EXHIBIT 10.12
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MEZZANINE LOAN AGREEMENT
Dated as of August 19, 2003
Between
SHG PROPERTY RESOURCES, LLC
and
SHG INVESTMENTS, LLC
collectively, as Borrower
and
CAPITALSOURCE FINANCE LLC,
FORTRESS CREDIT OPPORTUNITIES I, L.P.
and
HIGHBRIDGE/▇▇▇▇▇ SPECIAL OPPORTUNITIES FUND, L.P. ,
collectively, as Lender
CAPITALSOURCE FINANCE LLC,
as administrative agent and collateral agent for Lender
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TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION........................................................ 2
SECTION 1.1. DEFINITIONS.................................................................. 2
SECTION 1.2. PRINCIPLES OF CONSTRUCTION................................................... 32
II. GENERAL TERMS.................................................................................. 32
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER.................................... 32
SECTION 2.2. INTEREST RATE................................................................ 33
SECTION 2.3. LOAN PAYMENT................................................................. 38
SECTION 2.4. PREPAYMENTS.................................................................. 39
SECTION 2.5. RELEASE...................................................................... 40
SECTION 2.6. CASH MANAGEMENT.............................................................. 41
SECTION 2.7. ASSUMPTION OF PORTION OF LOAN................................................ 42
III. CONDITIONS PRECEDENT........................................................................... 43
SECTION 3.1. CONDITIONS PRECEDENT TO CLOSING.............................................. 43
IV. REPRESENTATIONS AND WARRANTIES................................................................. 47
SECTION 4.1. BORROWER REPRESENTATIONS..................................................... 47
SECTION 4.2. HEALTH CARE REPRESENTATIONS.................................................. 55
SECTION 4.3. SURVIVAL OF REPRESENTATIONS.................................................. 57
V. BORROWER COVENANTS............................................................................. 58
SECTION 5.1. AFFIRMATIVE COVENANTS........................................................ 58
SECTION 5.2. BORROWER NEGATIVE COVENANTS.................................................. 70
SECTION 5.3. GUARANTOR COVENANTS.......................................................... 79
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS............................................ 86
SECTION 6.1. INSURANCE.................................................................... 86
SECTION 6.2. CASUALTY AND CONDEMNATION.................................................... 87
VII. RESERVE FUNDS.................................................................................. 87
SECTION 7.1. RESERVE FUNDS GENERALLY...................................................... 87
VIII. DEFAULTS 88
SECTION 8.1. EVENT OF DEFAULT............................................................. 88
SECTION 8.2. REMEDIES..................................................................... 91
IX. SPECIAL PROVISIONS............................................................................. 94
SECTION 9.1. INTENTIONALLY DELETED........................................................ 94
SECTION 9.2. INTENTIONALLY DELETED........................................................ 94
SECTION 9.3. INTENTIONALLY DELETED........................................................ 94
SECTION 9.4. INTENTIONALLY DELETED........................................................ 94
SECTION 9.5. SERVICER..................................................................... 94
X. MISCELLANEOUS.................................................................................. 94
SECTION 10.1. SURVIVAL..................................................................... 94
SECTION 10.2. LENDER'S DISCRETION.......................................................... 94
SECTION 10.3. GOVERNING LAW................................................................ 94
SECTION 10.4. MODIFICATION, WAIVER IN WRITING.............................................. 96
SECTION 10.5. DELAY NOT A WAIVER........................................................... 96
SECTION 10.6. NOTICES...................................................................... 96
SECTION 10.7. TRIAL BY JURY................................................................ 98
SECTION 10.8. HEADINGS..................................................................... 98
SECTION 10.9. SEVERABILITY................................................................. 98
SECTION 10.10. PREFERENCES.................................................................. 98
SECTION 10.11. WAIVER OF NOTICE............................................................. 99
SECTION 10.12. REMEDIES OF BORROWER......................................................... 99
SECTION 10.13. EXPENSES; INDEMNITY.......................................................... 99
SECTION 10.14. SCHEDULES INCORPORATED...................................................... 100
SECTION 10.15. OFFSETS, COUNTERCLAIMS AND DEFENSES......................................... 101
SECTION 10.16. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES............... 101
SECTION 10.17. PUBLICITY................................................................... 101
SECTION 10.18. WAIVER OF MARSHALLING OF ASSETS............................................. 101
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SECTION 10.19. WAIVER OF OFFSETS/COUNTERCLAIMS............................................. 102
SECTION 10.20. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE............................... 102
SECTION 10.21. BROKERS AND FINANCIAL ADVISORS.............................................. 102
SECTION 10.22. PRIOR AGREEMENTS............................................................ 102
SECTION 10.23. CERTAIN ADDITIONAL RIGHTS OF LENDER (VCOC).................................. 103
SECTION 10.24. SUCCESSORS AND ASSIGNS...................................................... 103
SECTION 10.25. COUNTERPARTS; LOST NOTES.................................................... 103
SECTION 10.26. REINSTATEMENT............................................................... 103
SECTION 10.27. JOINT AND SEVERAL........................................................... 103
XI. AGENCY PROVISIONS; ASSIGNMENTS AND PARTICIPATIONS............................................. 104
SECTION 11.1. AGENT....................................................................... 104
SECTION 11.2. ACTIONS BY LENDER........................................................... 108
SECTION 11.3. SET OFF AND SHARING OF PAYMENTS............................................. 109
SECTION 11.4. PAYMENTS.................................................................... 110
SECTION 11.5. DISSEMINATION OF INFORMATION................................................ 110
SECTION 11.6. ASSIGNMENTS AND PARTICIPATIONS.............................................. 110
SECTION 11.7. NOTE REGISTER............................................................... 110
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SCHEDULES
Schedule I -- Properties and Mortgage Borrowers
Schedule II -- Licenses
Schedule III -- Form of Occupancy Report
Schedule IV -- Organizational Structure
Schedule V -- Licensed Bed Capacity
Schedule VI -- Intentionally Deleted
Schedule VII -- Mezzanine Allocated Loan Amounts
Schedule VIII -- Borrower Pledged Entity Interests
Schedule IX -- Exceptions to Health Care Representations
Schedule 5.3.2 -- Permitted Indebtedness
Schedule 5.3.3 -- Permitted Liens
Schedule 5.3.4 -- Investments; New Facilities or Collateral; Subsidiaries
Schedule 5.3.6 -- Transactions with Affiliates
Schedule 5.3.9 -- Contingent Obligations
Schedule 5.3.11 -- Leasehold Properties
Exhibit A -- Intentionally Deleted
Annex I -- Financial Covenants
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Index of Defined Terms
2003 MAXIMUM AMOUNT............................... 32,38
AFFILIATE......................................... 2
AFFILIATED LOANS.................................. 2
AFFILIATED MANAGER................................ 2
AGENT............................................. 1
AGREEMENT......................................... 1
ALTA.............................................. 2
ANNUAL BUDGET..................................... 3
APPLICABLE INTEREST RATE.......................... 3
APPROVED ANNUAL BUDGET............................ 3,64
APPROVED BANK..................................... 5
ASSIGNMENT OF LEASES.............................. 3
AWARD............................................. 3
BANK MIDWEST AMENDED AND RESTATED NOTE............ 3
BANKRUPTCY ACTION................................. 3
BANKRUPTCY CODE................................... 3
BASIC CARRYING COSTS.............................. 4
BERGEN NOTE....................................... 4
BORROWER.......................................... 1,4
BORROWER PLEDGED ENTITY INTERESTS................. 2,4
BREAKAGE COSTS.................................... 4,37
BUSINESS DAY...................................... 4
BUSINESS GROUP.................................... 4
CA MASTER TENANT.................................. 1
CAPITAL EXPENDITURES.............................. 4
CAPITAL LEASE..................................... 4
CAPITALIZED LEASE OBLIGATIONS..................... 4
CAPITALSOURCE LOAN DOCUMENTS...................... 4
CARE CENTERS...................................... 9
CASH EQUIVALENTS.................................. 4
CASH EXPENSES..................................... 5
CASH MANAGEMENT ACCOUNT........................... 5
CASH MANAGEMENT AGREEMENT......................... 5
CASUALTY.......................................... 5,87
CLASS 10 DEFERRED OBLIGATIONS..................... 5
CLOSING DATE...................................... 5
CODE.............................................. 5
COLLATERAL........................................ 5
CONDEMNATION...................................... 6
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CONDEMNATION PROCEEDS............................. 6
CONFIRMATION ORDER................................ 6
CONSOLIDATED BASIS................................ 6
CONTINGENT OBLIGATIONS............................ 6
CONTINUING CREDITOR DEFERRED OBLIGATION........... 6
CONTRACTUAL OBLIGATION............................ 6
CSFB.............................................. 6
DE 23 PLEDGED ENTITY INTERESTS.................... 2
DEBT.............................................. 6
DEBT SERVICE...................................... 7
Debt Service Coverage Ratio....................... 7
DEFAULT........................................... 7
DEFAULT RATE...................................... 7
Deposit Bank...................................... 7
DETERMINATION DATE................................ 7
DISTRIBUTION...................................... 7
ELIGIBLE ACCOUNT.................................. 7
ELIGIBLE INSTITUTION.............................. 8
EMBARGOED PERSON.................................. 8,54
ENVIRONMENTAL INDEMNITY........................... 8
ERISA............................................. 8
EUREKA PREMISE.................................... 9
EUREKA TRANSACTION................................ 8
EVENT OF DEFAULT.................................. 9,88
EXCESS CASH FLOW.................................. 9
EXCESS CASH FLOW PRINCIPAL PAYMENT................ 9,38
EXCLUDED SUBSIDIARY............................... 10
EXTRAORDINARY EXPENSE............................. 10,64
FACILITY.......................................... 10
FEE OWNERS........................................ 22
FISCAL YEAR....................................... 10
FITCH............................................. 10
FOREIGN TAXES..................................... 10,34
GAAP.............................................. 10
GOVERNMENTAL AUTHORITY............................ 10
GROSS INCOME FROM OPERATIONS...................... 10
GUARANTOR......................................... 1,10
GUARANTOR REVOLVING CREDIT BORROWER............... 10
GUARANTOR REVOLVING CREDIT LENDER................. 11
GUARANTOR REVOLVING CREDIT LOAN................... 11
GUARANTOR REVOLVING CREDIT LOAN AGREEMENT......... 11
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GUARANTOR REVOLVING CREDIT LOAN DOCUMENTS......... 11
GUARANTY.......................................... 11
GUARANTY AND SECURITY AGREEMENT................... 11
HEALTH CARE AUTHORITIES........................... 11
HEALTHCARE LAWS................................... 11
HERITAGE PARTNERS................................. 11
IMPROVEMENTS...................................... 11
INDEBTEDNESS...................................... 12
INDEBTEDNESS FOR BORROWED MONEY................... 12
INDEMNIFIED LIABILITIES........................... 12,100
INDEMNIFYING PERSON............................... 12
INDENTURE......................................... 12
INDENTURE INTERCREDITOR AGREEMENT................. 85
INDENTURE NOTES................................... 12
INDENTURE TRUSTEE................................. 12
INDEPENDENT DIRECTOR.............................. 12
INDEPENDENT MANAGER............................... 12
INDIVIDUAL PROPERTY............................... 13
INSURANCE PREMIUMS................................ 13
INSURANCE PROCEEDS................................ 13
INSURANCE SUBSIDIARY.............................. 13
INTERCREDITOR AGREEMENT........................... 14
INTEREST PERIOD................................... 13
INVENTORY......................................... 14
INVESTMENT........................................ 81
JOINDER AGREEMENT................................. 14
LANDLORD WAIVER................................... 14
LEASE............................................. 14
LEASEHOLD MORTGAGE................................ 14
LEASEHOLD PROPERTY................................ 14
LEGAL REQUIREMENTS................................ 15
LENDER............................................ 1,15
LETTER OF CREDIT.................................. 15
LIBOR............................................. 15
LIBOR LOAN........................................ 16
LICENSES.......................................... 16,55
LIEN.............................................. 16
LIQUIDATION EVENT................................. 16,40
LOAN.............................................. 16
LOAN DOCUMENTS.................................... 16
LOAN-TO-VALUE RATIO............................... 16
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LOCKBOX ACCOUNT................................... 16
LOCKBOX BANK...................................... 16
LONDON BUSINESS DAY............................... 17
MAINTENANCE CAPITAL EXPENDITURES.................. 17
MANAGER........................................... 17
MASTER LEASE...................................... 17
MASTER LESSEE..................................... 17
MATERIAL ADVERSE CHANGE........................... 17
MATERIAL ADVERSE EFFECT........................... 17
MATURITY DATE..................................... 17
MAXIMUM LEGAL RATE................................ 17
MEDICAL PAYORS.................................... 18
MEDICARE/MEDICAID ACCOUNT......................... 18
MEDICARE/MEDICAID RECEIVABLES ACCOUNT............. 18
MEZZANINE CASH MANAGEMENT AGREEMENT............... 18
MEZZANINE DEPOSIT ACCOUNT......................... 18,42
MEZZANINE LOAN ALLOCATED LOAN AMOUNT.............. 18
MEZZANINE LOAN RELEASE AMOUNT..................... 18
MEZZANINE SECURITIES ACCOUNT...................... 18,42
MONTHLY AMORTIZATION AMOUNT....................... 18,38
MONTHLY OPERATING EXPENSE AMOUNT.................. 19
▇▇▇▇▇'▇........................................... 19
MORTGAGE.......................................... 1,19
MORTGAGE BORROWER................................. 1,19
MORTGAGE INTERCREDITOR AGREEMENT.................. 19
MORTGAGE LENDER................................... 1,19
MORTGAGE LOAN..................................... 1
MORTGAGE LOAN AGREEMENT........................... 1,19
MORTGAGE LOAN DEFAULT............................. 19
MORTGAGE LOAN DOCUMENTS........................... 19
MORTGAGE LOAN EVENT OF DEFAULT.................... 19
MORTGAGE LOAN RESERVE FUNDS....................... 19
MORTGAGE NOTE..................................... 1,19
MORTGAGES......................................... 1
NET CASH FLOW..................................... 19
NET CASH FLOW SCHEDULE............................ 20,61
NET LIQUIDATION PROCEEDS AFTER DEBT SERVICE....... 20
NET OPERATING INCOME.............................. 20
NEW GUARANTOR REVOLVING CREDIT LOAN............... 20,75
NEW MORTGAGE LOAN................................. 20,78
NEW REVOLVING CREDIT LOAN......................... 20,76
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NOTE.............................................. 20
O&M AGREEMENT..................................... 21
OCCUPANCY REPORT.................................. 21
OFFICE BUILDING................................... 9
OFFICER'S CERTIFICATE............................. 21
OPERATING EXPENSES................................ 21
OPERATING LEASE................................... 21
OPERATOR.......................................... 21
ORGANIZATIONAL CHART.............................. 21,47
OTHER CHARGES..................................... 21
OWNER............................................. 22
PAYMENT DATE...................................... 22
PERMITTED ENCUMBRANCES............................ 22
PERMITTED INDEBTEDNESS............................ 79
PERMITTED LIENS................................... 80
PERMITTED REFINANCED INDEBTEDNESS................. 80
PERSON............................................ 22
PERSONAL PROPERTY................................. 22
PHYSICAL CONDITIONS REPORT........................ 22
PLAN OF REORGANIZATION............................ 22
PLEDGE AGREEMENT.................................. 2,22
PLEDGED ENTITY INTERESTS.......................... 23
PLEDGOR........................................... 23
PLEDGOR GUARANTY.................................. 23
POLICIES.......................................... 23
PRIMARY OBLIGATIONS............................... 6
PRIMARY OBLIGOR................................... 6
PRIME RATE........................................ 23
PRIME RATE LOAN................................... 23
PRIORITY CLAIMS................................... 23
PRIORITY LIENS.................................... 23
PROMISSORY NOTE B................................. 23
PROPERTIES........................................ 23
QUALIFIED MANAGER................................. 24
RATING AGENCIES................................... 24
REH LLC PLEDGED ENTITY INTERESTS.................. 1
RENTS............................................. 24
REPLACEMENT MANAGEMENT AGREEMENT.................. 24
RESERVE FUNDS..................................... 24
RESTORATION....................................... 25
RESTRICTED PARTY.................................. 25
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REVOLVING CREDIT LENDER........................... 25
REVOLVING CREDIT LOAN............................. 25
REVOLVING CREDIT LOAN AGREEMENT................... 25
REVOLVING CREDIT LOAN DOCUMENTS................... 25
RPGP.............................................. 1
S&P............................................... 25
SALE OR PLEDGE.................................... 25
SECURITY AGREEMENT................................ 25
SERVICER.......................................... 94
SERVICES.......................................... 25
SERVICING AGREEMENT............................... 94
SEVERED LOAN DOCUMENTS............................ 26,92
SIGNIFICANT PARTY................................. 26
SPECIAL PURPOSE ENTITY............................ 26
SPREAD............................................ 30
STATE............................................. 30
SUBORDINATED DEBT................................. 30
SUBORDINATION AGREEMENT........................... 30
SUBSIDIARY........................................ 30
SUBSIDIARY BORROWER............................... 30
SUBSIDIARY BORROWERS.............................. 30
SUMMIT NOTE....................................... 31
SURVEY............................................ 31
TAX AND INSURANCE ESCROW FUND..................... 31
TAXES............................................. 31
TITLE INSURANCE POLICIES.......................... 31
TRANSFER.......................................... 31,73
TX MASTER TENANT.................................. 1
U.S. OBLIGATIONS.................................. 31
UCC............................................... 31
UCC TITLE INSURANCE POLICY........................ 31,44
UNIFORM COMMERCIAL CODE........................... 31
UNION BANK NOTE................................... 31
VENDORS' LIEN..................................... ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ NOTE.............................. 31
WORKING CAPITAL................................... 32
ZONING REPORTS.................................... 32
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 19, 2003 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), by and among FORTRESS CREDIT OPPORTUNITIES I, L.P., a Delaware
limited partnership, HIGHBRIDGE/▇▇▇▇▇ SPECIAL OPPORTUNITIES FUND, L.P., a
Delaware limited partnership and CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company, collectively, as lender (in such capacity, "LENDER")
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company, as
administrative agent and collateral agent for Lender (in such capacity,
"AGENT"), and SHG PROPERTY RESOURCES, LLC, a Delaware limited liability company
("REH LLC") and SHG INVESTMENTS, LLC a Delaware limited liability company ("DE
23"), jointly and severally (REH LLC and DE 23, collectively, "BORROWER") and
FOUNTAIN VIEW, INC., a Delaware corporation ("GUARANTOR"), solely for the
purposes set forth in the last sentence of Section 2.6.3, Section 4.1.39 and
Section 5.3 of this Agreement.
W I T N E S S E T H:
WHEREAS, Column Financial, Inc., a Delaware corporation
("MORTGAGE LENDER"), is making a loan in the principal amount of $95,000,000.00
(the "MORTGAGE LOAN") to those entities set forth on SCHEDULE I annexed hereto
and made a part hereof (collectively, "MORTGAGE BORROWER") pursuant to that
certain Loan Agreement, dated as of the date hereof (as the same may be amended,
supplemented, replaced or otherwise modified from time to time, the "MORTGAGE
LOAN AGREEMENT"), which Mortgage Loan is evidenced by that certain Promissory
Note, dated as of the date hereof (as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time, the "MORTGAGE
NOTE"), made by Mortgage Borrower to Mortgage Lender and secured by, among other
things, certain first priority Deeds of Trust and Security Agreements dated as
of the date hereof (as the same may be amended, restated, supplemented, replaced
or otherwise modified from time to time, individually, each a "MORTGAGE", and,
as the context requires, collectively, the "MORTGAGES") given by Mortgage
Borrower in favor of Mortgage Lender pursuant to which Mortgage Borrower has
granted Mortgage Lender a first priority mortgage on, among other things, the
Property and other collateral as more fully described in the Mortgage;
WHEREAS, REH LLC is the legal and beneficial owner of (A) one
hundred percent (100%) of the membership interests in (i) those entities listed
as DE 24-32 on SCHEDULE VIII annexed hereto, (ii) Texas Secured Resources, LLC,
a Delaware limited liability company ("TX MASTER TENANT"), (iii) California
Secured Resources, LLC, a Delaware limited liability company ("CA MASTER
TENANT") and (iv) Secured Resource Management GP, LLC, a Delaware limited
liability company ("RPGP") and (B) all of the limited partnership interests in
SHG Secured Resources, LP, consisting of a 99% limited partnership interest
therein (collectively, the "REH LLC PLEDGED ENTITY INTERESTS");
WHEREAS, DE 23 is the legal and beneficial owner of (i) one
hundred percent (100%) of the membership interests in those entities listed as
DE 1-21 on SCHEDULE VIII annexed hereto and (ii) all of the limited partner
interests in those entities listed as NTLP 1-21 on SCHEDULE VIII annexed hereto,
consisting of ninety-nine percent (99%) of the limited partnership interests
therein (collectively, the "DE 23 PLEDGED ENTITY INTERESTS, together with the
REH LLC Pledged Entity Interests, collectively, the "BORROWER PLEDGED ENTITY
INTERESTS");
WHEREAS, Borrower desires to obtain the Loan (as hereinafter
defined) from Lender;
WHEREAS, as a condition precedent to the obligation of Lender
to make the Loan to Borrower, (A) Borrower and certain other entities have each
entered into that certain Pledge Agreement and Security Agreement, dated as of
the date hereof in favor of Agent (as amended, restated, supplemented, replaced
or otherwise modified from time to time, the "PLEDGE AGREEMENT"), pursuant to
which Agent has been granted a first priority security interest in the
Collateral (as defined in the Pledge Agreement) as collateral security for the
Debt (as hereinafter defined) and (B) Borrower and the other parties thereto
have entered into the Loan Documents; and
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents (as hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by
Lender, the covenants, agreements, representations and warranties set forth in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS. For all purposes of this
Agreement, except as otherwise expressly required or unless the context clearly
indicates a contrary intent:
"AFFILIATE" shall mean, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such Person or of
an Affiliate of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to an
Affiliate of Borrower or Guarantor.
