right, remedy, power or privilege with respect to such excess until
payment and satisfaction in full of all such obligations. For the purposes of
this Section 2.9, "Pro Rata Shares" shall mean, for any guarantor, a percentage
equal to the percentage that the guarantor's Tangible Net Worth as at June 30,
1997 (as reflected on the balance sheet as at that date referred to in Section
3.2) is of the aggregate Tangible Net Worth of all of the guarantors as so
reflected as at such date.
2.10 Revocation. To the fullest extent permitted by law, the Guarantor
----------
hereby waives all right of revocation with respect to the Guaranteed
Obligations.
2.11 Right to Offset Balances. The Guarantor agrees that, in addition to
------------------------
(and without any limitation of) any right of setoff, banker's lien or
counterclaim a Lender may otherwise have, each Lender shall be entitled, at its
option but only with the prior written consent of the Required Lenders or the
Agent, to offset balances held by it for the amount of the Guarantor at any of
its offices, in Dollars or in any other currency, against any Obligations of the
Borrower to such Lender that are not paid when due (regardless of whether such
balances are then due to the Guarantor). Any Lender so entitled shall promptly
notify the Guarantor and the Agent of any offset effected by it, provided that
--------
such Lender's failure to give such notice shall not affect the validity of such
offset.
Section 3. Representations of the Guarantor. As of the Closing Date and
--------------------------------
as of the date of each extension of credit by the Lenders, the Guarantor
represents to the Agent and the Lenders that:
3.1 Corporate Existence. The Guarantor and its Subsidiaries: (i) is a
-------------------
corporation, partnership or other entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; (ii) has
all requisite corporate or other power, and has all material Governmental
Approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where the failure so to qualify would have a
Material Adverse Effect.
3.2 Financial Condition. The consolidated and consolidating balance
-------------------
sheets of the Borrower and the Guarantor as of June 30, 1997 are complete and
correct and fairly present the financial condition of such entities as at such
date.
-11-
3.3 Litigation. Except as disclosed to the Lenders in writing prior to
----------
the Closing Date, there are no legal or arbitral proceedings by or before any
Governmental Person, now pending or (to the knowledge of the Guarantor)
threatened against the Guarantor or its Property or any of its Subsidiaries or
any of their Property that, if adversely determined, could have a Material
Adverse Effect.
3.4 No Breach. None of the execution and delivery of this Agreement, the
---------
consummation of the transactions contemplated by this Guaranty or compliance
with the terms and provisions of this Guaranty will conflict with or result in a
breach of, or require any consent under, the corporate charter or by-laws of the
Guarantor, or any applicable Governmental Rule, or any agreement or instrument
to which the Guarantor or any of its Subsidiaries is a party or by which any of
them is bound or to which any of them is subject, or constitute a default under,
or result in the acceleration or mandatory prepayment of, any Debt evidenced by,
or termination of, any such agreement or instrument, or result in the creation
or imposition of any Lien upon any Property of the Guarantor or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
3.5 Corporate Action. The Guarantor has all necessary corporate power and
----------------
authority to execute, deliver and perform its obligations under this Guaranty;
the execution, delivery and performance by the Guarantor of this Guaranty have
been duly authorized by all necessary corporate action on its part (including
any required shareholder approvals); and this Guaranty has been duly and validly
executed and delivered by the Guarantor and constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms
3.6 Approvals. No Governmental Approvals are necessary for the execution,
---------
delivery or performance by the Guarantor of this Guaranty or for the legality,
validity or enforceability of this Guaranty.
3.7 ERISA. The Guarantor and its Affiliates have fulfilled their
-----
respective obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and are in compliance with all material respects with
the presently applicable provisions of ERISA and the Code, and have not incurred
any liability to the PBGC or any Plan or Multiemployer Plan (other than to make
contributions in the ordinary course of business).
3.8 Taxes. The Guarantor and its Subsidiaries have filed all United
-----
States Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Guarantor or any of its
Subsidiaries and all other related penalties and charges. The charges, accruals
and reserves on the books of the Guarantor and
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its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Guarantor, adequate. The Guarantor has not given or been
requested to give a waiver of the statute of limitations relating to the payment
of any Federal or other taxes.
3.9 Certain Regulations. The Guarantor is not (a) an "investment
-------------------
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, (b) a "holding company," or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935
or (c) subject to any other Governmental Rule restricting its ability to incur
Debt or to issue guarantees.
3.10 Ranking of Obligations. This Guaranty and the other Loan Documents
----------------------
to which the Guarantor is a party, when executed, are and will be the direct and
general obligations of the Guarantor. The Guarantor's Obligations hereunder and
thereunder will rank at least pari passu in priority of payment with all other
---- -----
Senior Debt, except to the extent permitted hereunder or under the Credit
Agreement.
Section 4. Covenants of the Guarantor. So long as this Guaranty is in
--------------------------
effect and until all of the Guaranteed Obligations have been paid in full and
the expiration and termination of the Commitments of the Lender under the Credit
Agreement, the Guarantor agrees as follows:
4.1 Financial Statements. The Guarantor shall deliver to each of the
--------------------
Lenders:
(a) Each of the financial statements referenced in Sections 7.1(i)
and (ii) of the Credit Agreement (within the time periods specified in such
Sections) as they relate to the Guarantor; and
(b) as soon as possible, and in any event within 10 days after the
Guarantor knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of the Guarantor setting
forth details respecting the event or condition and the action, if any, that
such Guarantor or its Affiliate proposes to take with respect to such event or
condition (and a copy of any report or notice required to be filed with or given
to PBGC by such Guarantor or an Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued under ERISA, with respect to a Plan, as to which PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event (provided that a
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failure to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Guarantor or any Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal by the Guarantor or an
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the
receipt by the Guarantor or any Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under Section 4041A of
ERISA; and
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Guarantor or any Affiliate to enforce Section 515
of ERISA, which proceeding is not dismissed within 30 days;
(c) promptly after the Guarantor knows or has reason to know that any
Default has occurred, a notice of such Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that the Guarantor has taken and proposes to take with
respect to such Default; and
(d) from time to time such other information regarding the business,
affairs or financial condition of the Guarantor or any of its Subsidiaries
(including any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA) as any Lender or the Agent may reasonably
request
4.2 Litigation. The Guarantor will promptly give to each Lender notice of
----------
all legal or arbitral proceedings by or before any Governmental Person affecting
such Guarantor or any of its Subsidiaries, except proceedings that, if adversely
determined, would not have a Material Adverse Effect.