"AFFILIATED MANAGER" shall mean any manager of any Individual
Property in which Borrower, Mortgage Borrower or Guarantor has, directly or
indirectly, any legal, beneficial or economic interest.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
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"ANNUAL BUDGET" shall mean the operating budget, including all
planned Capital Expenditures for the Properties and each Individual Property
separately, prepared by Mortgage Borrower for the applicable Fiscal Year or
other period.
"APPLICABLE INTEREST RATE" shall mean the rate or rates at
which the outstanding principal amount of the Loan bears interest from time to
time in accordance with the provisions of Section 2.2.3 hereof.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in
Section 5.1.11(l) hereof.
"ASSIGNMENT OF LEASES" shall mean, with respect to each
Individual Property, that certain first priority Assignment of Leases and Rents,
dated as of the date hereof, from Mortgage Borrower, as assignor, to Mortgage
Lender, as assignee, assigning to Mortgage Lender all of Mortgage Borrower's
interest in and to the Leases and Rents of such Individual Property as security
for the Mortgage Loan, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation with respect to all or any part of
any Individual Property.
"BANK MIDWEST AMENDED AND RESTATED NOTE" shall mean the
amended and restated promissory note in a maximum principal amount not to exceed
$5,633,333 to be issued by [Woodlands Resource Management, L.P., and The
Woodlands Healthcare Center, L.P.] to Bank Midwest, N.A. pursuant to the Plan,
the repayment of which is secured by that certain deed of trust and security
agreement dated December 1, 1993 and assigned to Bank Midwest by instrument
dated July 17, 2001.
"BANKRUPTCY ACTION" shall mean with respect to any Person (a)
such Person filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary
petition against such Person under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or soliciting or causing to be solicited
petitioning creditors for any involuntary petition against such Person; (c) such
Person filing an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or
soliciting or causing to be solicited petitioning creditors for any involuntary
petition from any Person; (d) such Person consenting to or acquiescing in or
joining in an application for the appointment of a custodian, receiver, trustee,
or examiner for such Person or any portion of the Property; or (e) such Person
making an assignment for the benefit of creditors, or admitting, in writing or
in any legal proceeding, its insolvency or inability to pay its debts as they
become due.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of
1978, as amended, 11 U.S.C., Section 101, et seq., and the regulations adopted
and promulgated pursuant thereto.
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"BASIC CARRYING COSTS" shall mean, for any period, with
respect to each Individual Property, the sum of the following costs associated
with such Individual Property for such period: (a) Taxes and (b) Insurance
Premiums.
"BERGEN NOTE" shall have the meaning set forth in the Plan of
Reorganization.
"BORROWER" shall have the meaning set forth in the
introductory paragraph hereto.
"BORROWER PLEDGED ENTITY INTERESTS" shall have the meaning set
forth in the Recitals.
"BREAKAGE COSTS" shall have the meaning set forth in Section
2.2.3(h) hereof.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in New York, New York are not
open for business.
"BUSINESS GROUP" shall mean (a) the Subsidiaries of Guarantor
that are borrowers under this Agreement, the Revolving Credit Loan Agreement,
the Mortgage Loan Agreement or Subsidiaries of such borrowers; (b) the long term
care business (other than such business as is covered by clause (a)); (c) the
pharmacy business; (d) the locomotion business, and (e) corporate headquarters
and overhead.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount
expended for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"CAPITAL LEASE" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations of
any Person under Capital Leases, in each case, taken at the amount thereof
accounted for as a liability in accordance with GAAP.
"CAPITALSOURCE LOAN DOCUMENTS" shall mean, collectively all of
the Loan Documents defined as Loan Documents in the Revolving Credit Loan
Agreement and the Guarantor Revolving Credit Loan Agreement.
"CASH EQUIVALENTS" shall mean (a) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any Guarantor Revolving
Credit Lender, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000, or (ii) any
4
bank (or the parent company of such bank) whose short-term commercial paper
rating from S&P is at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ is at
least P-2 or the equivalent thereof in each case with maturities of not more
than six months from the date of acquisition (any bank meeting the
qualifications specified in clauses (b)(i), (ii) or (iii), an "APPROVED BANK"),
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a), above, entered into
with any Approved Bank, (d) commercial paper issued by any Approved Bank or by
the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-2 or the equivalent thereof by S&P or at least P-2 or
the equivalent thereof by Moody's, or guaranteed by any industrial company with
a long term unsecured debt rating of at least A or the equivalent thereof, from
S&P or A2 or the equivalent thereof from Moody's and in each case maturing
within six months after the date of acquisition and (e) investments in money
market funds substantially all of whose assets are comprised of securities of
the type described in clauses (a) through (d) above.
"CASH EXPENSES" shall mean, for any period, the Operating
Expenses for the operation of the Properties as set forth in an Approved Annual
Budget to the extent that such expenses are actually incurred by Borrower minus
any payments into the Tax and Insurance Escrow Fund and the Replacement Reserve
Fund (each as defined in the Mortgage Loan Agreement).
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in
the Mortgage Loan Agreement.
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash
Management Agreement, dated as of the date hereof, by and among Mortgage
Borrower, Manager and Mortgage Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"CASUALTY" shall have the meaning set forth in Section 6.2
hereof.
"CLASS 10 DEFERRED OBLIGATIONS" shall have the meaning set
forth in the Plan of Reorganization.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"COLLATERAL" shall have the meaning set forth in the Pledge
Agreement.
"COMMITMENT" shall mean, with respect to each Lender, the
amounts set forth opposite the name of such Lender on the signature pages
hereof, such amount representing the portion of the Loan advanced by such Lender
on the date hereof.
5
"CONDEMNATION" shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in
the Mortgage Loan Agreement.
"CONFIRMATION ORDER" shall have the meaning set forth in
Section 3.1.21 hereof.
"CONSOLIDATED BASIS" shall mean, with respect to Borrower, the
consolidation in accordance with GAAP of the accounts or other items of
Guarantor and its Subsidiaries.
"CONTINGENT OBLIGATIONS" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guaranty any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.
"CONTINUING CREDITOR DEFERRED OBLIGATION" shall have the
meaning set forth in the Plan of Reorganization.
"CONTRACTUAL OBLIGATION" shall mean as to any Person, any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound, or
any provision of the foregoing.
"CSFB" shall mean Credit Suisse First Boston LLC and its
successors in interest.
"DEBT" shall mean the outstanding principal amount set forth
in, and evidenced by, this Agreement and the Note together with all interest
accrued and unpaid thereon and all other sums due to Lender and Agent in respect
of the Loan under the Note, this Agreement, the Pledge Agreement and the other
Loan Documents.
6
"DEBT SERVICE" shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments due under this
Agreement and the Note (excluding Excess Cash Flow Principal Payments).
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the
immediately preceding twelve (12) month period for which financial statements of
Borrower are delivered in accordance with this Agreement:
(a) the numerator is the Net Operating Income (excluding
interest on credit accounts) for such period as set forth in the financial
statements required hereunder; and
(b) the denominator is the aggregate amount of the Debt
Service due and payable on the Loan and the Mortgage Loan for such period.
If the Debt Service Coverage Ratio is required to be
calculated during a period in which the Loan has been outstanding for less than
twelve (12) months or financial statements are available for less than twelve
(12) months during the Loan term, Net Operating Income shall still be calculated
for the preceding twelve (12) months and Debt Service shall be calculated for
the number of full Interest Periods in which the Loan is outstanding multiplied
by a fraction the numerator of which is 12 and the denominator is the number of
such Interest Periods in which the Loan is outstanding.
"DEFAULT" shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"DEFAULT RATE" shall mean a rate per annum equal to the lesser
of (a) the Maximum Legal Rate and (b) five percent (5%) above the Applicable
Interest Rate.
"DEPOSIT BANK" shall mean the bank or banks selected by the
Agent to maintain the Mezzanine Deposit Account.
"DETERMINATION DATE" shall mean, with respect to any Interest
Period, the date that is two (2) London Business Days prior to the fifteenth
(15th) day of the calendar month in which such Interest Period commences.
"DISTRIBUTION" shall mean any fee, payment, bonus or other
remuneration or distribution of any kind, and any repayment of or debt service
on loans or other indebtedness.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable
account from all other funds held by the holding institution that is either (a)
an account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company, is subject to regulations substantially similar to
12 C.F.R.
7
Section 9.10(b), having in either case a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or
trust company, the short term unsecured debt obligations or commercial paper of
which are rated at ▇▇▇▇▇ "▇- ▇▇" ▇▇ S&P, "P-i" by Moody's or "F-1+" by Fitch, if
rated by such Rating Agency, in the case of accounts in which funds are held for
thirty (30) days or less (or, in the case of accounts in which funds are held
for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least "AA" by Fitch or S&P and "Aa2" by Moody's, if rated by
such Rating Agency). Lender and Agent acknowledge that each of Bank of America
and ▇▇▇▇▇ Fargo Bank, N.A. shall be deemed to be an Eligible Institutions so
long as its short term unsecured debt obligations or commercial paper (in the
case of accounts in which funds are held for thirty (30) days or less) are rated
at least "A-2+" by S&P, "P-2" by Moody's and "F-1" by Fitch, if rated by such
Rating Agency, or its long term unsecured debt obligations (in the case of
accounts in which funds are held for more than thirty (30) days) are rated at
least "A" by Fitch and S&P and "A2" by Moody's, if rated by such Rating Agency.
For accounts into which checks are deposited by Borrower from private pay
residents of the Facilities, other than the Lockbox Account and the
Medicare/Medicaid Account, a depository institution or trust company that
insures deposits held by such a depository institution or trust company through
the Federal Deposit Insurance Corporation shall constitute an "Eligible
Institution" so long as the amount on deposit in all accounts of any Borrower at
such institution does not exceed $100,000 at any one time.
"EMBARGOED PERSON" shall have the meaning set forth in Section
4.1.35 hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain
Environmental Indemnity Agreement, dated as of the date hereof, executed by
Borrower in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EUREKA TRANSACTION" shall mean the transactions contemplated
by that certain Option Agreement dated as of May 30, 2003 (as amended, modified
or supplemented from time to time with the consent of the Guarantor Revolving
Credit Lender (such consent not to be unreasonably withheld) (the "Option
Agreement") by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees of the
▇▇▇▇▇▇ Family Living Trust, Landlord and Guarantor, including, without
limitation, (i) the entering into of that certain Commercial Lease to be entered
into pursuant to the Option Agreement by and between Matmel Enterprises, Inc. as
"Landlord", and Guarantor or a Subsidiary of Guarantor, as "Tenant" with respect
to the lease by such tenant of the premises commonly known as Sunset Care
Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the Granada Care Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the Pacific Care
8
Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the Seaview Care Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "CARE CENTERS")
and the Redwood Care ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "OFFICE BUILDING" and collectively with the Care Centers,
the "EUREKA PREMISES") and (ii) the purchase by Guarantor or a Subsidiary of
Guarantor or the Eureka Premises or all of the equity interest in the entity
that owns the Eureka Premises, in each case pursuant to the Option Agreement.
"EVENT OF DEFAULT" shall have the meaning set forth in Section
8.1(a) hereof.
"EXCESS CASH FLOW" means for any fiscal year of Guarantor, (a)
the sum, without duplication, of (i) the net income or loss of Guarantor and its
Subsidiaries for such fiscal year, calculated in accordance with GAAP,
excluding, however, all gains and losses (together with any related provision
for federal and state income taxes on such gains and losses) realized in
connection with any sale or other disposition by Guarantor or any of its
Subsidiaries of any asset (other than the sales of inventory in the ordinary
course of business); (ii) the aggregate amount of all interest expense of
Guarantor and its Subsidiaries during such fiscal year, calculated in accordance
with GAAP, whether paid or accrued; (iii) the aggregate amount of all federal
and state income taxes incurred by Guarantor and its Subsidiaries during such
fiscal year, calculated in accordance with GAAP, whether paid or accrued; (iv)
the aggregate amount of all depreciation expense and amortization expense of
Guarantor and its Subsidiaries during such fiscal year, calculated in accordance
with GAAP; (v) the aggregate amount of all non-cash extraordinary losses
(together with any related provision for federal and state income taxes on such
extraordinary losses) of Guarantor and its Subsidiaries during such fiscal year,
calculated in accordance with GAAP; and (vi) an amount equal to any decrease in
the Working Capital during such fiscal year up to $2,000,000 per year; minus (b)
the sum, without duplication, of (i) the Maintenance Capital Expenditures for
such fiscal year; (ii) the aggregate amount of all interest expense of Guarantor
and its Subsidiaries paid or payable during such fiscal year, (iii) an amount
equal to any increase in the Working Capital during such fiscal year up to
$2,000,000 per year; (iv) the aggregate amount of all federal and state income
taxes of Guarantor and its Subsidiaries paid or payable during such fiscal year;
(v) the aggregate amount of all scheduled payments and mandatory prepayments of
principal actually made or required to be made during such fiscal year with
respect to the Mortgage Loan (including any required posting of cash collateral
in connection with property releases or loans), the Bank Midwest Amended and
Restated Note, the Woodlands Place Note, the Union Bank Note, the Mezzanine
Loan, (vi) the aggregate amount of all voluntary prepayments of principal
actually made with respect to the Loan and the Mortgage Loan and (vii) the
aggregate amount of all non-cash extraordinary gains (together with any related
provision for federal and state income taxes on such extraordinary gains) of
Guarantor and its Subsidiaries during such fiscal year, calculated in accordance
with GAAP.
"EXCESS CASH FLOW PRINCIPAL PAYMENT" shall have the meaning
set forth in Section 2.3.2(b) hereof.
9
"EXCLUDED SUBSIDIARY" shall mean any Subsidiary that is (i) a
Borrower, (ii) a borrower under the Mortgage Loan Documents, (iii) a Borrower
(as defined in the Revolving Credit Loan Agreement), (iv) a partner in an entity
described in clause (i), (ii) or (iii), and (iv) a Person designated by
Borrowing Agent (as defined in the Guarantor Revolving Credit Agreement) as an
excluded Subsidiary.
"EXTRAORDINARY EXPENSE" shall have the meaning set forth in
Section 5.1.11(l) hereof.
"FACILITY" shall mean, individually, any facility providing
Services and operated by a Mortgage Borrower.
"FISCAL YEAR" shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of the term
of the Loan.
"FITCH" shall mean Fitch, Inc.
"FOREIGN TAXES" shall have the meaning set forth in Section
2.2.3(e) hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean, for any period, all
income, computed in accordance with GAAP, derived from the ownership and
operation of the Properties from whatever source during such period, including,
but not limited to, Rents, utility charges, escalations, forfeited security
deposits, interest on credit accounts, service fees or charges, license fees,
parking fees, rent concessions or credits, and other pass-through or
reimbursements paid by tenants under the Leases of any nature but excluding
Rents from month-to-month tenants or tenants that are included in any Bankruptcy
Action, sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds and Condemnation Proceeds (other than business interruption or other
loss of income insurance), and any disbursements to Mortgage Borrower from the
Reserve Funds, or any other escrow fund established by the Mortgage Loan
Documents.
"GUARANTOR" shall mean Fountain View, Inc., a Delaware
corporation.
"GUARANTOR REVOLVING CREDIT BORROWER" shall mean,
individually, the "Borrower" or collectively, as the context requires, the
"Borrowers" under the Guarantor Revolving Credit Loan Agreement.
10
"GUARANTOR REVOLVING CREDIT LENDER" shall mean (i)
CapitalSource Finance LLC, as agent and sole lender under the Guarantor
Revolving Credit Loan, its successors and assigns or (ii) the lender under any
New Guarantor Revolving Credit Loan entered into in accordance with the
provisions of Section 5.2.13.
"GUARANTOR REVOLVING CREDIT LOAN AGREEMENT" shall mean that
certain Revolving Credit and Security Agreement dated as of the date hereof
between Guarantor and certain other entities a party thereto and Revolving
Credit Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"GUARANTOR REVOLVING CREDIT LOAN" shall mean the loan from
Revolving Credit Lender to Guarantor and certain other entities a party thereto
in the principal amount of up to Twenty One Million and No/100 Dollars
($21,000,000.00) and any New Guarantor Revolving Credit Loan entered into in
accordance with the provisions of Section 5.2.13.
"GUARANTOR REVOLVING CREDIT LOAN DOCUMENTS" shall mean the
Guarantor Revolving Credit Loan Agreement and all other agreements, documents,
instruments and certificates executed and delivered in connection therewith.
"GUARANTY" shall mean that certain Mezzanine Guaranty of
Payment, dated as of the date hereof, from Guarantor in favor of Agent for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"GUARANTY AND SECURITY AGREEMENT" shall have the meaning set
forth in the Guarantor Revolving Credit Agreement.
"HEALTH CARE AUTHORITIES" shall mean any federal, state or
local governmental or quasi-governmental authority or any agency, intermediary,
board, authority or entity concerned with the ownership, operation, use or
occupancy of any Individual Property as a skilled nursing facility or assisted
living facility.
"HEALTHCARE LAWS" shall mean all applicable statutes, laws,
ordinances, rules and regulations of any Governmental Authority with respect to
regulatory matters primarily relating to patient healthcare, healthcare
providers and healthcare services (including without limitation Section 1128B(b)
of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Social Security Act, as
amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as "▇▇▇▇▇ Statute").
"HERITAGE PARTNERS" shall mean Heritage Partners, Inc., its
Affiliates, and its and their successors and assigns.
"IMPROVEMENTS" shall have the meaning set forth in the
granting clause of the related Mortgage with respect to each Individual
Property.
11
"INDEBTEDNESS" of any Person shall mean, without duplication,
(a) all items (other than trade payables and current accrued liabilities) which,
in accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of the balance sheet of such Person as of the date
as of which Indebtedness is to be determined, including any lease which, in
accordance with GAAP would constitute a capital lease, (b) all indebtedness
secured by any mortgage, pledge, security, Lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby shall have
been assumed, (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"INDEBTEDNESS FOR BORROWED MONEY" of any Person shall mean,
without duplication, (a) all Indebtedness of such Person for borrowed money,
whether or not evidenced by bonds, debentures, notes or similar instruments, (b)
all Capitalized Lease Obligations of such Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge, security, Lien or conditional sale or
other title retention agreement to which any property or asset owned or held by
such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (d) all Indebtedness for the deferred purchase price of
property and (e) all direct or indirect guaranties of any or all of the
foregoing.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in
Section 10.13(b) hereof.
"INDEMNIFYING PERSON" shall mean each of Borrower and
Guarantor.
"INDENTURE" shall mean the Indenture dated August 19, 2003 by
Guarantor, as Issuer, the subsidiaries of the Guarantor party thereto as
guarantors and the Indenture Trustee, pursuant to which the Indenture Notes were
issued as the same may be amended, supplemented or modified from time to time.
"INDENTURE NOTES" shall mean the $106,761,608 of Senior
Subordinated Increasing Rate Secured Notes due 2008 issued pursuant to the
Indenture.
"INDENTURE TRUSTEE" shall mean US Bank, National Association,
as Trustee and Collateral Agent under the Indenture, and any successor thereto.
"INDEPENDENT DIRECTOR" or "INDEPENDENT MANAGER" shall mean a
natural Person who is not at the time of initial appointment, or at any time
while serving as a director or manager, as applicable, and has not been at any
time during the preceding five (5) years: (a) a stockholder, director (with the
exception of serving as the Independent Director or Independent Manager),
officer, employee, partner, member,
12
attorney or counsel of Borrower or any Affiliate of either of them (provided,
however, that no person may serve both as an Independent Director of Mortgage
Borrower and Borrower); (b) a creditor, customer, supplier or other person who
derives any of its purchases or revenues from its activities with Borrower or
any Affiliate of either of them; (c) a Person or other entity controlling or
under common control with any such stockholder, partner, member, creditor,
customer, supplier or other Person; or (d) a member of the immediate family of
any such stockholder, director, officer, employee, partner, member, creditor,
customer, supplier or other Person. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a person or entity, whether
through ownership of voting securities, by contract or otherwise.
A natural person who satisfies the foregoing definition other
than subparagraph (b) shall not be disqualified from serving as an Independent
Director or Independent Manager of Borrower if such individual is an independent
director provided by a nationally-recognized company that provides professional
independent directors and that also provides other corporate services in the
ordinary course of its business.
A natural person who otherwise satisfies the foregoing
definition except for being the independent director of a "special purpose
entity" affiliated with Borrower that does not own a direct or indirect equity
interest in Borrower or any co-borrower shall not be disqualified from serving
as an Independent Director or Independent Manager of the Borrower if such
individual is at the time of initial appointment, or at any time while serving
as a Independent Director or Independent Manager of the Borrower, an Independent
Director or Independent Manager of a Special Purpose Entity affiliated with
Borrower (other than Mortgage Borrower or any entity that owns a direct or
indirect equity interest in Borrower or any co-borrower) if such individual is
an independent director or independent manager provided by a
nationally-recognized company that provides professional independent directors
or independent managers.
"INDIVIDUAL PROPERTY" shall mean each parcel of real property,
the Improvements thereon and all personal property owned by Mortgage Borrower
and encumbered by a Mortgage, together with all rights pertaining to such
property and Improvements, as more particularly described in the Granting
Clauses of each Mortgage and referred to therein as the "Property."
"INSURANCE PREMIUMS" shall have the meaning set forth in the
Mortgage Loan Agreement.
"INSURANCE PROCEEDS" shall have the meaning set forth in the
Mortgage Loan Agreement.
"INSURANCE SUBSIDIARY" shall mean the offshore insurance
subsidiary to be formed by the Guarantor.
"INTEREST PERIOD" shall mean, with respect to any Payment
Date, the period commencing on the ninth (9th) day of the preceding calendar
month and
13
terminating on and including the eighth (8th) day of the calendar month in which
such Payment Date occurs; provided, however, that no Interest Period shall end
later than the Maturity Date (other than for purposes of calculating interest at
the Default Rate), and the initial Interest Period shall begin on and include
the Closing Date and shall end on and include the immediately following eighth
(8th) day of the calendar month.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement entered into between Lender, Agent and Mortgage Lender with respect to
the Loan and the Mortgage Loan.
"INVENTORY" shall mean all "inventory" (as defined in the UCC)
of Guarantor (or, if referring to another Person, of such other Person), now
owned or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"JOINDER AGREEMENT" shall have the meaning set forth in the
Guarantor Revolving Credit Agreement.
"LANDLORD WAIVER" shall mean a waiver/consent in form and
substance reasonably satisfactory to Agent from the owner/lessor of any premises
not owned by Guarantor or Borrower at which any of the collateral granted under
the Security Agreement is now or hereafter located for the purpose of providing
Agent access to such collateral, in each case as such may be modified, amended
or supplemented from time to time.
"LEASE" shall mean any lease, rental agreement, occupancy
agreement, residency agreement, sublease or subsublease, letting, license,
concession or other agreement of whatever form, including, without limitation,
service, consulting and administrative agreement (whether written or oral and
whether now or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of any
space in any Individual Property, and (a) every modification, amendment,
extension, renewal, replacement or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such
lease, sublease, subsublease, or other agreement and (b) every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"LEASEHOLD MORTGAGE" shall mean, with respect to each
Leasehold Property, that certain first priority Deed of Trust and Security
Agreement, dated the date hereof, executed and delivered as security for the
Loan and encumbering such Leasehold Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"LEASEHOLD PROPERTY" shall mean those properties identified on
SCHEDULE 5.3.11 and/or any other leasehold property of Borrower or Guarantor
upon which the Indenture Trustee shall assert a Lien.
14
"LEGAL REQUIREMENTS" shall mean, with respect to each
Individual Property, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities or Health Care Authorities
affecting each Individual Property or any part thereof or the construction, use,
alteration or operation thereof, or any part thereof, whether now or hereafter
enacted and in force (including, without limitation, all Health Care Laws and
the Americans with Disabilities Act of 1990), and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting any Individual Property or any
part thereof, including, without limitation, any which may (a) require repairs,
modifications or alterations in or to any Individual Property or any part
thereof or (b) in any way limit the use and enjoyment thereof.
"LENDER" shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Agent and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Agent and entitling Lender to draw thereon in New York, New York,
issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible Institution. If at any time the bank issuing any such Letter of
Credit shall cease to be an Eligible Institution, Agent shall have the right
immediately to draw down the same in full and hold the proceeds of such draw in
accordance with the applicable provisions hereof.
"LIBOR" shall mean, with respect to each Interest Period, the
rate (expressed as a percentage per annum and rounded upward, if necessary, to
the next nearest 1/8 of 1%) for deposits in U.S. dollars, for a one-month
period, that appears on Telerate Page 3750 (or the successor thereto) as of
11:00 a.m., London time, on the related Determination Date. If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such
Determination Date, LIBOR shall be the arithmetic mean of the offered rates
(expressed as a percentage per annum) for deposits in U.S. dollars for a
one-month period that appear on the Reuters Screen Libor Page as of 11:00 a.m.,
London time, on such Determination Date, if at least two such offered rates so
appear. If fewer than two such offered rates appear on the Reuters Screen Libor
Page as of 11:00 a.m., London time, on such Determination Date, Agent shall
request the principal London office of any four major reference banks in the
London interbank market selected by Agent to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London time, on such Determination Date for the amounts of not less than
U.S. $1,000,000. If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, Agent shall request any three major banks in New
York City selected by Agent to provide such bank's rate (expressed as a
percentage per annum) for loans in U.S. dollars to leading European
15
banks for a one-month period as of approximately 11:00 a.m., New York City time
on the applicable Determination Date for amounts of not less than U.S.
$1,000,000. If at least two such rates are so provided, LIBOR shall be the
arithmetic mean of such rates. LIBOR shall be determined conclusively by Agent
or its agent, absent manifest error. Notwithstanding anything to the contrary
contained herein in no event shall LIBOR be less than one and seventy -five
hundredths percent (1.75%) per annum.
"LIBOR LOAN" shall mean the Loan at such time as interest
thereon accrues at a rate of interest based upon LIBOR.
"LICENSES" shall have the meaning set forth in Section 4.2(a)
hereof.
"LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting Borrower, Mortgage Borrower, the Collateral, the
related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LIQUIDATION EVENT" shall have the meaning set forth in
Section 2.4.4 hereof, provided, however, that any assets which have been sold
and for which a release amount has been paid shall be deemed excluded from the
provisions of this Section.
"LOAN" shall mean the loan in the principal amount of Twenty
Three Million Dollars ($23,000,000.00) made by Lender to Borrower pursuant to
this Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Note, the Pledge Agreement, the Environmental Indemnity, the Guaranty, the
Pledgor Guaranty, the Mezzanine Cash Management Agreement, the Intercreditor
Agreement, the Mezzanine Subordination Agreements, and all other documents
executed and/or delivered in connection with the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"LOAN-TO-VALUE RATIO" shall mean the ratio, as of a particular
date, in which the numerator is equal to the outstanding principal balance of
Note A and the denominator is equal to (a) on the Closing Date, the value of the
Properties as set forth in the Appraisals delivered by Mortgage Borrower to
Mortgage Lender in accordance with the provisions of Section 3.1.18 of the
Mortgage Loan Agreement, and (b) thereafter, the fair market value of the
Properties as determined by Mortgage Lender in its reasonable discretion.
"LOCKBOX ACCOUNT" shall have the meaning set forth in the
Mortgage Loan Agreement.
"LOCKBOX BANK" shall have the meaning set forth in the
Mortgage Loan Agreement.
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"LONDON BUSINESS DAY" shall mean any day other than a
Saturday, Sunday or any other day on which commercial banks in London, England
are not open for business.
"MANAGER" shall mean a Qualified Manager who is managing the
Properties in accordance with the terms and provisions of this Agreement.
"MAINTENANCE CAPITAL EXPENDITURES" means, for any fiscal year,
the aggregate amount of all non-financed capital expenditures (other than
capital expenditures that are made in connection with an acquisition) incurred
or made by Guarantor and its Subsidiaries during such fiscal year; provided
that, for purposes of this definition, the maximum amount of such capital
expenditures deducted in any fiscal year (for any fiscal year, the "Maximum
Amount") shall not exceed (a) for fiscal year 2003, $7,000,000 and (b) for any
fiscal year thereafter, $7,000,000 plus the Maximum Amount for the immediately
preceding fiscal year minus the actual amount of Maintenance Capital
Expenditures included in this definition pursuant to clause (a) in such
immediately preceding fiscal year.
"MASTER LEASE" shall mean, individually and collectively,
those certain leases dated as of the date hereof between Owner, as lessor, and
the Master Lessees, as lessee, pursuant to which such Master Lessee is leasing
the Individual Properties.
"MASTER LESSEE" shall mean, collectively, the Mortgage
Borrowers set forth on SCHEDULE I under the column labeled "Master Lessee,"
which are leasing their respective Individual Properties pursuant to a Master
Lease.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall
mean any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has, had or could reasonably be
expected to have any material adverse effect upon or change in the validity or
enforceability of any Loan Document, (ii) has been or could reasonably be
expected to be material and adverse to the value of the Collateral or to the
business, operations, prospects, properties, assets, liabilities or condition of
Borrower and Guarantor taken as a whole, or (iii) has materially impaired or
could reasonably be expected to materially impair the ability of Borrower or
Guarantor to perform the obligations of each such Person or to consummate the
transactions under the Loan Documents executed by such Person.
"MATURITY DATE" shall mean September 9, 2008, or such other
date on which the final payment of principal of the Note becomes due and payable
as therein or herein provided, whether at such stated maturity date, by
declaration of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
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"MEDICAL PAYORS" shall mean the Center for Medicare and
Medicaid Services and any other federal or state governmental authority or any
other governmental Person responsible for making payment of any
Medicare/Medicaid Account.
"MEDICARE/MEDICAID ACCOUNT" shall mean any account payable by
any Medical Payor under the Medicare or Medicaid programs, any similar or
implementing state statutes and the rules and regulations promulgated pursuant
to any thereof.
"MEDICARE/MEDICAID RECEIVABLES ACCOUNT" shall have the meaning
set forth in the Mortgage Loan Agreement.
"MEZZANINE CASH MANAGEMENT AGREEMENT" shall mean that certain
Mezzanine Cash Management Agreement dated as of the date hereof among Borrower
and Agent, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"MEZZANINE DEPOSIT ACCOUNT AND SECURITIES ACCOUNT CONTROL
AGREEMENT" shall mean that certain Mezzanine Deposit Account and Securities
Account Control Agreement dated as of the date hereof among Borrower, Agent and
▇▇▇▇▇ Fargo Bank, N.A., as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"MEZZANINE DEPOSIT ACCOUNT" shall have the meaning set forth
in Section 2.6.5 (a) hereof.
"MEZZANINE SECURITIES ACCOUNT" shall have the meaning set
forth in Section 2.6.5 (b) hereof.
"MEZZANINE LOAN ALLOCATED LOAN AMOUNT" shall mean, for each
Individual Property, the amount set forth on SCHEDULE VII hereto, provided that
such amounts shall be ratably reduced in connection with any principal payments
made hereununder, including those made under Sections 2.3.2(a) and (b) hereof.
"MEZZANINE LOAN RELEASE AMOUNT" shall mean, for each
Individual Property, one hundred twenty-five percent (125%) of the Mezzanine
Loan Allocated Loan Amount for such Individual Property, as the same may be
reduced from time to time pursuant to the terms of this Agreement.
"MEZZANINE SUBORDINATION AGREEMENTS" shall mean, collectively,
the Subordination of Interim Management Agreements and Interim Subleases, the
Subordination of Master Leases and Operating Leases, the Subordination of
Administrative Services and Employee Services Agreements, each dated as of the
date hereof.
"MONTHLY AMORTIZATION AMOUNT" shall have the meaning set forth
in Section 2.3.2(a) hereof.
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"MONTHLY OPERATING EXPENSE AMOUNT" shall mean, with respect to
any calendar month, the monthly Cash Expenses for the Properties set forth in
the Approved Annual Budget then in effect.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" shall have the meaning set forth in the Recitals to
this Agreement.
"MORTGAGE BORROWER" shall have the meaning set forth in the
Recitals to this Agreement, together with its successors and permitted assigns.
"MORTGAGE INTERCREDITOR AGREEMENT" shall mean that certain
Intercreditor Agreement, dated as of August 19, 2003, by and between Mortgage
Lender and Lender, as the same may be amended from time to time.
"MORTGAGE LENDER" shall have the meaning set forth in the
Recitals to this Agreement, together with its successors and assigns.
"MORTGAGE LOAN AGREEMENT" shall have the meaning set forth in
the Recitals to this Agreement.
"MORTGAGE LOAN DEFAULT" shall mean a "Default" under and as
defined in the Mortgage Loan Agreement.
"MORTGAGE LOAN DOCUMENTS" shall mean, collectively, the
Mortgage Note, the Mortgage Loan Agreement, each Mortgage, each Assignment of
Leases and Rents, the Cash Management Agreement, the Assignment of Interest Rate
Cap Agreement, the Subordination of Administrative Services and Employee
Services Agreements, the Assignment and Subordindation of Interim Subleases and
Interim Management Agreements and any and all other documents defined as "Loan
Documents" in the Mortgage Loan Agreement, as amended, restated, replaced,
supplemented or otherwise modified from time to time.
"MORTGAGE LOAN EVENT OF DEFAULT" shall mean an "Event of
Default" under and as defined in the Mortgage Loan Agreement.
"MORTGAGE LOAN RESERVE FUNDS" shall mean the "Reserve Funds"
as defined in the Mortgage Loan Agreement.
"MORTGAGE NOTE" shall have the meaning set forth in the
Recitals to this Agreement.
"NET CASH FLOW" shall mean, for any period, the amount
obtained by subtracting Operating Expenses and Capital Expenditures for such
period from Gross Income from Operations for such period.
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"NET CASH FLOW SCHEDULE" shall have the meaning set forth in
Section 5.1.11(b) hereof.
"NET LIQUIDATION PROCEEDS AFTER DEBT SERVICE" shall mean, with
respect to any Liquidation Event, all amounts paid to or received by or on
behalf of Mortgage Borrower in connection with such Liquidation Event,
including, without limitation, proceeds of any sale, refinancing or other
disposition or liquidation, less (a) Lender's, Agent's and/or Mortgage Lender's
reasonable costs incurred in connection with the recovery thereon (b) the costs
incurred by Mortgage Borrower in connection with a Restoration of all or any
portion of the Property made in accordance with the Mortgage Loan Documents, (c)
amounts required or permitted to be deducted therefrom and amounts paid pursuant
to the Mortgage Loan Documents to Mortgage Lender, (d) in the case of a
foreclosure sale, disposition or Transfer of the Property in connection with
realization thereon following an Event of Default under the Mortgage Loan, such
reasonable and customary costs and expenses of sale or other disposition
(including attorneys' fees and brokerage commissions), (e) in the case of a
foreclosure sale, such costs and expenses incurred by Mortgage Lender under the
Mortgage Loan Documents as Mortgage Lender shall be entitled to receive
reimbursement for under the terms of the Mortgage Loan Documents, (f) in the
case of a refinancing of the Mortgage Loan, such costs and expenses (including
attorneys' fees) of such refinancing as shall be reasonably approved by Agent,
and (g) the amount of any prepayments required pursuant to the Mortgage Loan
Documents, and/or the Loan Documents, in connection with any such Liquidation
Event.
"NET OPERATING INCOME" shall mean, for any period, the amount
obtained by subtracting Operating Expenses for such period from Gross Income
from Operations for such period.
"NEW GUARANTOR REVOLVING CREDIT LOAN" shall have the meaning
set forth in Section 5.2.13(c) hereof.
"NEW MORTGAGE LOAN" shall have the meaning set forth in
Section 5.2.15(c) hereof.
"NEW REVOLVING CREDIT LOAN" shall have the meaning set forth
in Section 5.2.14(c) hereof.
"NOTE" shall mean, collectively (i) that certain Promissory
Note, dated as of the date hereof, in the principal amount of Eleven Million
Five Hundred Thousand Dollars ($11,500,000.00) made by Borrower in favor of
CapitalSource Finance LLC, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, (ii) that certain
Promissory Note, dated as of the date hereof, in the principal amount of Five
Million Seven Hundred Fifty Thousand Dollars ($5,750,000.00) made by Borrower in
favor of Highbridge/▇▇▇▇▇ Special Opportunities Fund, L.P., as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time and (iii) that certain Promissory Note, dated as of the date hereof, in the
principal amount of Five Million Seven Hundred Fifty Thousand Dollars
($5,750,000.00) made by
20
Borrower in favor of Fortress Credit Opportunities I, LP, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"O&M AGREEMENT" shall have the meaning set forth in the
Mortgage Loan Agreement.
"OCCUPANCY REPORT" shall mean a true, correct and complete
schedule, in substantially the form attached hereto as SCHEDULE III (provided in
accordance with legal requirements related to privacy) which accurately and
completely sets forth, the number and percentage of beds or units at the
Facility that are occupied, the average rent and other charges payable with
respect to each bed or unit at an Individual Property, the form of payment or
reimbursement (e.g. Medicare, Medical, other insurance, private payments)
applicable thereto and the aggregate arrearages in payments.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to
Lender or Agent, as applicable, by Borrower which is signed by an authorized
senior officer of the general partner or managing member of Borrower, as
applicable.
"OPERATING EXPENSES" shall mean, for any period, the total of
all expenditures, computed in accordance with GAAP, of whatever kind during such
period relating to the operation, maintenance and management of the Properties
that are incurred on a regular monthly or other periodic basis, including
without limitation, utilities, ordinary repairs and maintenance (which ordinary
repairs and maintenance for the purposes of determining the Debt Service
Coverage Ratio shall be no less than an assumed monthly expense of one-twelfth
(1/12th) of $400 per bed for any Individual Property that is a skilled nursing
facility and one-twelfth (1/12th) of $400 per unit for any Individual Property
that is an assisted living facility), insurance, license fees, property taxes
and assessments, advertising expenses, legal fees, consulting fees, management
fees, payroll and related taxes, computer processing charges, tenant
improvements and leasing commissions, operational equipment or other lease
payments as approved by Mortgage Lender, and other similar costs, but excluding
depreciation, Debt Service, Capital Expenditures, and contributions to the
Reserve Funds and any other reserves required under the Mortgage Loan Documents.
"OPERATING LEASE" shall mean, individually and collectively,
those certain leases dated as of the date hereof between a Master Lessee, as
lessor and an Operator, as lessee, pursuant to which such Operator is leasing
its Individual Property.
"OPERATOR" shall mean, collectively, the Mortgage Borrowers
set forth on SCHEDULE I under the column labeled "OPERATOR," which are operating
their respective Individual Properties pursuant to Operating Leases.
"ORGANIZATIONAL CHART" shall have the meaning set forth in
Section 4.1.1 hereof.
"OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any
21
Individual Property, now or hereafter levied or assessed or imposed against such
Individual Property or any part thereof.
"OWNER" shall mean, collectively, the Mortgage Borrowers set
forth on Schedule I under the column labeled "FEE OWNERS," each of which is the
fee owner of its respective Individual Property.
"PAYMENT DATE" shall mean the ninth (9th) day of each calendar
month during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
"PERMITTED ENCUMBRANCES" shall mean, with respect to an
Individual Property, collectively, (a) the Liens and security interests created
by the Loan Documents and Mortgage Loan Documents, (b) the Liens and security
interests created by the Revolving Credit Loan Agreement, (c) all Liens,
encumbrances and other matters disclosed in the Title Insurance Policies
relating to such Individual Property or any part thereof, (d) Liens, if any, for
Taxes imposed by any Governmental Authority not yet due or delinquent, and (e)
(i) with respect to the Title Insurance Policies, such other title exceptions as
Mortgage Lender has approved or may approve in writing in Mortgage Lender's sole
discretion and such survey exceptions as Mortgage Lender has approved or may
approve in writing in Mortgage Lender's sole discretion and (ii) with respect to
the UCC Title Insurance Policy, such other title exceptions as Agent has
approved or may approve in writing in Agent's sole discretion.
"PERSON" shall mean any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the
granting clauses of the Mortgage with respect to each Individual Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each
Individual Property, a report prepared by a company satisfactory to Lender
regarding the physical condition of such Individual Property, satisfactory in
form and substance to Lender in its reasonable discretion.
"PLAN OF REORGANIZATION" shall mean Debtors' Third Amended
Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated
April 22, 2003, in Case No. LA 01-39678BB through LA 01-39697BB and LA
01-45520BB and LA 01-45516BB, LA 01-45520BB and ▇▇ ▇▇-▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Bankruptcy Court for the Central District of California, Los Angeles
Division, as such may be modified, amended or supplemented from time to time.
"PLEDGE AGREEMENT" shall have the meaning set forth in the
Recitals to this Agreement.
22
"PLEDGED ENTITY INTERESTS" shall have the meaning set forth in
the Pledge Agreement.
"PLEDGOR" shall mean each "PLEDGOR" individually, or as the
context requires, collectively, as set forth in each of the Pledge Agreement.
"PLEDGOR GUARANTY" shall mean that certain Guaranty of Payment
(Pledgor), dated as of the date hereof, from Pledgors (other than Borrower and
Guarantor) to Agent, for the benefit of the Lenders, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"POLICIES" shall have the meaning set forth in the Mortgage
Loan Agreement.