4.3 Corporate Existence, Etc. The Guarantor will, and will cause each of
------------------------
its Subsidiaries to: preserve and maintain its corporate existence and all of
its material rights, privileges and franchises; comply with the requirements of
all applicable Governmental Rules if the failure to comply with such
requirements has a Material Adverse Effects; pay and discharge
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all taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its other Property prior to the date on which
penalties would attach, except for any such tax, assessment, charge or levy, the
payment of which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained; maintain all of its
Properties used or useful in its business in good working order and condition,
ordinary wear and tear excepted; permit representatives of any Lender or the
Agent, during normal business hours, to examine, copy and make extracts from its
books and records, to inspect its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by any Lender
or the Agent (as the case may be); keep adequate records and books of account,
in which complete entries will be made in accordance with Agreement Accounting
Principles; and keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as s usually carried by such corporations.
Section 5. Miscellaneous Provisions.
------------------------
5.1 Waiver. No failure or delay by the Agent or any Lender in exercising
------
any remedy, right, power or privilege under this Guaranty or any other Loan
Document shall operate as a waiver of such remedy, right, power or privilege,
nor shall any single or partial exercise of such remedy, right, power or
privilege preclude any other or further exercise of such remedy, right, power or
privilege or the exercise of any other remedy, right, power or privilege. The
remedies, rights, powers and privileges provided by this Guaranty are cumulative
and not exclusive of any remedies, rights, powers or privileges provided by the
other Loan Documents or by law.
5.2 Notices. All notices and communications to be given under this
-------
Guaranty shall be given or made in writing to the intended recipient at the
address specified below or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Guaranty, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 5.2:
To the Guarantor: LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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To the Agent: Sanwa Lender California
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
5.3 Expenses, Etc. The Guarantor agrees to pay or to reimburse the
-------------
Lenders and the Agent for all costs and expenses (including reasonable
attorneys' fees and expenses) that may be incurred by the Agent or the Lenders
in any effort to enforce any of the obligations of any Guarantor under this
Guaranty, whether or not any lawsuit is filed, including all such costs and
expenses (and reasonable attorneys' fees and expenses) incurred by the Agent or
the Lenders in any bankruptcy, reorganization, workout or similar proceeding.
All amounts due under this Guaranty (including under Section 2.1) not paid when
due shall bear interest until paid at the rate per annum equal to the rate set
forth in Section 2.17 of the Credit Agreement.
5.4 Amendments, Etc. Any provision of this Guaranty may be modified,
---------------
supplemented or waived only by an instrument in writing signed by the Guarantor
and the Agent (with the consent of the Lenders as specified in Section 10.4 of
the Credit Agreement). Any modification, supplement or waiver shall be for such
period and subject to such conditions as shall be specified in the written
instrument effecting the same and shall be binding upon the Agent, each Lender,
each holder of Guaranteed Obligations and the Guarantor, and any such waiver
shall be effective only in the specific instance and for the purpose for which
given.
5.5 Successors and Assigns. This Guaranty shall be binding upon and inure
----------------------
to the benefit of its parties and their respective successors and assigns. The
Guarantor may not assign or transfer its rights or obligations under this
Guaranty without the prior written consent of the Agent (with the further
consent of the Lenders as specified in the Credit Agreement).
5.6 Survival. All representations and warranties made in this Guaranty or
--------
in any certificate or other document delivered pursuant to or in connection with
this Guaranty shall survive the execution and delivery of this Guaranty or such
certificate or other document (as the case may be) or any deemed repetition of
any such representation or warranty.
5.7 Agreements Superseded. This Guaranty supersedes all prior agreements
---------------------
and understandings, written or oral, among the parties with respect to the
subject matter of this Guaranty.
5.8 Severability. Any provision of this Guaranty that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Guaranty, and any such prohibition or
unenforceability in
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any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
5.9 Captions. The table of contents, captions and section headings
--------
appearing in this Guaranty are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Guaranty.
5.10 Counterparts. This Guaranty may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties to the Guaranty may execute this Guaranty by
signing any such counterpart.
5.11 Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE
-----------------------------------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA AND OF
ANY CALIFORNIA STATE COURT SITTING IN LOS ANGELES, CALIFORNIA FOR THE PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED BY THIS GUARANTY. THE GUARANTOR IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE 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.
5.12 Waiver of Jury Trial. EACH OF THE GUARANTOR AND THE AGENT (ON BEHALF
--------------------
OF ITSELF AND THE LENDERS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED BY
THIS GUARANTY.
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IN WITNESS WHEREOF, the undersigned have executed this Guaranty as of the
date first above written.
GUARANTOR
---------
[GUARANTOR],
By: ____________________________
Title:
AGENT
-----
SANWA BANK CALIFORNIA
as Agent for the Lenders
By: ____________________________
Title:
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