"PRIME RATE" shall mean the annual rate of interest publicly
announced by Citibank, N.A. in New York, New York, as its base rate, as such
rate shall change from time to time. If Citibank, N.A. ceases to announce a base
rate, Prime Rate shall mean the rate of interest published in The Wall Street
Journal from time to time as the "Prime Rate." If more than one "Prime Rate" is
published in The Wall Street Journal for a day, the average of such "Prime
Rates" shall be used, and such average shall be rounded up to the nearest
one-eighth of one percent (0.125%). If The Wall Street Journal ceases to publish
the "Prime Rate," the Agent shall select an equivalent publication that
publishes such "Prime Rate," and if such "Prime Rates" are no longer generally
published or are limited, regulated or administered by a governmental or
quasigovernmental body, then Agent shall reasonably select a comparable interest
rate index. Notwithstanding the foregoing to the contrary, so long as the
Mortgage Loan remains outstanding, the "Prime Rate" shall have the meaning set
forth in the Mortgage Loan Agreement.
"PRIME RATE LOAN" shall mean the Loan at such time as interest
thereon accrues at a rate of interest based upon the Prime Rate.
"PRIME RATE SPREAD" shall mean the difference (expressed as
the number of basis points) between (a) LIBOR plus the Spread on the date LIBOR
was last applicable to the Loan and (b) the Prime Rate on the date that LIBOR
was last applicable to the Loan; provided, however, in no event shall such
difference be a negative number.
"PROPERTIES" shall mean, collectively, each and every
Individual Property which is subject to the terms of the Mortgage Loan Agreement
and the Mortgages.
"PRIORITY CLAIMS" shall mean Class 1, Class 2, Class 3, Class
4 and Class 7 claims under the Plan of Reorganization and any other liens given
priority under the Plan of Reorganization and outstanding on the Closing Date.
"PRIORITY LIENS" shall mean Liens permitted pursuant to
Section 5.3.3(ii), (iii), (iv), (v), (vi), (viii), (x), (xi) and Liens set forth
on SCHEDULE 5.3.3.
"PROMISSORY NOTE B" shall have the meaning set forth in the
Mortgage Loan Agreement.
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"PRO RATA SHARE" means, with respect to each Lender at any
time, the percentage obtained by dividing (i) the principal balance of the Loan
held by such Lender by (ii) the aggregate principal balance of the Loan.
"QUALIFIED MANAGER" shall mean, in the reasonable judgment of
Agent, a reputable and experienced management organization (which may be an
Affiliate of Borrower) possessing experience in managing properties similar in
size, scope, use and value as the Properties.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch,
or any other nationally recognized statistical rating agency which has been
approved by Agent.
"RENTS" shall mean, with respect to each Individual Property,
all accounts (including any rights of Mortgage Borrower in accounts arising from
the operations conducted at or by the Facility), deposits (whether for security
or otherwise but excluding any resident trust accounts), rents, issues, profits,
revenues, royalties, rights, benefits, and income of every nature of and from
the Individual Property and the operations conducted or to be conducted thereon,
including, without limitation, minimum rents, additional rents, termination
payments, forfeited security deposits, any rights to payment earned under Leases
for the operation of ongoing retail businesses such as newsstands, concession
stands, barbershops, beauty shops, gift shops, cafeterias, dining rooms,
restaurants, lounges, vending machines, physicians' offices, pharmacies,
laboratories, gymnasiums, swimming pools, tennis courts, golf courses,
recreational centers and specialty shops, liquidated damages following default
and all proceeds payable under any policy of insurance covering loss of rents
resulting from untenantability due to destruction or damage to the Individual
Property, together with the immediate and continuing right to collect and
receive the same, whether now due or hereafter becoming due, and together with
all rights and claims of any kind that Mortgage Borrower may have against any
tenant, lessee or licensee under the Leases or against any other occupant of the
Individual Property.
"REPLACEMENT MANAGEMENT AGREEMENT" shall mean (a) a management
agreement with a Qualified Manager, which management agreement shall be
reasonably acceptable to Agent in form and substance and (b) an assignment of
management agreement and subordination of management fees substantially in the
form then used by Agent (or of such other form and substance reasonably
acceptable to Agent), executed and delivered to Lender by Borrower and such
Qualified Manager at Borrower's expense.
"REQUIRED LENDERS" means at any time the Lenders whose Pro
Rata Shares, in the aggregate, are greater than or equal to sixty-six and
two-thirds percent (66.67%).
"RESERVE FUNDS" shall mean, collectively, the Tax and
Insurance Escrow Fund, the Replacement Reserve Fund and the Debt Service Reserve
Fund, the Required Repair Fund and any other escrow fund established pursuant to
and as defined in the Mortgage Loan Documents.
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"RESTORATION" shall mean the repair and restoration of an
Individual Property after a Casualty or Condemnation as nearly as commercially
practicable to the condition the Individual Property was in immediately prior to
such Casualty or Condemnation.
"RESTRICTED PARTY" shall mean, collectively, (a) Borrower,
Mortgage Borrower, Guarantor and any Affiliated Manager and (b) any shareholder,
partner, member, non-member manager, direct or indirect legal or beneficial
owner of, Borrower, Mortgage Borrower or any Affiliated Manager.
"REVOLVING CREDIT LENDER" shall mean (i) CapitalSource Finance
LLC, as administrative agent and collateral agent for the lenders specified in
the Revolving Credit Loan, their successors and assigns or (ii) the lender under
any New Revolving Credit Loan entered into in accordance with the provisions of
Section 5.2.14.
"REVOLVING CREDIT LOAN" shall mean the loan from Revolving
Credit Lender to Operators in the principal amount of up to Eleven Million and
No/100 Dollars ($11,000,000.00) and any New Revolving Credit Loan entered into
in accordance with the provisions of Section 5.2.14.
"REVOLVING CREDIT LOAN AGREEMENT" shall mean that certain
Revolving Credit and Security Agreement dated as of the date hereof between the
Borrowers listed on SCHEDULE 1 to the Revolving Credit Loan Agreement and
Revolving Credit Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"REVOLVING CREDIT LOAN DOCUMENTS" shall mean, the Revolving
Credit Loan Agreement and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies.
"SALE OR PLEDGE" shall mean a voluntary or involuntary sale,
conveyance, assignment, transfer, encumbrance or pledge of a legal or beneficial
interest.
"SECURITY AGREEMENT" shall mean that certain Security
Agreement dated as of the date hereof between the grantors listed on SCHEDULE 1
to the Security Agreement, Guarantor and Agent, for the benefit of the Lenders,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"SERVICES" shall mean medical and health care services
provided to a Person, including, but not limited to, medical and health care
services which are covered by a policy of insurance, physician services, nurse
and therapist services, dental services, hospital services, skilled nursing
facility services, comprehensive outpatient rehabilitation services, home health
care services, pharmacy services, residential and out-patient behavioral
healthcare services.
25
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in
Section 8.2(d) hereof.
"SIGNIFICANT PARTY" shall mean Borrower, Mortgage Borrower,
Guarantor and Operators.
"SPECIAL PURPOSE ENTITY" shall mean (i) with respect to a
Mortgage Borrower, a "Special Purpose Entity" as defined in the Mortgage Loan
Agreement and (ii) with respect to any other corporation, limited partnership or
limited liability company which at all times on and after the Closing Date
hereof (except as otherwise provided in the Revolving Loan Agreement or
Guarantor Revolving Loan Agreement):
(a) is organized solely for the purpose of (i) owning,
holding, encumbering, selling, transferring, exchanging, managing and operating
the Collateral, entering into this Agreement with the Lender, refinancing the
Collateral in connection with a permitted repayment of the Loan, and transacting
lawful business that is incident, reasonably necessary and appropriate to
accomplish the foregoing; or (ii) acting as a general partner of the limited
partnership that owns the Collateral or managing member of the limited liability
company that owns the Collateral;
(b) is not engaged and will not engage in any business
unrelated to (i) the ownership of the Collateral, (ii) acting as general partner
of the limited partnership that owns the Collateral or (iii) acting as a
managing member of the limited liability company that owns the Collateral, as
applicable;
(c) does not have and will not have any assets other than
those related to the Collateral or its partnership interest in the limited
partnership or the member interest in the limited liability company that owns
the Collateral or acts as the general partner or managing member thereof as
applicable;
(d) has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets, transfer
of partnership or membership interests (if such entity is a general partner in a
limited partnership or a member in a limited liability company) or amendment of
its limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation or operating agreement (as applicable)
with respect to the matters set forth in this definition;
(e) if such entity is a limited partnership, has, as its
only general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies and each general partner owns at
least one half of one percent (0.5%) of the equity of the limited partnership;
(f) if such entity is a corporation, has at least two (2)
Independent Directors, and has not caused or allowed and will not cause or allow
the board of directors of such entity to take any action requiring the unanimous
affirmative vote of one hundred percent (100%) of the members of its board of
directors unless two (2) Independent Directors shall have participated in such
vote;
26
(g) if such entity is a limited liability company with
more than one (1) member, has at least one (1) member that is a Special Purpose
Entity that is a corporation that has at least two (2) Independent Directors and
that owns at least one half of one percent (0.5%) of the equity of the limited
liability company;
(h) if such entity is a limited liability company with
only one (1) member, is a limited liability company organized in the State of
Delaware that (i) is managed by a board of managers, (ii) has at least two (2)
Independent Managers and has not caused or allowed and will not cause or allow
the board of managers of such entity to take any action requiring the unanimous
affirmative vote of one hundred percent (100%) of the managers unless two (2)
Independent Managers shall have participated in such vote and (iii) at least one
(1) springing member that will become a non-managing member of such entity upon
the dissolution of the existing member;
(i) if such entity is (i) a limited liability company,
has articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (ii) a limited partnership, has a limited partnership
agreement, or (iii) a corporation, has a certificate of incorporation or
articles that, in each case, provide that such entity will not, without the
written consent of any applicable Governmental Authority, if required: (A)
dissolve, merge, liquidate, consolidate; (B) sell all or substantially all of
its assets or the assets of Borrower (as applicable) without the consent of
Agent; (C) engage in any other business activity, or amend its organizational
documents with respect to the matters set forth in this definition without the
consent of Agent; or (D) without the affirmative vote of two (2) Independent
Managers or two (2) Independent Directors and of all other directors of the
corporation or board of managers (that is such entity or the general partner or
managing or co-managing member of such entity), file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings with respect to itself or
to any other entity in which it has a direct or indirect legal or beneficial
ownership interest;
(j) is and will remain solvent and pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due, and is maintaining and will
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;
(k) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(l) has maintained and will maintain its accounts, books
and records separate from any other Person and will file its own tax returns,
except to the extent that it is required to file consolidated tax returns by
law;
(m) has maintained and will maintain its own records,
books, resolutions and agreements;
27
(n) other than as provided in the Mezzanine Cash
Management Agreement, (i) has not commingled and will not commingle its funds or
assets with those of any other Person and (ii) has not participated and will not
participate in any cash management system with any other Person, except that if
Borrower and its Affiliates use a centralized disbursement system, administered
by an Affiliate pursuant to written paying agency agreement acceptable to Agent
to pay expenses, Borrower may, on any day when Borrower shall pay such expenses,
transfer the amount of such payment to the disbursement account used for such
centralized system and cause such disbursement to be made on the same day,
provided that such disbursement shall indicate that such disbursement is made on
behalf of Borrower and Borrowers shall keep, and shall cause such Affiliates to
keep accurate records reflecting all deposits made by Borrower and all
disbursements made on Borrower's behalf;
(o) has held and will hold its assets in its own name;
(p) has conducted and will conduct its business in its
name or in a name franchised or licensed to it by an entity other than an
Affiliate of Borrower, except for services rendered under a business management
services agreement with an Affiliate that complies with the terms contained in
Subsection (dd) below, so long as the manager, or equivalent thereof, under such
business management services agreement holds itself out as an agent of Borrower;
(q) has maintained and will maintain its financial
statements, accounting records and other entity documents separate from any
other Person and has not permitted and will not permit its assets or liabilities
to be listed as assets or liabilities on the financial statement of any other
entity except as required by GAAP; provided, however, that any such consolidated
financial statement shall contain a note indicating that its separate assets and
liabilities are neither available to pay the debts of the consolidated entity
nor constitute obligations of the consolidated entity;
(r) has paid and will pay its own liabilities and
expenses, including the salaries of its own employees, out of its own funds and
assets, and has maintained and will maintain a sufficient number of employees in
light of its contemplated business operations and in accordance with all Legal
Requirements;
(s) has observed and will observe all partnership,
corporate or limited liability company formalities, as applicable;
(t) has and will have no Indebtedness other than (i) the
Loan, (ii) liabilities incurred in the ordinary course of business and the
routine administration of Borrower, which liabilities are not more than sixty
(60) days past the date incurred, are not evidenced by a note and are paid when
due, and which amounts are normal and reasonable under the circumstances, and
(iii) such other liabilities that are permitted pursuant to this Agreement;
(u) has not and will not assume or guarantee or become
obligated for the debts of any other Person (other than pursuant to the Summit
Note) or hold out its
28
credit as being available to satisfy the obligations of any other Person except
as permitted pursuant to this Agreement; provided, however, that this provision
shall not be deemed to prohibit indemnification and contribution agreements
entered into under the Loan Documents;
(v) has not and will not acquire obligations or
securities of its partners, members or shareholders or any other Affiliate;
(w) has allocated and will allocate fairly, reasonably
and in accordance with all Legal Requirements any overhead expenses or other
common expenses that are shared with any Affiliate, including, but not limited
to, paying for shared office space and services performed by any employee of an
Affiliate;
(x) maintains and uses and will maintain and use separate
stationery, invoices and checks bearing its name. The stationery, invoices, and
checks utilized by the Special Purpose Entity or utilized to collect its funds
or pay its expenses shall bear its own name and shall not bear the name of any
other entity unless such entity is clearly designated as being the Special
Purpose Entity's agent;
(y) has not pledged and will not pledge its assets for
the benefit of any other Person, except as otherwise permitted or by the Loan
Documents;
(z) has held itself out and identified itself and will
hold itself out and identify itself as a separate and distinct entity under its
own name or in a name franchised or licensed to it by an entity other than an
Affiliate of Borrower and not as a division or part of any other Person, except
(i) for services rendered under a business management services agreement with an
Affiliate that complies with the terms contained in Subsection (dd) below, so
long as the manager, or equivalent thereof, under such business management
services agreement holds itself out as an agent of Borrower; or (ii) to the
extent a single member limited liability company is treated as a division of its
member for federal tax purposes;
(aa) has maintained and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person;
(bb) has not made and will not make loans to any Person or
hold evidence of indebtedness issued by any other Person or entity (other than
cash and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(cc) has not identified and will not identify its
partners, members or shareholders, or any Affiliate of any of them, as a
division or part of it, and has not identified itself and shall not identify
itself as a division of any other Person, except to the extent a single member
limited liability company is treated as a division of its member for federal tax
purposes;
29
(dd) has not entered into or been a party to, and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or Affiliates except (i) in the ordinary course of its business and
on terms which are intrinsically fair, commercially reasonable and are in
compliance with all Legal Requirements and no less favorable to it than would be
obtained in a comparable arm's-length transaction with an unrelated third party,
and (ii) in connection with this Agreement;
(ee) has not and will not have any obligation to, and will
not, indemnify its partners, officers, directors or members, as the case may be,
unless such an obligation is fully subordinated to the Debt;
(ff) if such entity is a corporation, it shall consider
the interests of its creditors in connection with all corporate actions;
(gg) does not and will not have any of its obligations
guaranteed by any Affiliate, except as otherwise provided for in the Loan
Documents or the Revolving Credit Loan Documents or the Guarantor Revolving
Credit Loan Documents; and
(hh) has complied and will comply with all of the terms
and provisions contained in its organizational documents. The statement of facts
contained in its organizational documents are true and correct and will remain
true and correct.
"SPREAD" shall mean 18.875%.
"STATE" shall mean, with respect to an Individual Property,
the State or Commonwealth in which such Individual Property or any part thereof
is located.
"SUBORDINATED DEBT" shall mean Indebtedness under the
Indenture, the Bergen Note, the Class 10 Deferred Obligation, the Continuing
Creditor Deferred Obligation and the Vendor's Lien and any other Indebtedness
which is expressly subordinated to the obligations of Borrower and Guarantor
hereunder and under the Guaranty and under the Guarantor Revolving Credit Loan
Documents pursuant to a Subordination Agreement or otherwise in a manner
satisfactory to Guarantor Revolving Credit Loan Lender.
"SUBORDINATION AGREEMENT" shall mean, collectively and each
individually, any subordination agreements to which Lender or Agent on behalf of
Lender and other service providers or creditors of Guarantor are a party and any
other agreement in form and substance reasonably satisfactory to Agent pursuant
to which a Person agrees to subordinate its Indebtedness and/or Liens to the
Debt.
"SUBSIDIARY" shall mean, as to any other Person, any Person in
which more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by such Person or by one or more of
such Person's Subsidiaries.
"SUBSIDIARY BORROWERS" and "SUBSIDIARY BORROWER" shall mean
the entities listed on SCHEDULE VIII to this Agreement.
30
"SUMMIT NOTE" shall mean that certain Note, dated as of the
date hereof, in the original principal amount of $32,392,800, given by SHG
INVESTMENTS, LLC, in favor of SUMMIT CARE TEXAS, LP, a Texas limited
partnership, which note has been pledged to Lender as additional security for
the Loan.
"SURVEY" shall mean a survey of the Individual Property in
question prepared pursuant to the requirements contained in Section 3.1.3(c)
hereof.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set
forth in the Mortgage Loan Agreement.
"TAXES" shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against any Individual Property or part thereof.
"TITLE INSURANCE POLICIES" shall mean, with respect to each
Individual Property, an ALTA mortgagee title insurance policy in a form
acceptable to Lender (or, if an Individual Property is in a State which does not
permit the issuance of such ALTA policy, such form as shall be permitted in such
State and acceptable to Mortgage Lender) issued with respect to such Individual
Property and insuring the lien of the Mortgage encumbering such Individual
Property.
"TRANSFER" shall have the meaning set forth in Section
5.2.10(b) hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the applicable State in which an Individual
Property is located.
"UCC TITLE INSURANCE POLICY" shall have the meaning set forth
in Section 3.1.3(b) hereof.
"UNION BANK NOTE" shall mean that certain Amended and Restated
Commercial Promissory Note dated April 1, 2001 issued by Summit Care Corporation
to Union Bank of California, N.A. with an outstanding principal balance of
$823,333.04 on the date of this Agreement and secured by certain real and
personal property located in Burbank, California, pursuant to that certain
Extension and Modification Agreement and Modification of Deed of Trust dated
April 1, 2001.
"U.S. OBLIGATIONS" shall mean non-redeemable securities
evidencing an obligation to timely pay principal and/or interest in a full and
timely manner that are direct obligations of the United States of America for
the payment of which its full faith and credit is pledged.
"VENDORS' LIEN" shall have the meaning set forth in the Plan
of Reorganization.
"WOODLANDS PLACE NOTE" shall mean that certain promissory note
in the original principal amount of $1,887,866.62 made by Woodlands Resource
Management,
31
L.P., and The Woodlands Healthcare Center, L.P., in favor of Woodlands Place
Nursing Center, LP, and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith, as each may be
amended, modified and supplemented from time to time.
"WORKING CAPITAL" means, as of any date, (a) the sum, without
duplication, of (i) current assets (other than cash and cash equivalents) and
(ii) cash and cash equivalents held in restricted accounts minus (b) the sum,
without duplication, of (i) current liabilities (other than the current portion
of long term debt) and (ii) long term liabilities related to accrued insurance,
in each case calculated on such date for Guarantor and its Subsidiaries.
"ZONING REPORTS" shall have the meaning set forth in Section
3.1.3(f) hereof.
"2003 MAXIMUM AMOUNT" shall have the mean set forth in Section
2.3.2(b) hereof.
SECTION 1.2. PRINCIPLES OF CONSTRUCTION. All references
to sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified. All uses of the word "including" shall mean
"including, without limitation" unless the context shall indicate otherwise.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
II. GENERAL TERMS
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the
terms and conditions set forth herein, Lender hereby agrees to make and Borrower
hereby agrees to accept the Loan on the Closing Date. The portion of the Loan
being advanced by each Lender is an amount equal to such Lender's Commitment.
2.1.2 SINGLE DISBURSEMENT TO BORROWER. Borrower shall
receive only one borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE, PLEDGE AGREEMENT AND LOAN DOCUMENTS. The
Loan shall be evidenced by the Note and secured by the Pledge Agreement and the
other Loan Documents.
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of
the Loan solely to (a) make an equity contribution to Mortgage Borrower in order
to cause Mortgage Borrower to use such amounts for any use permitted pursuant to
Section 2.1.4
32
of the Mortgage Loan Agreement, (b) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (c) fund any
working capital requirements of the Properties and (d) distribute the balance,
if any, to Borrower to be used for other general corporate needs of Borrower or
its Affiliates.
SECTION 2.2. INTEREST RATE.
2.2.1 INTEREST GENERALLY. Interest on the outstanding
principal balance of the Loan shall accrue from the Closing Date to but
excluding the Maturity Date at the Applicable Interest Rate. Borrower shall pay
to Lender on each Payment Date the interest accrued on the Loan for the
immediately preceding Interest Period.
2.2.2 INTEREST CALCULATION. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year by (c) the
outstanding principal balance.
2.2.3 DETERMINATION OF INTEREST RATE. (a) The Applicable
Interest Rate with respect to the Loan shall be: (i) LIBOR plus the Spread with
respect to the applicable Interest Period for a LIBOR Loan or (ii) the Prime
Rate plus the Prime Rate Spread for a Prime Rate Loan if the Loan is converted
to a Prime Rate Loan pursuant to the provisions of Section 2.2.3 (c) or (f).
(b) Subject to the terms and conditions of this Section
2.2.3, the Loan shall be a LIBOR Loan and Borrower shall pay interest on the
outstanding principal amount of the Loan at LIBOR plus the Spread for the
applicable Interest Period. Any change in the rate of interest hereunder due to
a change in the Applicable Interest Rate shall become effective as of the
opening of business on the first day on which such change in the Applicable
Interest Rate shall become effective. Each determination by Agent of the
Applicable Interest Rate shall be conclusive and binding for all purposes,
absent manifest error.
(c) In the event that Agent shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining LIBOR, then
Agent shall forthwith give notice by telephone of such determination, confirmed
in writing, to Borrower at least one (1) Business Day prior to the last day of
the related Interest Period. If such notice is given, the related outstanding
LIBOR Loan shall be converted, on the last day of the then current Interest
Period, to a Prime Rate Loan.
(d) If, pursuant to the terms of this Agreement, any
portion of the Loan has been converted to a Prime Rate Loan and Agent shall
determine (which determination shall be conclusive and binding upon Borrower
absent manifest error) that the event(s) or circumstance(s) which resulted in
such conversion shall no longer be applicable, Agent shall give notice by
telephone of such determination, confirmed in writing, to Borrower at least one
(1) Business Day prior to the last day of the related
33
Interest Period. If such notice is given, the related outstanding Prime Rate
Loan shall be converted to a LIBOR Loan on the last day of the then current
Interest Period.
(e) With respect to a LIBOR Loan, all payments made by
Borrower hereunder shall be made free and clear of, and without reduction for or
on account of, income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions, reserves or withholdings imposed, levied, collected, withheld
or assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof (such non-excluded taxes being referred to
collectively as "FOREIGN TAXES"), excluding income and franchise taxes of the
United States of America or any political subdivision or taxing authority
thereof or therein (including Puerto Rico). If any Foreign Taxes are required to
be withheld from any amounts payable to Lender hereunder, the amounts so payable
to Lender shall be increased to the extent necessary to yield to Lender (after
payment of all Foreign Taxes) interest or any such other amounts payable
hereunder at the rate or in the amounts specified hereunder, provided, however,
that if:
(i) Lender is a "foreign corporation,
partnership or trust" within the meaning of the Internal Revenue Code,
Lender agrees with and in favor of Borrower, to deliver to Borrower:
(A) if Lender claims an exemption from, or a
reduction of, withholding tax under a United
States of America tax treaty, properly
completed IRS Forms W-8BEN and W-8ECI before
the payment of any interest in the first
calendar year and before the payment of any
interest in each third succeeding calendar
year during which interest may be paid under
this Agreement;
(B) if Lender claims that interest paid under
this Agreement is exempt from United States
of America withholding tax because it is
effectively connected with a United States
of America trade or business of Lender, two
properly completed and executed copies of
IRS Form W-8ECI before the payment of any
interest is due in the first taxable year of
Lender and in each succeeding taxable year
of Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(C) such other form or forms as may be required
under the Internal Revenue Code or other
laws of the United States of America as a
condition to exemption from, or reduction
of, United States of America withholding
tax.
Lender agrees to promptly notify Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
34
(ii) Lender claims exemption from, or reduction
of, withholding tax under a United States of America tax treaty by
providing IRS Form FW-8BEN and Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Debt owing
to Lender, Lender agrees to notify Borrower of the percentage amount in
which it is no longer the beneficial owner of Debt of Borrower to
Lender. To the extent of such percentage amount, Borrower will treat
Lender's IRS Form W-8BEN as no longer valid.
(iii) Lender is claiming exemption from United
States of America withholding tax by filing IRS Form W-8ECI with the
Agent sells, assigns, grants a participation in, or otherwise transfers
all or part of the Debt owing to Lender, Lender agrees to undertake
sole responsibility for complying with the withholding tax requirements
imposed by Section 1441 and 1442 of the Code.
(iv) Lender is entitled to a reduction in the
applicable withholding tax, Borrower may withhold from any interest
payment to Lender an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not
delivered to Borrower, then Borrower may withhold from any interest
payment to Lender not providing such forms or other documentation an
amount equivalent to the applicable withholding tax.
Whenever any Foreign Tax is payable pursuant to applicable law
by Borrower, as promptly as possible thereafter, Borrower shall send to Lender
an original official receipt, if available, or certified copy thereof showing
payment of such Foreign Tax. Borrower hereby indemnifies Lender for any
incremental taxes, interest or penalties that may become payable by Lender which
may result from any failure by Borrower to pay any such Foreign Tax when due to
the appropriate taxing authority or any failure by Borrower to remit to Lender
the required receipts or other required documentary evidence.
(f) If any requirement of law or any change therein or in
the interpretation or application thereon shall hereafter make it unlawful for
Lender to make or maintain a LIBOR Loan as contemplated hereunder (i) the
obligation of Lender hereunder to make a LIBOR Loan or to convert a Prime Rate
Loan to a LIBOR Loan shall be canceled forthwith and (ii) any outstanding LIBOR
Loan shall be converted automatically to a Prime Rate Loan on the next
succeeding Payment Date or within such earlier period as required by law.
Borrower hereby agrees promptly to pay Lender, upon demand, any additional
amounts necessary to compensate Lender for any Breakage Costs. Lender's notice
of such costs, as certified to Borrower, shall be conclusive absent manifest
error.
(g) In the event that any change in any requirement of
law or in the interpretation or application thereof, or compliance by Lender
with any request or directive (whether or not having the force of law) hereafter
issued from any central bank or other Governmental Authority:
35
(i) shall hereafter impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of Lender which is
not otherwise included in the determination of LIBOR hereunder;
(ii) shall hereafter have the effect of reducing
the rate of return on Lender's capital as a consequence of its
obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy) by
any amount reasonably deemed by Lender to be material; or
(iii) shall hereafter impose on Lender any other
condition and the result of any of the foregoing is to increase the
cost to Lender of making, renewing or maintaining loans or extensions
of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender, upon demand, any
additional amounts necessary to compensate Lender for such additional cost or
reduced amount receivable which Lender deems to be material as reasonably
determined by Lender. If Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.2.3(g), Lender shall provide Borrower with not less
than ninety (90) days notice specifying in reasonable detail the event by reason
of which it has become so entitled and the additional amount required to fully
compensate Lender for such additional cost or reduced amount. A certificate as
to any additional costs or amounts payable pursuant to the foregoing sentence
submitted by Lender to Borrower shall be conclusive in the absence of manifest
error. This provision shall survive payment of the Note and the satisfaction of
all other obligations of Borrower under this Agreement and the Loan Documents.
(h) Borrower agrees to indemnify Lender and to hold
Lender harmless from any loss or expense which Lender sustains or incurs as a
consequence of (i) any default by Borrower in payment of the principal of or
interest on a LIBOR Loan, including, without limitation, any such loss or
expense arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain a LIBOR Loan hereunder, (ii) any prepayment
(whether voluntary or mandatory) of the LIBOR Loan on a day that (a) is not the
Payment Date immediately following the last day of an Interest Period with
respect thereto or (b) is the Payment Date immediately following the last day of
an Interest Period with respect thereto if Borrower did not give the prior
notice of such prepayment required pursuant to the terms of this Agreement,
including, without limitation, such loss or expense arising from interest or
fees payable by Lender to lenders of funds obtained by it in order to maintain
the LIBOR Loan hereunder and (iii) the conversion (for any reason whatsoever,
whether voluntary or involuntary) of the Applicable Interest Rate from LIBOR
plus the Spread to the Prime Rate plus the Prime Rate Spread with respect to any
portion of the outstanding principal amount of the Loan then bearing interest at
LIBOR plus the Spread on a date other than the Payment Date immediately
following the last day of an Interest Period, including, without limitation,
36
such loss or expenses arising from interest or fees payable by Lender to lenders
of funds obtained by it in order to maintain a LIBOR Loan hereunder (the amounts
referred to in clauses (i), (ii) and (iii) are herein referred to collectively
as the "BREAKAGE COSTS"); provided, however, Borrower shall not indemnify Lender
from any loss or expense arising from Lender's willful misconduct or gross
negligence. This provision shall survive payment of the Note in full and the
satisfaction of all other obligations of Borrower under this Agreement and the
other Loan Documents.
(i) Lender shall not be entitled to claim compensation
pursuant to this Section 2.2.3 for any Foreign Taxes, increased cost or
reduction in amounts received or receivable hereunder, or any reduced rate of
return, which was incurred or which accrued more than ninety (90) days before
the date Lender notified Borrower of the change in law or other circumstance on
which such claim of compensation is based and delivered to Borrower a written
statement setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.2.3, which statement
shall be conclusive and binding upon all parties hereto absent manifest error.
2.2.4 ADDITIONAL COSTS. Lender will use reasonable efforts
(consistent with legal and regulatory restrictions) to maintain the availability
of the LIBOR Loan and to avoid or reduce any increased or additional costs
payable by Borrower under Section 2.2.3 including, if requested by Borrower, a
transfer or assignment of the Loan to a branch, office or Affiliate of Lender in
another jurisdiction, or a redesignation of its lending office with respect to
the Loan, in order to maintain the availability of the LIBOR Loan or to avoid or
reduce such increased or additional costs, provided that the transfer or
assignment or redesignation (a) would not result in any additional costs,
expenses or risk to Lender that are not reimbursed by Borrower and (b) would not
be disadvantageous in any other respect to Lender as determined by Lender in its
sole discretion.
2.2.5 DEFAULT RATE. In the event that, and for so long as,
any Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, all accrued
and unpaid interest in respect of the Loan and any other amounts due pursuant to
the Loan Documents, shall accrue interest at the Default Rate, calculated from
the date such payment was due without regard to any grace or cure periods
contained herein.
2.2.6 USURY SAVINGS. This Agreement, the Note and the other
Loan Documents are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance of
the Loan at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the Maximum Legal Rate. If, by the
terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal
Rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the
37
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Loan until payment in full so that
the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.
2.2.7 INTENTIONALLY DELETED.
SECTION 2.3. LOAN PAYMENT.
2.3.1 PAYMENTS GENERALLY. Borrower shall pay to Lender an
amount equal to the interest accrued on the outstanding principal balance of the
Loan for (a) the initial Interest Period to be paid on the Closing Date and (b)
each Interest Period thereafter to be paid on the applicable Payment Date. All
amounts due pursuant to this Agreement and the other Loan Documents shall be
payable without setoff, counterclaim, defense or any other deduction whatsoever.
2.3.2 PRINCIPAL PAYMENTS.
(a) Commencing on the first Payment Date occurring on
[October 9], 2003, 2003 and continuing on each Payment Date thereafter through
and including the Payment Date which occurs on the second (2nd) anniversary of
the initial Payment Date (October 9, 2005), together with each monthly payment
of interest, Borrower shall make a payment to Lender of principal in the amount
of Two Hundred Eight Thousand and 33/100 Dollars ($208,333.33) (the "MONTHLY
AMORTIZATION AMOUNT").
(b) Commencing in 2004 and during each calendar year
thereafter during the term of the Loan, upon the earlier to occur of (i) April
30th of such year and (ii) not later than ten (10) days following delivery of
the annual financial statements to Lender referred to in and required by Section
5.11(b) with respect to the prior calendar year, Borrower shall make a principal
payment to Lender (each such payment, an "EXCESS CASH FLOW PRINCIPAL PAYMENT")
in an amount equal to the lesser of (i) 100% of Excess Cash Flow for the
immediately preceding calendar year and (ii) the positive excess of (x) Ten
Million Dollars ($10,000,000) (or for calendar year 2003, the 2003 Maximum
Amount (as defined below)) plus any Catch-Up Amounts (defined below) with
respect to years prior to the immediately preceding calendar year, if
applicable, over (y) monthly amortization payments made by Borrower to Lender
during such immediately preceding calendar year pursuant to Section 2.3.2(a) or
any other voluntary prepayments (it being understood and agreed that any
prepayment made under Section 2.5 or Section 2.7 shall not be deemed to be a
"voluntary" prepayment). To the extent that, with respect to any calendar year,
the aggregate amount of principal payments under this Section 2.3.2(b) and
Section 2.3.2(a) is less than $10,000,000, the positive excess of $10,000,000
over such payments shall be defined as a "Catch-Up Amount". For purposes of the
foregoing calculation for calendar year 2003, an amount equal to the product of
(I) $10,000,000 multiplied by (II) a fraction, the numerator of which is the
number of months during 2003 that this Loan is outstanding and the denominator
of which is 12 (the "2003 MAXIMUM AMOUNT") shall be substituted for
"$10,000,000" in such calculation.
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2.3.3 PAYMENT ON MATURITY DATE. Borrower shall pay to
Lender on the Maturity Date the outstanding principal balance of the Loan, all
accrued and unpaid interest and all other amounts due hereunder and under the
Note and the other Loan Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or
any other sums due under the Loan Documents is not paid by Borrower by the date
on which it is due, Borrower shall pay to Lender upon demand an amount equal to
the lesser of five percent (5%) of such unpaid sum or the maximum amount
permitted by applicable law in order to defray the expense incurred by Lender in
handling and processing such delinquent payment and to compensate Lender for the
loss of the use of such delinquent payment. Any such amount shall be secured by
the Pledge Agreement and the other Loan Documents to the extent permitted by
applicable law.
2.3.5 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office or as
otherwise directed by Lender, and any funds received by Lender after such time
shall, for all purposes hereof be deemed to have been paid on the next
succeeding Business Day. Whenever any payment to be made hereunder or under any
other Loan Document is stated to be due on a day which is not a Business Day,
the due date thereof shall be the Business Day immediately preceding such day.
Notwithstanding anything to the contrary contained herein, if Lender shall
constitute more than one Person, all payments hereunder shall be made to each
constituent Lender on a ratable basis, based upon the principal balance then
outstanding under such Lender's Note
SECTION 2.4. PREPAYMENTS.
2.4.1 VOLUNTARY PREPAYMENTS. Borrower at any time may, at
its option and upon ten (10) days prior notice to Agent, prepay the Debt in
whole or in part; provided that such prepayment is accompanied by (a) all
interest at the Applicable Interest Rate which would have accrued on the amount
of the Loan to be paid through the date of such prepayment; and (b) all other
sums due and payable under this Agreement, the Note, and the other Loan
Documents, including, but not limited to the Breakage Costs, if any, and all of
Lender's costs and expenses (including reasonable attorney's fees and
disbursements) incurred by Lender in connection with such prepayment. Any
partial prepayment shall be applied to the last payments of principal due under
the Loan. Notwithstanding the foregoing to the contrary, any prepayment made
following the occurrence of an Event of Default shall be accompanied by interest
at the Default Rate which would have accrued on the amount of the Loan to be
paid through the date of such prepayment.
2.4.2 INTENTIONALLY DELETED
2.4.3 INTENTIONALLY DELETED
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2.4.4 LIQUIDATION EVENTS
(a) In the event of (i) any Casualty to all or any all or
any portion of the Properties, (ii) any Condemnation of all or any portion of
the Properties, (iii) a Transfer of all or any portion of the Properties in
connection with realization thereon following a Mortgage Loan Event of Default,
including without limitation a foreclosure sale, or (iv) any refinancing of all
or any portion of the Properties or the Mortgage Loan (each, a "LIQUIDATION
EVENT"), Borrower shall cause the related Net Liquidation Proceeds After Debt
Service to be deposited directly into the Mezzanine Deposit Account. On each
date on which Lender actually receives a distribution of Net Liquidation
Proceeds After Debt Service, Borrower shall prepay the outstanding principal
balance of the Note in an amount equal to one hundred percent (100%) of such Net
Liquidation Proceeds After Debt Service, together with interest through the date
of such prepayment. Any amounts of Net Liquidation Proceeds After Debt Service
in excess of the Debt shall be paid to Borrower. Any prepayment received by
Lender pursuant to this Section 2.4.4(a) on a date other than a Payment Date
shall be held by Lender as collateral security for the Loan in an interest
bearing account, with such interest accruing to the benefit of Borrower, and
shall be applied by Lender on the next Payment Date. No prepayment premium or
fee shall be due in connection with any prepayment made pursuant to this Section
2.4.4(a). Any partial prepayment shall be applied to the last payment of
principal due under the Loan.
(b) Borrower shall immediately notify Agent of any
Liquidation Event once Borrower has knowledge of such event. Borrower shall be
deemed to have knowledge of (i) a sale (other than a foreclosure sale) of all or
any portion of the Properties on the date on which a contract of sale for such
sale is entered into, and a foreclosure sale, on the date notice of such
foreclosure sale is given, and (ii) a refinancing of all or any portion of the
Properties (other than as expressly permitted pursuant to this Agreement, it
being understood and agreed that any Property which has been released pursuant
to the terms of this Agreement shall be deemed excluded from the provisions of
this Section), on the date on which a commitment for such refinancing has been
entered into. The provisions of this Section 2.4.4(b) shall not be construed to
contravene in any manner the restrictions and other provisions regarding
refinancing of the Mortgage Loan or Transfer of the Properties set forth in this
Agreement, the other Loan Documents and the Mortgage Loan Documents.
SECTION 2.5. RELEASE. Except as set forth in this Section
2.5, no repayment or prepayment of all or any portion of the Note shall cause,
give rise to a right to require, or otherwise result in, the release or
assignment of any Lien of the Pledge Agreement on the Collateral.
2.5.1 RELEASE OF COLLATERAL ON PAYMENT IN FULL. Upon
payment in full of all principal and interest due on the Loan and all other
amounts due and payable under the Loan Documents in accordance with the terms
and provisions of the Note, this Agreement and the other Loan Documents, the
Lien of the Pledge Agreement on the Collateral shall be released upon written
request by Borrower, and at Borrower's sole cost
40
and expense, Lender shall execute such reasonable documents as Borrower shall
reasonably request to evidence such release.
2.5.2 RELEASE OF INDIVIDUAL PROPERTY. Borrower shall have
the right to cause Mortgage Borrower to engage in the transactions contemplated
by Section 2.5 of the Mortgage Loan Agreement and obtain the release of an
Individual Property from the Lien of the Mortgage thereon (and related Mortgage
Loan Documents), only if all of the following conditions precedent are
satisfied:
(a) Borrower shall have complied with all other
conditions set forth in Section 2.5.1 of the Mortgage Loan Agreement with
respect to such transaction without regard to any waiver by Mortgage Loan Lender
of any such conditions (other than a waiver of any non-material term or
condition);
(b) Borrower shall submit to Agent, not less than thirty
(30) days prior to the date of such release, a letter setting forth the
Individual Property that is the subject of the transaction, along with its
calculation of the ratios referenced in Section 2.5 of the Mortgage Loan
Agreement; and
(c) Borrower shall have paid to Lender an amount equal to
the Mezzanine Loan Release Amount applicable to the released Property and
Mortgage Borrower shall have paid to the holder of Note B the Note B Release
Amount (each as defined in the Mortgage Loan Agreement) applicable to such
Individual Property to be released.
SECTION 2.6. CASH MANAGEMENT.
2.6.1 MEDICARE/MEDICAID RECEIVABLES ACCOUNT. Borrower shall
cause Mortgage Borrower to establish and maintain a Medicare/Medicaid
Receivables Account in accordance with the terms of the Mortgage Loan Agreement.
2.6.2 LOCKBOX ACCOUNTS. Borrower shall cause Mortgage
Borrower to establish and maintain one or more Lockbox Accounts in accordance
with the terms of the Mortgage Loan Agreement. To the extent that the Mortgage
Loan Agreement is no longer in place, Borrower shall cause Mortgage Borrower to
maintain substantially similar accounts required in accordance with the terms of
the Mortgage Loan Agreement or if the Mortgage Loan is refinanced or paid off in
full (without a prepayment of the Loan) and accounts that are required hereunder
are not required under the new mortgage loan, if any, then Borrower shall
maintain hereunder substantially similar accounts, satisfactory to Agent in
accordance with the terms of the Mortgage Loan Agreement.
2.6.3 REVOLVING CREDIT CASH MANAGEMENT. Notwithstanding the
foregoing provisions of Sections 2.6.1 and 2.6.2, provided that (a) the
Revolving Credit Loan is outstanding, (b) amounts on account of
Medicare/Medicaid Receivables and Rents from the Properties are being deposited
with the Revolving Credit Lender pursuant to the Revolving Credit Loan
Agreement, and (c) the Revolving Credit Lender is disbursing the proceeds of the
Revolving Credit Loan and any funds deposited with Revolving Credit Lender
pursuant to the Revolving Credit Loan Agreement in the excess
41
of amounts payable under the Revolving Credit Loan into the Cash Management
Account, Borrower shall not be required to cause Medical Payors to make deposits
of Medicare/Medicaid Receivables and Rents into the Medicare/Medicaid
Receivables Account and Lockbox Bank to transfer such amounts into the Lockbox
Accounts, respectively, in accordance with the provisions of Sections 2.6.1 and
2.6.2 hereof. Guarantor hereby authorizes Agent, on behalf of Lender to request
and obtain advances under the Guarantor Revolving Credit Loan Agreement on each
Payment Date to pay any shortfall between the amount on deposit in the Mezzanine
Deposit Account on such Payment Date and the amounts payable by Borrower on such
Payment Date.
2.6.4 CASH MANAGEMENT ACCOUNT. Borrower shall cause
Mortgage Borrower to establish and maintain a Cash Management Account in
accordance with the terms of the Mortgage Loan Agreement.
2.6.5 MEZZANINE ACCOUNTS. (a) During the term of the Loan,
Borrower shall establish and maintain an Eligible Account into which all cash
flow after funding all amounts required under Section 2.6.4 of the Mortgage Loan
Agreement shall be transferred into an account (the "MEZZANINE DEPOSIT
ACCOUNT"), which Mezzanine Deposit Account shall be entitled and shall have the
account number as set forth in the Mezzanine Deposit Account and Securities
Account Control Agreement. Funds on deposit in the Mezzanine Deposit account
shall be transferred to the Mezzanine Securities Account on the next business
day; provided, however, after such time as the total amount on deposit in the
Mezzanine Securities Account is equal to or exceeds the "Pegged Amount" (as such
term is defined in the Mezzanine Cash Management Agreement), and provided that
no Event of Default has occurred and is continuing, all monies in excess of the
Pegged Amount shall be transferred to the Borrower in accordance with the terms
of the Mezzanine Cash Management Agreement.
(a) During the term of the Loan, Borrower shall establish
and maintain an Eligible Account into which, on a daily basis, funds on deposit
in the Mezzanine Deposit Account up to the Pegged Amount shall be transferred
into (the "MEZZANINE SECURITIES ACCOUNT"), which Mezzanine Securities Account
shall be entitled and shall have the account number as set forth in the
Mezzanine Deposit Account and Securities Account Control Agreement. Funds on
deposit in the Mezzanine Securities Account shall be allocated and disbursed in
accordance with the terms of the Mezzanine Cash Management Agreement.
2.6.6 INTENTIONALLY DELETED.
SECTION 2.7. ASSUMPTION OF PORTION OF LOAN. Borrower
shall have the right to cause Mortgage Borrower to engage in the transactions
contemplated by Section 2.7 of the Mortgage Loan Agreement, only if all of the
following conditions precedent are satisfied:
(a) Borrower shall have complied with all other
conditions set forth in Section 2.7 of the Mortgage Loan Agreement with respect
to such transaction in effect on
42
the date hereof without regard to any waiver by Mortgage Loan Lender of any such
conditions (other than a waiver of any non-material term or condition;
(b) Borrower shall submit to Agent, not less than thirty
(30) days prior to the date of the proposed transaction a notice identifying the
Assumed Property and the other information required hereunder, including a
calculation of the financial ratios described in Section 2.7 of the Mortgage
Loan;
(c) Borrower shall have paid or reimbursed Agent for all
reasonable costs and expenses incurred by Agent (including, without limitation,
reasonable attorneys fees and disbursements) in connection with the transaction
contemplated pursuant to Section 2.7 of the Mortgage Loan Agreement; and
(d) Borrower shall have paid to Lender an amount equal to
the Mezzanine Loan Release Amount applicable to the Assumed Property and
Mortgage Borrower shall have paid to the holder of Note B the Note B Release
Amount (as defined in the Mortgage Loan Agreement) applicable to such Assumed
Property.
III. CONDITIONS PRECEDENT
SECTION 3.1. CONDITIONS PRECEDENT TO CLOSING. The
obligation of Lender to make the Loan hereunder is subject to the fulfillment by
Borrower or waiver by Lender of the following conditions precedent no later than
the Closing Date:
3.1.1 REPRESENTATIONS AND WARRANTIES: COMPLIANCE WITH
CONDITIONS. The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
3.1.2 LOAN AGREEMENT AND NOTE. Lender shall have received a
copy of this Agreement and the Note, in each case, duly executed and delivered
on behalf of Borrower.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
INSURANCE.
(a) PLEDGE AGREEMENT. Lender shall have received from
Borrower fully executed and acknowledged counterparts of the Pledge Agreement
and such other documents required pursuant to the Pledge Agreement, and delivery
of certificates evidencing the Pledged Entity Interests, together with
applicable stock, membership or limited partnership interest powers in blank,
the UCC Financing Statements and such other documents required in the reasonable
judgment of Lender so as to effectively create valid and enforceable Liens upon
the Collateral, of the requisite priority, in favor of Lender, subject only to
the Permitted Encumbrances and such other Liens as are
43
permitted pursuant to the Loan Documents. Lender shall have also received from
Borrower fully executed counterparts of the other Loan Documents.
(b) TITLE INSURANCE. Lender shall have received a UCC
"Eagle 9" or equivalent Title Insurance Policy (the "UCC TITLE INSURANCE
POLICY") issued by a title company acceptable to Lender and dated as of the
Closing Date. Such UCC Title Insurance Policy shall (i) provide coverage in the
amount of $23,000,000.00, (ii) insure Agent that the Pledge Agreement and the
documents executed and delivered in connection therewith create a valid Lien on
the Collateral of the requisite priority, free and clear of all exceptions from
coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Agent may reasonably
request, and (iv) name Agent on behalf of Lender as the insured. The UCC Title
Insurance Policy shall be assignable. Lender also shall have received evidence
that all premiums in respect of such UCC Title Insurance Policy.
(c) SURVEY. Lender shall have received copies of the
Survey for each Individual Property delivered to Mortgage Lender in accordance
with the terms of the Mortgage Loan Agreement.
(d) INSURANCE. Lender shall have received valid
certificates of insurance for the Policies required under Article VI of the
Mortgage Loan Agreement. Lender shall be included as an "additional insured" or
"additional named insured", as applicable, under such Policies and Lender shall
have received evidence of the payment of all Insurance Premiums payable for the
existing policy period.
(e) ENVIRONMENTAL REPORTS. Lender shall have received
copies of the Phase I environmental report (and, if performed, the Phase II
environmental reports) in respect of each Individual Property delivered to
Mortgage Lender in accordance with the terms of the Mortgage Loan Agreement.
(f) ZONING. With respect to each Individual Property,
Lender shall have received copies of the Zoning Reports delivered to Mortgage
Lender in accordance with the terms of the Mortgage Loan Agreement.
(g) ENCUMBRANCES. Borrower shall have taken or caused to
be taken such actions in such a manner so that Lender has a valid and perfected
first priority Lien as of the Closing Date on the Collateral and Lender shall
have received satisfactory evidence thereof.
(h) MORTGAGE LOAN DOCUMENTS. The Mortgage Loan Documents
shall have been duly authorized, executed and delivered by all parties thereto
and all of the conditions precedent set forth in Article III of the Mortgage
Loan Agreement shall have been satisfied (or waived) and the Mortgage Loan shall
have closed and the proceeds of the Mortgage Loan shall have been fully advanced
in accordance therewith.
(i) LEASEHOLD MORTGAGES. Lender shall have received final
fully executed and acknowledged counterparts of the Leasehold Mortgages.
44
(j) INTERCREDITOR AGREEMENTS. Lender shall have received
final fully executed copies of the General Intercreditor Agreement (as defined
in the Guarantor Revolving Credit Agreement) and the Intercreditor Agreement.
(k) ADDITIONAL GUARANTEES. Lender shall have received
from The Woodlands Resource Management L.P. and The Woodlands Healthcare Center,
L.P. final fully executed copies of unsecured guarantees substantially similar
in form and substance to such guarantees delivered to Guarantor Revolving Credit
Lender pursuant to Section 4.1(r) of the Guarantor Revolving Credit Loan
Agreement.
3.1.4 RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall be in form and substance reasonably satisfactory to Lender, and
shall have been duly authorized, executed and delivered by all parties thereto
and Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. Borrower shall
deliver or cause to be delivered to Lender copies certified by Borrower of all
organizational documentation related to each Significant Party and/or their
respective formation, structure, existence, good standing and/or qualification
to do business, as Lender may request in its reasonable discretion, including,
without limitation, good standing certificates dated not more than thirty (30)
days prior to the Closing Date, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the Loan and
Mortgage Loan, as applicable, and incumbency certificates.
3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have
received opinions from Borrower's counsel (a) with respect to the perfection of
Lender's Lien on the Collateral and (b) with respect to the due execution,
authority, enforceability of the Loan Documents and such other matters as Lender
may require, all such opinions in form, scope and substance satisfactory to
Lender and Lender's counsel in their reasonable discretion.
3.1.7 BUDGETS. Borrower shall have delivered, and Lender
shall have approved, the Annual Budget for the current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Borrower shall have caused
Mortgage Borrower to have paid (or to pay with proceeds from the Loan) all Basic
Carrying Costs relating to the Properties which are in arrears, including
without limitation, (a) accrued but unpaid Insurance Premiums, (b) currently due
Taxes (including any in arrears) and (c) currently due Other Charges, which
amounts shall be funded with proceeds of the Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be reasonably satisfactory in form and substance to
Lender, and Lender shall have received all such
45
counterpart originals or certified copies of such documents as Lender may
reasonably request.
3.1.10 PAYMENTS. All payments, deposits or escrows required
to be made or established by Borrower under this Agreement, the Note and the
other Loan Documents on or before the Closing Date shall have been paid.
3.1.11 ORIGINATION FEES AND TRANSACTION COSTS. Borrower
shall have paid to Lender an origination fee of $230,000.00 (less any amount
previously paid by Borrower to Lender) and shall have paid or reimbursed Lender
for all UCC Title Insurance Policy premiums, recording and filing fees, costs of
environmental reports, Physical Conditions Reports, appraisals and other
reports, the fees and costs of Lender's counsel and all other third party out-of
pocket expenses incurred in connection with the origination of the Loan to the
extent such costs and expenses relating to third party costs have not already
been paid or reimbursed by Mortgage Borrower to Mortgage Lender.
3.1.12 MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the financial condition or business condition of any
Significant Party, the Collateral or the Properties since the date of the most
recent financial statements delivered to Lender. The income and expenses of the
Properties, the occupancy thereof, and all other features of the transaction
shall be as represented to Lender without material adverse change. No
Significant Party nor any of their respective constituent Persons shall be the
subject of any bankruptcy, reorganization, or insolvency proceeding.
3.1.13 LEASES AND OCCUPANCY REPORT. Lender shall have
received copies of all material Leases other than residential Leases or
occupancy agreements and a copy of the Occupancy Report(s) for the Properties
delivered to Mortgage Lender in accordance with the terms of the Mortgage Loan
Agreement.
3.1.14 INTENTIONALLY DELETED
3.1.15 PHYSICAL CONDITIONS REPORT. Lender shall have
received copies of the Physical Conditions Report with respect to each
Individual Property delivered to Mortgage Lender in accordance with the terms of
the Mortgage Loan Agreement.
3.1.16 OPERATING LEASES AND MASTER LEASES. Lender shall have
received a copy of the Operating Leases and the Master Leases, which shall be
satisfactory in form and substance to Lender, and copies of all necessary
approvals in accordance with all Legal Requirements.
3.1.17 INTENTIONALLY DELETED.
3.1.18 APPRAISAL. Lender shall have received an appraisal of
each Individual Property, satisfactory to Lender in its sole discretion..
3.1.19 FINANCIAL STATEMENTS. Lender shall have received a
balance sheet with respect to each Individual Property for the two (2) most
recent Fiscal Years and statements of income and statements of cash flows with
respect to each Individual
46
Property for the three (3) most recent Fiscal Years, each in form and substance
satisfactory to Lender.
3.1.20 MEDICARE/MEDICAID AGREEMENTS. Lender shall have
received, at Lender's option, copies of Mortgage Borrower's current and valid
Medicare and Medicaid provider numbers and agreements, copies of the most recent
state surveys, copies of all participation agreements relating to health plans,
and information pertaining to the patient census for each Individual Property.
3.1.21 APPROVAL OF REORGANIZATION PLAN. Lender shall have
received evidence of the approval of the Plan of Reorganization by the
Bankruptcy Court having jurisdiction thereof (the "CONFIRMATION ORDER").
3.1.22 FURTHER DOCUMENTS. Lender or its counsel shall have
received such other and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance satisfactory to Lender and its counsel.
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1. BORROWER REPRESENTATIONS. Borrower
represents and warrants as of the date hereof and as of the Closing Date that:
4.1.1 ORGANIZATION. Each Significant Party has been duly
organized and is validly existing and in good standing with requisite power and
authority to own its assets and to transact the businesses in which it is now
engaged and is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its assets and to transact the businesses in which it is now engaged. The
ownership interests of Borrower are as set forth on the organizational chart
attached hereto as SCHEDULE IV (the "ORGANIZATIONAL CHART").
4.1.2 PROCEEDINGS. Borrower has taken all necessary action
to authorize the execution, delivery, and performance of this Agreement and the
other Loan Documents by it and has the power and authority to execute, deliver
and perform under this Agreement and the other Loan Documents and all
transactions contemplated thereby. This Agreement and such other Loan Documents
have been duly executed and delivered by or on behalf of Borrower and constitute
legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance
of this Agreement and the other Loan Documents by Borrower will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the
47
Loan Documents) upon any of the property or assets of any Significant Party
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement, management agreement or other agreement or instrument to
which any Significant Party is a party or by which any of any Significant
Party's property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over any Significant Party or any
of any Significant Party's properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any such
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents has been obtained and is
in full force and effect.
4.1.4 LITIGATION. There are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority or other
agency now pending or threatened against or affecting any Significant Party or
any Individual Property, which actions, suits or proceedings, if determined
against such Significant Party any Individual Property, might reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or business of such Significant Party or the condition or ownership
of any Individual Property.
4.1.5 AGREEMENTS. Borrower is not a party to any agreement
or instrument or subject to any restriction which might materially and adversely
affect Borrower, Mortgage Borrower, any Individual Property or the Collateral,
Mortgage Borrower's or Borrower's business, properties or assets, operations or
condition, financial or otherwise. Neither Borrower nor Mortgage Borrower is in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower, Mortgage Borrower, the
Collateral or any of the Properties are bound. Neither Borrower nor Mortgage
Borrower has any material financial obligation under any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which Borrower
or Mortgage Borrower is a party or by which Borrower, Mortgage Borrower, the
Collateral or any of the Properties is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of the Property as
permitted pursuant to clause (t) of the definition of "Special Purpose Entity"
set forth in Section 1.1 of the Mortgage Loan Agreement or this Agreement, and
(b) obligations under the Loan Documents, and (c) obligations under the
Revolving Credit, Loan Documents and the Mortgage Loan Documents, as applicable.
4.1.6 TITLE. Each of the Pledgors under the Pledge
Agreement are the record and beneficial owner of, and have good and marketable
title to, the applicable Collateral, free and clear of all Liens whatsoever
except the Liens created by the Loan Documents. The Pledge Agreement, together
with the UCC Financing Statements relating to the Collateral, will create valid
liens on, and security interests in and to, the Collateral, all in accordance
with the terms thereof. There are no claims for payment for work, labor or
materials affecting the Properties which are or may become a Lien prior to, or
of equal priority with, the Liens created by the Mortgage Loan Documents.
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4.1.7 SOLVENCY. Borrower has (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for its obligations under such Loan
Documents. The fair saleable value of Borrower's assets exceeds and will,
immediately following the making of the Loan, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower).
Except the petition that commenced the reorganization proceedings titled In re
Fountain View, Inc, et al (jointly administered under Case No. LA 01-39678BB) in
the United States Bankruptcy Court for the Central District of California, no
petition in bankruptcy has been filed against Borrower or any Affiliate, and
neither Borrower nor any Affiliate has ever made an assignment for the benefit
of creditors or taken advantage of any insolvency act for the benefit of
debtors. Neither Borrower nor any of its Affiliates are contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of Borrower's assets or
properties, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it or such constituent Persons.
4.1.8 FULL AND ACCURATE DISCLOSURE. No statement of fact
made by Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no material fact presently known to Borrower which has not been
disclosed to Lender which adversely affects, nor as far as Borrower can foresee,
might reasonably be anticipated to have a material adverse effect on the
Collateral, any Significant Party, any Individual Property or the business,
operations or condition (financial or otherwise) of Borrower or Mortgage
Borrower.
4.1.9 NO PLAN ASSETS. Borrower is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (a) Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject
to any state statute regulating investments of, or fiduciary obligations with
respect to, governmental plans similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code currently in effect, which prohibit or otherwise
restrict the transactions contemplated by this Loan Agreement.
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4.1.10 COMPLIANCE. Except as set forth in the Zoning
Reports, each Significant Party and the Properties (including the use thereof)
comply in all material respects with all applicable Legal Requirements,
including building and zoning ordinances and codes. Borrower is not in default
or violation of any order, writ, injunction, decree or demand of any
Governmental Authority, except where any default or violation could not
reasonably be expected to have a material adverse effect. No Significant Party
or any other Person in occupancy of or involved with the operation or use of the
Properties has committed any act or omission affording the federal government or
any other Governmental Authority the right of forfeiture as against any
Individual Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents.
4.1.11 FINANCIAL INFORMATION. All financial data, including
balance sheets, cost reports and the statements of cash flow and income and
operating expense, that have been delivered to Lender in connection with the
Loan (a) are true, complete and correct in all material respects, (b) accurately
represent the financial condition of the Properties as of the date of such
reports, and (c) to the extent prepared or audited by an independent certified
public accounting firm, have been prepared in accordance with GAAP throughout
the periods covered, except as disclosed therein. Except for Permitted
Encumbrances, no Significant Party has any contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower and
reasonably likely to have a materially adverse effect on any Significant Party,
the Collateral, or any Individual Property or the operation of any Individual
Property as a skilled nursing facility or assisted living facility, in each case
as indicated on Schedule I attached hereto, except as referred to or reflected
in said financial statements. Since the date of such financial statements, there
has been no material adverse change in the financial condition, operation or
business of Mortgage Borrower, Borrower or any of the Properties from that set
forth in said financial statements.
4.1.12 CONDEMNATION. No Condemnation or other proceeding has
been commenced or, to Borrower's best knowledge, is threatened or contemplated
with respect to all or any portion of any Individual Property or for the
relocation of roadways providing access to any Individual Property.
4.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds
of the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or by the terms and conditions of
this Agreement or the other Loan Documents.
4.1.14 UTILITIES AND PUBLIC ACCESS. Each Individual Property
has rights of access to public ways and is served by water, sewer, sanitary
sewer and storm drain facilities adequate to service such Individual Property
for its respective intended uses. All public utilities necessary or convenient
to the full use and enjoyment of each
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Individual Property are located either in the public right-of-way abutting such
Individual Property (which are connected so as to serve such Individual Property
without passing over other property) or in recorded easements serving such
Individual Property and such easements are set forth in and insured by the Title
Insurance Policies. All roads necessary for the use of each Individual Property
for their current respective purposes have been completed and dedicated to
public use and accepted by all Governmental Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. Each Individual Property is comprised
of one (1) or more parcels which constitute a separate tax lot or lots and does
not constitute a portion of any other tax lot not a part of such Individual
Property.
4.1.17 ASSESSMENTS. There are no pending or, to Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor are there any contemplated
improvements to any Individual Property that may result in such special or other
assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to
any right of rescission, set off, counterclaim or defense by Borrower or
Guarantor, including the defense of usury, nor would the operation of any of the
terms of the Loan Documents, or the exercise of any right thereunder, render the
Loan Documents unenforceable (subject to principles of equity and bankruptcy,
insolvency and other laws generally affecting creditors' rights and the
enforcement of debtors' obligations), and Borrower and Guarantor have not
asserted any right of rescission, set off, counterclaim or defense with respect
thereto.
4.1.19 NO PRIOR ASSIGNMENT. There are no prior assignments
of the Collateral which are presently outstanding except in accordance with the
Loan Documents.
4.1.20 INSURANCE. Borrower has obtained and has delivered to
Lender certified copies of all Policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement naming Lender as an
"additional insured" or "additional named insured", as applicable. No claims
have been made under any such Policies, and no Person, including Borrower and
Mortgage Borrower, has done, by act or omission, anything which would impair the
coverage of any such Policies.
4.1.21 USE OF PROPERTY. Each Individual Property is used
exclusively as a skilled nursing facility or assisted living facility, in each
case as indicated on Schedule I attached hereto, and other appurtenant and
related uses.
4.1.22 CERTIFICATE OF OCCUPANCY. The use being made of each
Individual Property is in conformity with the certificate of occupancy issued
for such Individual Property (or the equivalent thereto).
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4.1.23 FLOOD ZONE. Except as set forth in the Surveys, none
of the Improvements on any Individual Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special
flood hazards or, if so located, the flood insurance required pursuant to
Section 6.1(a)(i) of the Mortgage Loan Agreement is in full force and effect
with respect to each such Individual Property.
4.1.24 PHYSICAL CONDITION. Except as set forth in the
Physical Conditions Report, each Individual Property, including, without
limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to Borrower's knowledge,
there exists no structural or other material defects or damages in any
Individual Property, whether latent or otherwise, and Borrower has not received
notice from any insurance company or bonding company of any defects or
inadequacies in any Individual Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
4.1.25 BOUNDARIES. To Borrower's knowledge, all of the
improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and other than as disclosed to Lender on the
Survey for such Individual Property, (a) no improvements on adjoining properties
encroach upon such Individual Property, and (b) no easements or other
encumbrances upon the applicable Individual Property encroach upon any of the
improvements, so as to affect the value or marketability of the applicable
Individual Property except those which are insured against by the Title
Insurance Policy.
4.1.26 OCCUPANCY REPORT. Borrower has delivered to Lender a
true, correct and complete Occupancy Report for each Individual Property as of
the date hereof. All Leases comply with applicable law, regulation and/or policy
issued by any Health Care Authority that has direct or indirect authority or
oversight over Borrower, the applicable Individual Property or the operations
conducted on such Individual Property. No tenant/resident under any Lease has,
as of the date hereof, paid rent more than thirty (30) days in advance, and the
rents or charges under such Leases have not been waived, released, or otherwise
discharged or compromised.
4.1.27 SURVEY. The Survey for each Individual Property
delivered to Lender in connection with the Mortgage Loan Agreement has been
prepared in accordance with the provisions of Section 3.1.3(c) of the Mortgage
Loan Agreement, and, to Borrower's knowledge, does not fail to reflect any
material matter affecting such Individual Property or the title thereto.
4.1.28 PRINCIPAL PLACE OF BUSINESS; STATE OF ORGANIZATION.
Borrower's principal place of business as of the Closing Date is the address set
forth in the
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introductory paragraph of this Agreement and Borrower shall not change its
principal place of business without first delivering thirty (30) days prior
written notice to Lender. Borrower is organized under the laws of the State of
Delaware.
4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Collateral to Borrower have
been paid. All recording, stamp, intangible or other similar tax required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Pledge Agreement, have been paid, and, under current Legal
Requirements, the Loan Documents are enforceable in accordance with their
respective terms by Lender (or any subsequent holder thereof), subject to
principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors' rights and the enforcement of debtors' obligations.
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS. (a) Until the
Debt has been paid in full, Borrower hereby represents, warrants and covenants
that (i) Borrower is, shall be and shall continue to be a Special Purpose Entity
and (ii) Mortgage Borrower is, shall be and shall continue to be a Special
Purpose Entity.
(b) The representations, warranties and covenants set
forth in Section 4.1.30(a) shall survive for so long as any amount remains
payable to Lender under this Agreement or any other Loan Document.
4.1.31 O&M AGREEMENT. Any O&M Agreements required by
Mortgage Lender are in full force and effect and there is no default under any
such agreement by any party thereto and no event has occurred that, with the
passage of time and/or the giving of notice would constitute a default under any
such agreement.
4.1.32 ILLEGAL ACTIVITY. No portion of any Individual
Property or the Collateral has been or will be purchased with proceeds of any
illegal activity.
4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower to Lender and in all financial statements,
Occupancy Reports, reports, certificates and other documents submitted in
connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower in this Agreement or in any other Loan
Document, are accurate, complete and correct in all material respects. There has
been no material adverse change in any condition, fact, circumstance or event
that would make any such information inaccurate, incomplete or otherwise
misleading in any material respect or that otherwise materially and adversely
affects or might materially and adversely affect the use, operation or value of
the Properties or the business operations or the financial condition of Mortgage
Borrower or Borrower. Borrower has disclosed to Lender all material facts and
has not failed to disclose any material fact that could cause any Provided
Information or representation or warranty made herein to be materially
misleading.
53
4.1.34 INVESTMENT COMPANY ACT. Borrower is not (a) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
4.1.35 EMBARGOED PERSON. At all times throughout the term of
the Loan, including after giving effect to any Transfers permitted pursuant to
the Loan Documents, (a) none of the funds or other assets of any Significant
Party constitute property of, or are beneficially owned, directly or indirectly,
by any person, entity or government subject to trade restrictions under U.S.
law, including, but not limited to, the International Emergency Economic Powers
Act, 50 U.S.C. Sections 1701, et seq., The Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and any Executive Orders or regulations promulgated thereunder
with the result that the investment in any Significant Party as applicable
(whether directly or indirectly), is prohibited by law or the Loan made by
Lender is in violation of law ("EMBARGOED PERSON"); (b) no Embargoed Person has
any interest of any nature whatsoever in any Significant Party with the result
that the investment in such Significant Party (whether directly or indirectly),
is prohibited by law or the Loan is in violation of law; and (c) none of the
funds of any Significant Party have been derived from, or are the proceeds of,
any unlawful activity, including money laundering, terrorism or terrorism
activities, with the result that the investment in any Significant Party
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law or may cause any Individual Property to be subject to
forfeiture or seizure.
(a) SECURITY INTEREST. This Agreement, together with the
other Loan Documents, creates a valid and continuing security interest (as
defined in the Uniform Commercial Code of the State of Delaware) in the Borrower
Pledged Entity Interests in favor of Lender, which security interests are prior
to all other Liens, other than Permitted Encumbrances, and is enforceable as
such against creditors of and purchasers from Borrower. Other than in connection
with the Loan Documents and except for Permitted Encumbrances, Borrower has not
sold or otherwise conveyed the Borrower Pledged Entity Interests.
4.1.36 MASTER LEASES AND OPERATING LEASES. The Master Leases
and Operating Leases are in full force and effect and there is no default under
any Master Lease or any Operating Lease by any party thereto and no event has
occurred that, with the passage and/or the giving of notice would constitute a
default under any such Master Lease or any such Operating Lease.
4.1.37 NO CONTRACTUAL OBLIGATIONS. Other than the Loan
Documents, as of the date of this Agreement, and the Summit Note, Borrower is
not subject to any Contractual Obligations and has not entered into any
agreement, instrument or undertaking by which it or its assets are bound, or has
incurred any Indebtedness, and prior to the date of this Agreement and Borrower
has not entered into any Contractual
54
Obligation (other than the Loan Documents), or any agreement, instrument or
undertaking by which it or its assets are bound or incurred any Indebtedness.
4.1.38 MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES. All of
the representations and warranties contained in the Mortgage Loan Documents are
hereby incorporated into this Agreement and deemed made hereunder as and when
made thereunder and shall remain incorporated without regard to any waiver
amendment or other modification thereof by the Mortgage Lender or to whether the
related Mortgage Loan Document has been repaid, defeased or otherwise
terminated, unless otherwise consented to in writing by Lender.
4.1.39 TAX FILINGS. Guarantor has filed all federal, state
and local tax returns required to be filed and has paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower. Borrower believes that its tax returns (if any)
properly reflect the income and taxes of Borrower for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit.
SECTION 4.2. HEALTH CARE REPRESENTATIONS. Borrower, for
itself and its successors and assigns, does hereby represent and warrant to
Lender, its successors and assigns, as of the date hereof, that:
(a) All certificates, certifications, permits, licenses
and approvals, including certificates of operation, completion and occupancy,
required for the legal use, occupancy and operation of each Facility
(collectively, the "LICENSES") have been obtained and are in full force and
effect except for Licenses which, if not maintained, would not have a material
adverse effect on the use or operating of the Facility. Mortgage Borrower owns
and/or possesses, and holds free from restrictions or conflicts with the rights
of others, all such Licenses, provided that with respect to the Facilities
listed on SCHEDULE II, all such Licenses are held by Summit Care Corporation, a
California corporation, directly or as successor-by-merger to Summit Care
California, Inc., a California corporation, which has entered into an interim
sublease and interim management agreement with the applicable Operator to
operate such Facilities, which interim management agreement is effective to
permit the operation of such Facilities in accordance with all Legal
Requirements;
(b) Each Facility is duly licensed as a skilled nursing
facility or assisted living facility (as set forth on Schedule I attached
hereto) as required under the applicable laws of the State in which such
Facility is located. The licensed bed capacity of each Facility is as set forth
on Schedule V attached hereto. Mortgage Borrower has not applied to reduce the
number of licensed or certified beds of any Facility or to move the right to any
and all of the licensed or certified beds of any Facility to any other location
and there are no proceedings or actions pending or contemplated to reduce the
number of licensed or certified beds of any Facility;
(c) Except as otherwise provided in paragraph (d),
Mortgage Borrower (and the operation of each Facility) is in material compliance
with the applicable
55
provisions of the laws, ordinances, statutes, regulations, orders, standards,
policies, restrictions or rules of any Health Care Authority having jurisdiction
over the operation of any Facility, including, (i) staffing requirements, (ii)
health and fire safety codes, (iii) federal, state or local laws, rules,
regulations or published interpretations or policies relating to the prevention
of fraud and abuse, (iv) insurance, reimbursement and cost reporting
requirements, and (v) any other applicable laws, regulations or agreements for
reimbursement for the type of care or services provided by Operator with respect
to each Facility. As used in this Section 4.2(c), "material compliance" means a
level of compliance that would keep Mortgage Borrower (and the operation of the
Facility) free from any proceedings or sanctions by any Governmental Authority
having jurisdiction over the operation of the Facility and that would not be
reasonably be expected to have a material adverse effect on Mortgage Borrower's
operations, including, but not limited to, its right to receive reimbursement or
insurance payments with no opportunity to contest or correct;
(d) Mortgage Borrower is in substantial compliance with
the requirements for participation in the Medicare and Medicaid Programs with
respect to each Facility that currently participates in such programs and has a
current provider agreement under Title XVIII and/or XIX of the Social Security
Act. Borrower has not had any deficiencies on its most recent survey (standard
or complaint) that would result in a denial of payment for new admissions with
no opportunity to correct prior to termination other than as disclosed in
SCHEDULE IX hereto. Other than as set forth on SCHEDULE IX hereto Borrower did
not have any deficiencies at level G or above on its most recent survey
(standard or complaint), nor has Borrower been cited with any substandard
quality of care deficiencies (as that term is defined in Part 488 of 42 C.F.R)
for the past two consecutive surveys.
(e) Mortgage Borrower is not a participant in, subject
to, or, to Mortgage Borrower's knowledge, a target of, any action, proceeding,
suit, audit, investigation or sanction by any Health Care Authority or any other
administrative or investigative body or entity or any other third party or any
patient or resident (including, without limitation, whistleblower suits, or
suits brought pursuant to federal or state False Claims Acts, and
Medicaid/Medicare/State fraud/abuse laws) which could reasonably be expected to
result in the imposition of a fine, penalty, alternative, interim or final
sanction, a lower rate certification, recoupment, recovery, suspension or
discontinuance of all or part of reimbursement from any Health Care Authority,
third-party payor, insurance carrier or private payor, a lower reimbursement
rate for services rendered to eligible patients, or any other civil or criminal
remedy, or which could reasonably be expected to have a material adverse effect
on Mortgage Borrower or the operation of the Facility, or which could reasonably
be expected to result in the appointment of a receiver or manager, or in the
revocation, transfer, surrender, suspension or other impairment of a License,
nor has any such action, proceeding, suit, investigation proceeding or audit
been threatened;
(f) There are no agreements with residents of any
Facility, or with any other persons or organizations, which deviate in any
material adverse respect from, or which conflict with, any statutory or
regulatory requirements. All resident records at
56
each Facility, including patient and/or resident accounts records, are true,
complete, and correct in all material respects;
(g) Neither the execution, delivery or performance of the
Note, this Agreement, the Pledge Agreement, the UCC Financing Statements or the
other Loan Documents, nor Mortgage Borrower's execution, delivery or performance
under the Mortgage Loan Documents will (i) adversely affect Mortgage Borrower's
right to receive Medicaid, Medicare, insurance company, managed care company, or
other third-party insurance payments or reimbursements or to receive private
payor payments or reimbursements, (ii) materially reduce the Medicaid, Medicare,
insurance company, managed care company, or other third-party insurance payments
or reimbursements or materially reduce private payor payments or reimbursements
which Mortgage Borrower is receiving as of the date hereof, or (iii) adversely
affect the Licenses;
(h) Other than the Medicare and Medicaid programs and as
set forth on Schedule 4.2(h) attached hereto, Mortgage Borrower is not a
participant in any federal, state or local program whereby any federal, state or
local government or quasi-governmental body, or any intermediary, agency, board
or other authority or entity may have the right to recover funds with respect to
any Individual Property by reason of the advance of federal, state or local
funds, including, without limitation, those authorized under the ▇▇▇▇-▇▇▇▇▇▇ Act
(42 U.S.C. 291, et seq.). Mortgage Borrower has received no notice, and is not
aware of any violation of applicable antitrust laws;
(i) Mortgage Borrower's private payor, Medicaid,
Medicare, and/or managed care company, insurance company or other third-party
insurance accounts receivable with respect to each Individual Property are free
of any liens;
(j) Except as set forth on Schedule 4.2(j) attached
hereto, Mortgage Borrower is not a party to any collective bargaining agreement
or other labor contract applicable to persons employed by it at any Facility
and, to Borrower's knowledge, there are no threatened or pending labor disputes
at any Facility;
(k) Mortgage Borrower has instituted, and each Facility
is operated in substantial compliance with, a compliance plan which follows
applicable guidelines established by Health Care Authorities; and
(l) Mortgage Borrower is in material compliance with the
Healthcare Insurance Portability and Accountability Act of 1996, and the
regulations promulgated thereunder.
SECTION 4.3. SURVIVAL OF REPRESENTATIONS. Borrower agrees
that all of the representations and warranties of Borrower set forth in Article
IV and elsewhere in this Agreement and in the other Loan Documents shall survive
for so long as any amount remains owing to Lender under this Agreement or any of
the other Loan Documents by Borrower. All representations, warranties, covenants
and agreements made in this Agreement, as qualified by the Schedules hereto, or
in the other Loan Documents by
57
Borrower shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
V. BORROWER COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS. From the date hereof
and until payment and performance in full of all obligations of Borrower under
the Loan Documents or the earlier release of the Lien of the Pledge Agreement
(and all related obligations) in accordance with the terms of this Agreement and
the other Loan Documents, Borrower hereby covenants and agrees with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, and all material
licenses (including, without limitation, the Licenses), permits and franchises
and cause Mortgage Borrower to comply in all material respects with all Legal
Requirements of all Governmental Authorities and Health Care Authorities
applicable to Borrower or Mortgage Borrower and the Properties, including,
without limitation, Medicare, Medicaid, or other Health Care Authority laws,
orders, decrees, rules or regulations relating to the operations conducted at
the Facility, laws, orders, decrees, rules or regulations concerning employment
and compensation of persons engaged in operation and maintenance of each
Individual Property and any environmental or ecological requirements. Borrower
shall cause Mortgage Borrower to keep and maintain in full force and effect all
Licenses necessary for the operation of the Facility on each Individual Property
other than Licenses which, if not maintained, would not have a material adverse
effect on the use or operation of such Individual Property. Borrower will cause
the Facility located on the applicable Individual Property to remain in
operation without interruption in accordance with all Legal Requirements. There
shall never be committed by Borrower and Borrower shall not permit Mortgage
Borrower to commit or permit any other Person in occupancy of or involved with
the operation or use of the Properties to commit any act or omission affording
the federal government or any state or local government the right of forfeiture
against any Individual Property or any part thereof or any monies paid in
performance of Borrower's obligations under any of the Loan Documents. Borrower
hereby covenants and agrees not to cause or permit Mortgage Borrower to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall at all times cause Mortgage Borrower to maintain,
preserve and protect all material franchises and trade names and preserve all
the remainder of its property used or useful in the conduct of its business and
shall keep, and cause Mortgage Borrower to keep the Properties in good working
order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage Loan and/or the
Mortgage. Borrower shall keep, or cause Mortgage Borrower to keep, the
Properties insured at all times by financially sound and reputable insurers, to
such extent and against such risks, and maintain liability and such other
insurance, as is more fully provided in this Agreement. Borrower shall cause
Mortgage Borrower to operate any Individual Property in accordance with the
terms and provisions of any applicable O&M Agreement in all material respects.
After prior notice to Agent, Borrower, at its own expense, may contest (or cause
Mortgage Borrower to contest) by
58
appropriate legal proceeding promptly initiated and conducted in good faith and
with due diligence, the validity of any Legal Requirement, the applicability of
any Legal Requirement to Borrower or Mortgage Borrower or any Individual
Property or any alleged violation of any Legal Requirement, provided that (i) no
Event of Default has occurred and remains uncured; (ii) Borrower is permitted to
do so under the provisions of any mortgage or deed of trust superior in lien to
the Mortgage; (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any instrument to which Mortgage Borrower or
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (iv) neither any Individual Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost; (v) Borrower shall promptly upon final determination thereof
comply with any such Legal Requirement determined to be valid or applicable or
cure any violation of any Legal Requirement; (vi) such proceeding shall suspend
the enforcement of the contested Legal Requirement against Borrower or Mortgage
Borrower or any Individual Property; and (vii) Borrower shall furnish such
security as may be required in the proceeding, or as may be reasonably requested
by Agent, to insure compliance with such Legal Requirement, together with all
interest and penalties payable in connection therewith. Agent may apply any such
security, as necessary to cause compliance with such Legal Requirement at any
time when, in the reasonable judgment of Agent, the validity, applicability or
violation of such Legal Requirement is finally established or any Individual
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall cause
Mortgage Borrower to pay all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Properties or any part thereof as the same
become due and payable in accordance with Section 5.1.2 of the Mortgage Loan
Agreement.
5.1.3 LITIGATION. Borrower shall give prompt notice to
Agent of any litigation or governmental proceedings pending or threatened
against any Significant Party, any Individual Property or the Collateral, which
might reasonably be expected to have a material adverse effect on such
Significant Party's condition (financial or otherwise) or business or any
Individual Property or Borrower's, Mortgage Borrower's or Guarantor's ability to
perform its obligations hereunder under the other Loan Documents or the Mortgage
Loan Documents, to which each is a party.
5.1.4 ACCESS TO PROPERTIES. Borrower shall cause Mortgage
Borrower to permit agents, representatives and employees of Lender to inspect
the Properties or any part thereof at reasonable hours upon reasonable advance
notice.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise
Agent of any material adverse change in any Significant Party's condition,
financial or otherwise, or of the occurrence of any Event of Default of which
Borrower has knowledge, including any Mortgage Loan Event of Default.
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5.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall
cooperate with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender or
Agent hereunder or any rights obtained by Lender or Agent under any of the other
Loan Documents and, in connection therewith, permit Lender and Agent, at its
election, to participate in any such proceedings.
5.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe,
perform and satisfy all the terms, provisions, covenants and conditions of, and
shall pay when due all costs, fees and expenses to the extent required under the
Loan Documents executed and delivered by, or applicable to, Borrower.
5.1.8 USURY. Borrower, by reason of its own business and
financial experience or that of its professional advisors has the capacity to
protect its interests in connection with the Loan and the transactions
contemplated by this Agreement and the other Loan Documents to which it is a
party..
5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's
sole cost and expense:
(a) furnish to Lender all instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements
relating to any Individual Property, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or which are reasonably requested by
Lender in connection therewith;
(b) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the collateral
at any time securing or intended to secure the obligations of Borrower under the
Loan Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall reasonably require from time to time.
5.1.10 MORTGAGE TAXES. Borrower represents that it has
caused Mortgage Borrower to pay all state, county and municipal recording and
all other taxes imposed upon the execution and recordation of the Mortgage.
5.1.11 FINANCIAL REPORTING. (a) Borrower will keep and
maintain or will cause to be kept and maintained on a Fiscal Year basis, in
accordance with GAAP (or such other accounting basis acceptable to Agent),
books, records and accounts reflecting all of the financial affairs of Borrower
and all items of income and expense in connection with the operation on an
individual basis of the Properties, which such books, records and accounts shall
be proper and accurate in all material respects. Agent and
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each Lender shall have the right from time to time at all times during normal
business hours upon reasonable notice to examine such books, records and
accounts at the office of Borrower or any other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Agent or
Lender shall desire. After the occurrence of an Event of Default, Borrower shall
pay any costs and expenses incurred by Agent or Lender to examine Borrower's
accounting records with respect to the Properties and/or the Collateral, as
Lender shall reasonably determine to be necessary or appropriate in the
protection of Lender's interest.
(b) Borrower will furnish and cause to be furnished to
Lender annually, within ninety (90) days following the end of each Fiscal Year
of Borrower, a complete copy of annual consolidated financial statements of
Fountain View, Inc. audited by a "Big Four" accounting firm or other independent
certified public accountant acceptable to Lender in accordance with GAAP (or
such other accounting basis acceptable to Lender) covering Borrower and its
Affiliates (with a supplemental unaudited combining balance sheet by property
for each Individual Property and for the Properties on a combined basis),
containing statements of profit and loss for Mortgage Borrower and each
Individual Property and the Properties in the aggregate, including the
operations of the Facilities and a balance sheet for Mortgage Borrower.
Borrower's unaudited financial statements for each Property shall include a
balance sheet, statement of profit and loss, census and occupancy schedule and a
Net Cash Flow statement. In addition, Borrower will provide unaudited financial
statements for all Properties, which such financial statements shall include a
combining balance sheet, profit and loss statement, census and occupancy
schedule and Net Cash Flow statement. Such statements shall set forth the
financial condition and the results of operations for the Properties for such
Fiscal Year, and shall include, but not be limited to, aggregated amounts
representing annual Net Cash Flow, Net Operating Income, Gross Income from
Operations and Operating Expenses. Borrower's annual consolidated financial
statements shall be accompanied by (i) a comparison of the budgeted income and
expenses and the actual income and expenses for the prior Fiscal Year, (ii) an
unqualified opinion of a "Big Four" accounting firm or other independent
certified public accountant reasonably acceptable to Lender, (iii) a schedule
audited by such independent certified public accountant reconciling Net
Operating Income to Net Cash Flow (the "NET CASH FLOW SCHEDULE"), which shall
itemize all adjustments made to Net Operating Income to arrive at Net Cash Flow
deemed material by such independent certified public accountant and (iv) an
Officer's Certificate (which shall be co-signed by Guarantor) certifying that
(A) each annual financial statement presents fairly the financial condition and
the results of operations of Guarantor, Borrower, Mortgage Borrower and the
Properties being reported upon and that such financial statements have been
prepared in accordance with GAAP and as of the date thereof whether there
exists, to Borrower's knowledge, an event or circumstance which constitutes a
Default or Event of Default under the Loan Documents executed and delivered by,
or applicable to, Borrower, and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same and (B) Guarantor is in compliance with all financial
covenants attached hereto as Annex I and Section 5.3.1 hereof (such certificate
shall be accompanied by calculations necessary to show compliance with the
financial covenants in a form reasonably satisfactory to Agent).
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(c) Borrower will furnish, or cause to be furnished, to
Lender on or before forty-five (45) days after the end of each calendar quarter
the following items, accompanied by an Officer's Certificate stating that such
items are true, correct, accurate, and complete in all material respects and
fairly present the financial condition and results of the operations of
Borrower, Mortgage Borrower and the Properties on a combined basis as well as
each Individual Property including the operations of the Facility (subject to
normal year-end adjustments) as applicable: (i) a Occupancy Report for the
subject quarter; (ii) quarterly and year-to-date operating statements for each
Individual Property and the Properties combined, prepared for each calendar
quarter, noting Net Operating Income, Gross Income from Operations, and
Operating Expenses (not including any contributions to the Replacement Reserve
Fund), and, upon Lender's request, other information reasonably necessary and
sufficient to fairly represent the financial position and results of operation
of the Properties during such quarter, and containing a comparison of budgeted
income and expenses and the actual income and expenses together with a detailed
explanation of any variances of ten percent (10%) or more with respect to the
line item entitled "Total Controllable Expenses" on the Occupancy Report and
five percent (5%) or more in the aggregate between budgeted and actual amounts
for such periods, all in form satisfactory to Lender; (iii) a calculation
reflecting the annual Debt Service Coverage Ratio for the immediately preceding
twelve (12) month period as of the last day of such quarter; (iv) a consolidated
Net Cash Flow Schedule (including Capital Expenditures) for the Properties and
(v) (A) a quarterly calculation of Excess Cash Flow, (B) current cash, Cash
Equivalents and marketable securities held by Borrower and Guarantor and (C)
amounts currently available under the Guarantor Revolving Credit Loan Agreement
and the Revolving Credit Loan Agreement. In addition, such Officer's Certificate
shall also state that (A) the representations and warranties of Borrower set
forth in Section 4.1.30 are true and correct in all material respects as of the
date of such certificate and that there are no trade payables outstanding for
more than sixty (60) days and (B) Guarantor is in compliance with all financial
covenants attached hereto as Annex I and Section 5.3.1 hereof (such certificate
shall be accompanied by calculations necessary to show compliance with the
financial covenants in a form reasonably satisfactory to Agent).
(d) For so long as Mortgage Borrower is required to
deliver monthly financial statements to Mortgage Lender, then Borrower shall
furnish or cause to be furnished to Lender as soon as available and in any event
within thirty (30) calendar days after the end of each calendar month (other
than the last calendar month of a fiscal quarter), unaudited financial
statements of Borrowers on a Consolidated Basis consisting of a balance sheet
and statements of income, retained earnings, cash flows and owners' equity as of
the end of the immediately preceding calendar month.
(e) Borrower shall furnish Lender, within ten (10)
Business Days of the receipt by Borrower, all material notices (regardless of
form) from any Health Care Authority and/or any insurance company, managed care
company, or other third-party payor that Borrower's license, Medicare or
Medicaid certification, or accreditation or ranking by any Health Care
Authority, insurance company, managed care company, or other third-party payor
is being downgraded, revoked, or suspended, that action is pending, being
considered or being taken to downgrade, revoke, or suspend the
62
Borrower's license or certification or to fine, penalize or impose remedies upon
the Borrower, or that action is pending, being considered, or being, or could
be, taken, to discontinue, suspend, deny, decrease or recoup any payments due,
made or coming due to Borrower or related to the operation of any Individual
Property.
(f) Borrower shall furnish Lender, simultaneously with
Borrower's delivery to the Guarantor Revolving Credit Loan Lender, each of the
other materials delivered to Guarantor Revolving Credit Loan Lender pursuant to
Section 6.1(b) of the Guarantor Revolving Credit Loan Agreement.
(g) Borrower shall cause Mortgage Borrower to file all
required Medicare or Medicaid cost reports on or prior to the date such reports
are due and shall furnish Lender, within thirty (30) days of the date of filing,
a complete and accurate copy of the annual Medicare or Medicaid cost report for
Mortgage Borrower, which will be prepared by Mortgage Borrower, and promptly
furnish Lender any material amendments filed with respect to such reports and
all material notices, responses, audit reports or inquiries with respect to such
reports.
(h) Borrower shall furnish Lender, within thirty (30)
days of the receipt by Mortgage Borrower, the annual Medicaid and Medicare
provider agreement(s) and the annual Medicaid and Medicare reimbursement rate
sheets and any new, revised or amended rate sheet which may be issued subsequent
to the annual reimbursement rate sheets.
(i) Borrower shall furnish Lender, within ten (10)
Business Days of receipt but at least five (5) days prior to the earliest date
on which Mortgage Borrower is required to take any action with respect thereto
or would suffer any adverse consequence, a copy of any material Medicare,
Medicaid or other licensing or accreditation or ranking agency or entity survey,
report, warning letter, or notice, and any statement of deficiencies, and within
the time period required by the particular agency for furnishing a plan of
correction also furnish or cause to be furnished to Lender a copy of the plan of
correction generated from such survey, report, warning letter, or notice for
Mortgage Borrower and by subsequent correspondence related thereto, and correct
or cause to be corrected any deficiency, the curing of which is a condition of
continued licensure or of full participation in Medicare or Medicaid or a care
program offered by an insurance company, managed care company, or other
third-party payor by the date required for cure by such agency or entity (plus
extensions granted by such agency or entity).
(j) Borrower shall furnish Lender, within ten (10)
Business Days of receipt by Mortgage Borrower, any other notices or charges
issued relating to the non-compliance by Borrower with any Health Care
Authority, insurance company, managed care company, or other third-party payor
laws, regulations, requirements, licenses, permits, certificates, authorizations
or approvals.
(k) Borrower shall furnish to Lender on or prior to the
Closing Date and for each fiscal year of Borrowers thereafter not more than
sixty (60) calendar days after the commencement of such fiscal year,
consolidated and consolidating by Business
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Group month by month projected operating budgets, annual projections, profit and
loss statements, balance sheets and cash flow reports of and for Borrower on
Consolidated Basis for such upcoming fiscal year (including an income statement
for each month and a balance sheet as at the end of the last month in each
fiscal quarter), in each case prepared in accordance with GAAP consistently
applied with prior periods.
(l) For each Fiscal Year commencing after the date
hereof, Borrower shall submit to Agent a proposed Annual Budget not later than
fifteen (15) days prior to the commencement of such period or Fiscal Year in
form reasonably satisfactory to Agent and a final Annual Budget not later than
thirty (30) days after the commencement of such Fiscal Year. The Annual Budget
shall be subject to Agent's approval, which approval shall not be unreasonably
withheld provided such Annual Budget provides for amounts as are sufficient to
make the payments to Agent required hereunder and under the Promissory Note B
(each such Annual Budget, an "APPROVED ANNUAL BUDGET"). In the event that Agent
objects to a proposed Annual Budget submitted by Borrower which requires the
approval of Agent hereunder, Agent shall advise Borrower of such objections
within fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise such Annual Budget and resubmit the same to Agent. Agent shall advise
Borrower of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise the same in accordance
with the process described in this subsection until Agent approves the Annual
Budget. Until such time that Agent approves a proposed Annual Budget which
requires the approval of Agent hereunder, the most recently Approved Annual
Budget shall apply; provided, that such Approved Annual Budget shall be adjusted
to reflect actual increases in Taxes, Insurance Premiums and utilities expenses.
(m) In the event that Mortgage Borrower or Borrower must
incur an extraordinary Operating Expense or Capital Expenditure not set forth in
the Approved Annual Budget (each, an "EXTRAORDINARY EXPENSE"), then Borrower
shall promptly deliver to Lender a reasonably detailed explanation of such
proposed Extraordinary Expense.
(n) Any reports, statements or other information required
to be delivered under this Agreement shall be delivered (i) in paper form, (ii)
on a diskette, and (iii) if requested by Lender and within the capabilities of
Borrower's data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files).
(o) It is understood and agreed that Lender shall accept
the financial reports required pursuant to this Section 5.1.11 in the forms
prepared in accordance with the Mortgage Loan Agreement, the Revolving Credit
Loan Agreement and the Guarantor Revolving Credit Loan Agreement, as applicable.
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5.1.12 BUSINESS AND OPERATIONS. Borrower will cause Mortgage
Borrower to continue to be engaged in the businesses presently conducted by it
as and to the extent the same are necessary for the ownership, maintenance,
management and operation of the Properties. Borrower shall cause Mortgage
Borrower to qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Properties.
5.1.13 TITLE. Borrower will warrant and defend the validity
and priority of Lender's security interest in the Collateral.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that the Note
or the Pledge Agreement is put into the hands of an attorney for collection,
suit or action, (b) Lender exercises any or all of its rights or remedies under
the Pledge Agreement or any other Loan Documents as and when permitted thereby,
or (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys' fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.
5.1.15 ESTOPPEL STATEMENT.
(a) After request by Agent or any Lender, Borrower shall
within ten (10) days furnish Agent or such Lender with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Loan, (ii) the unpaid principal amount of the Loan, (iii) the Applicable
Interest Rate of the Loan, (iv) the date installments of interest and/or
principal were last paid, (v) any offsets or defenses to the payment of the
Debt, if any, and (vi) that the Note, this Agreement, the Pledge Agreement and
the other Loan Documents are valid, legal and binding obligations and have not
been modified or if modified, giving particulars of such modification.
(b) In connection with a sale or transfer of all or a
portion of the Loan, after request by Agent or Lender, Borrower shall cause
Mortgage Borrower to, within ten (10) days, furnish Agent or such Lender with a
statement, duly acknowledged and certified, setting forth (i) the original
principal amount of the Mortgage Loan, (ii) the unpaid principal amount of the
Mortgage Loan, (iii) the Applicable Interest Rate of the Mortgage Loan, (iv) the
date installments of interest and/or principal were last paid under the Mortgage
Loan, (v) any offsets or defenses to the payment of the Debt, if any, under the
Mortgage Loan and (vi) that the Mortgage Note, the Mortgage Loan Agreement, the
Mortgage and the other Mortgage Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
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5.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the
Loan received by it on the Closing Date only for the purposes set forth in
Section 2.1.4 hereof.
5.1.17 PERFORMANCE BY BORROWER. Borrower shall in a timely
manner observe, perform and fulfill each and every covenant, term and provision
of each Loan Document executed and delivered by, or applicable to, Borrower, and
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior consent of Lender.
5.1.18 INTENTIONALLY DELETED.
5.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer,
permit or initiate or permit Mortgage Borrower to suffer, permit or initiate the
joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual Property which may
be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Individual
Property.
5.1.20 INTENTIONALLY DELETED.
5.1.21 INTENTIONALLY DELETED.
5.1.22 CERTAIN FURTHER COVENANTS. Borrower further covenants
and agrees with Lender as follows:
(a) Borrower shall cause Mortgage Borrower to cause the
operations conducted or to be conducted at the Facility to be conducted at all
times, at a minimum, in a manner consistent with or better than (x) Legal
Requirements, (y) the level of operation of the Facility as of the Closing Date,
and (z) with the level of operation of other such facilities in the industry,
and, in connection therewith, Borrower shall cause Mortgage Borrower to:
(i) maintain or cause to be maintained the
standard of care for the residents of the Facility at all times at a
level necessary to insure a level of quality care for the residents of
the Facility in compliance with Legal Requirements and comparable to or
better than that existing on the Closing Date;
(ii) maintain or cause to be maintained a
standard of care in the storage, use, transportation and disposal of
all medical equipment, medical supplies, medical products or gases, and
medical waste, of any kind and in any form, that is in accordance with,
at least, that of the commercially reasonable industry standard and in
conformity with all applicable Legal Requirements;
(iii) operate the Facility in a commercially
reasonable manner in substantial and material compliance with
applicable laws and regulations relating
66
thereto and cause all material Licenses, reimbursement or care
contracts, and any other agreements necessary for the certification,
licensure, accreditation or operation of the Facility as may be
necessary for participation in the Medicare or Medicaid reimbursement
programs, managed care company, insurance company, or other third-party
payor reimbursement programs to remain in effect without reduction in
the number of licensed beds or beds authorized for use in Medicare or
Medicaid reimbursement programs, managed care company, insurance
company, or other third-party payor reimbursement programs;
(iv) take no action which has a reasonable
likelihood of resulting in a suspension, denial, elimination or
material reduction of reimbursement for services from Medicare or
Medicaid (without opportunity to correct), or any managed care company,
insurance company, or other commercial third-party payor provided,
however, that Borrower may cancel or terminate any managed care
company, insurance company or other third-party commercial payor
contract (i) if such managed care company, insurance company or
third-party commercial payor has materially breached such contract, or
(ii) such cancellation or termination does not have a material adverse
effect on Net Operating Income; and
(v) maintain or cause to be maintained all
deposits, including, without limitation, deposits relating to residents
or residency agreements. If such deposits are in cash, such deposits
are to be deposited and held by Borrower, or any manager of the
Facility, as the case may be, in accordance with any Legal
Requirements, at such commercial or savings bank or banks as may be
reasonably satisfactory to Lender. If such deposits are in any other
form, such deposits are to be maintained as Lender may expressly
permit. Any bond or other instrument which Borrower, or any manager of
the Facility, as the case may be, is permitted to hold in lieu of cash
deposits under any applicable legal requirements shall be maintained in
full force and effect unless replaced by cash deposits as hereinabove
described, shall be issued by an institution reasonably satisfactory to
Lender, shall, if permitted pursuant to any Legal Requirements, name
Lender as payee or Lender thereunder (or at Lender's option, be fully
assignable to Lender) and shall, in all respects, comply with any
applicable legal requirements and otherwise be reasonably satisfactory
to Lender. Borrower shall, upon request, provide Lender with evidence
reasonably satisfactory to Lender of Borrower's compliance with the
foregoing.
(b) Borrower shall not permit Mortgage Borrower to assign
or transfer any of its interest in any Licenses or reimbursement or care
contracts (including rights to payment thereunder), including any Medicare,
Medicaid, managed care company, insurance company, or other third-party payor
agreements, pertaining to Borrower or the Facility, or assign, transfer, or
remove or permit any other person to assign, transfer, or remove any records
pertaining to the Facility, including, without limitation, resident records,
medical and clinical records (except for removal of such patient resident
records as directed by the patients or residents owning such records), without
Lender's prior written consent, which consent may be granted or refused in
Lender's sole discretion.
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(c) Borrower shall not permit Mortgage Borrower to enter
into any transaction with any person or entity affiliated with Borrower other
than in the ordinary course of its business and on fair and reasonable terms in
compliance with Legal Requirements and, no less favorable to Borrower than those
it would obtain in a comparable arms-length transaction with a person or entity
not an affiliate.
(d) Borrower shall, upon request, cause Mortgage Borrower
to deliver evidence of compliance with any applicable post-transfer license
requirements of Health Care Authorities.
5.1.23 OWNERSHIP APPLICATION. Borrower shall cause Mortgage
Borrower to file an application or filing as appropriate to initiate the process
to have each Operator become the licensed operator of its respective Individual
Property with the applicable Health Care Authorities within thirty (30) days
from the date hereof and shall diligently prosecute such ownership application
to completion. Upon completion of all required approvals for the ownership
application with respect to any Individual Property, Borrower shall cause
Mortgage Borrower to take all actions necessary to transfer the operations of
the applicable Individual Property (including the related Facility) to the
applicable Operator and to terminate any license or management agreement with
the current operator of such Individual Property. Borrower shall cause Mortgage
Borrower to complete the transfers of the operations of Individual Properties
with Allocated Loan Amounts at least equal, in the aggregate, to seventy five
percent (75%) of the original principal balance of the Loan on or before March
1, 2004 and to complete all such transfers of operations on or before July 1,
2004 and to deliver an opinion of counsel confirming that the Operators are
properly licensed and that operations of the Facility have been transferred to
the applicable Operator.
5.1.24 COMPLIANCE WITH PLAN OF REORGANIZATION. Borrower
shall comply with the Plan of Reorganization approved by the Bankruptcy Court
having jurisdiction thereof and with the order of such Bankruptcy Court
confirming the Plan of Reorganization.
5.1.25 MORTGAGE LOAN RESERVE FUNDS. Borrower shall cause
Mortgage Borrower to deposit and maintain each of the Mortgage Loan Reserve
Funds as more particularly set forth in Article VII of the Mortgage Loan
Agreement and to perform and comply with all the terms and provisions relating
thereto.
5.1.26 NOTICES. Borrowers shall promptly, and in any event
within five (5) Business Days after any Borrower or any authorized officer of
any Borrower obtain knowledge thereof, notify Lender in writing of (i) any
pending or threatened litigation, suit, investigation, arbitration, dispute
resolution proceeding or administrative proceeding brought or initiated by any
Borrower or otherwise affecting or involving or relating to any Borrower or any
of its property or assets to the extent (A) (x) with respect to professional
liability claims, the amount in controversy exceeds $5,000,000 (provided that
Borrower shall notify Lender if in their judgment any such claim has merit and
the Borrowers' potential exposure with respect thereto is greater than
$500,000), and (y) with respect to all other claims the amount in controversy
exceeds $500,000 or (B) to the
68
extent any of the foregoing seeks injunctive relief which could reasonably be
expected to have a Material Adverse Effect, (ii) the occurrence of any Default
or Event of Default, which notice shall specify the nature and status thereof,
the period of existence thereof and what action is proposed to be taken with
respect thereto, (iii) any other development, event, fact, circumstance or
condition that could reasonably be expected to have a Material Adverse Effect,
in each case describing the nature and status thereof and the action proposed to
be taken with respect thereto, (iv) any notice received by Borrower from any
payor of a material claim, suit or other action such payor has, claims or has
filed against Borrower, (v) any matter(s) materially and adversely affecting the
value, enforceability or collectability of the Collateral, including, without
limitation, claims or disputes in the amount of $250,000 or more in the
aggregate, in existence at any one time, (vi) any notice given by Borrower to
any other lender of Borrower (with a copy of such notice), (vii) receipt of any
notice or request from any Governmental Authority or governmental payor
regarding any material liability or claim of liability, and (viii) receipt of
any notice by Borrower regarding termination of any manager of any facility
owned, operated or leased by Borrower.
5.1.27 INTENTIONALLY DELETED.
5.1.28 INTENTIONALLY DELETED.
5.1.29 MORTGAGE BORROWER COVENANTS. Borrower shall cause
Mortgage Borrower to comply with all obligations with which Mortgage Borrower
has covenanted to comply under the Mortgage Loan Agreement and all other
Mortgage Loan Documents (including, without limitation, those certain
affirmative and negative covenants set forth in Article V of the Mortgage Loan
Agreement), whether the related Mortgage Loan Document has been repaid or
otherwise terminated, unless otherwise consented to in writing by Agent.
5.1.30 ASSUMPTION OF A PORTION OF LOAN. Except in accordance
with Section 2.7 hereof, Borrower shall not engage and shall not permit Mortgage
Borrower to engage in any transaction contemplated by Section 2.7 of the
Mortgage Loan Agreement without the prior written consent of Agent, which may be
withheld in its sole discretion.
5.1.31 MONUMENT HILL PROPERTY. With respect to the
Individual Property know as Monument Hill Nursing Center (the "MONUMENT HILL
PROPERTY"), Mortgage Borrower has filed a Plan of Correction with the applicable
Health Care Authorities. If, on or prior to November 7, 2003 either (A) the
applicable Health Care Authorities have not accepted such Plan of Correction (or
the deficiency addressed in the Plan of Correction is not otherwise resolved in
a manner satisfactory to Lender with written evidence thereof delivered to
Lender), or (B) a Denial of Payment for New Admissions ("DOPNA") is issued with
respect to the Monument Hill Property, and such DOPNA is not rescinded, Borrower
shall, within ten (10) days of such occurrence (and in any event on or prior to
November 17, 2003), cause Mortgage Borrower to (i) pay to Mortgage Lender the
Release Amount (as defined in the Mortgage Loan Agreement) for the Monument Hill
Property and release the Monument Hill Property from the lien of the Mortgage in
accordance with the provisions of Section 2.5.1 of the Mortgage Loan
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Agreement and (ii) pay to Lender an amount equal to the Mezzanine Loan Release
Amount applicable to the Monument Hill Property without a prepayment premium or
penalty. Failure of Mortgage Borrower to release the Monument Hill Property on
or prior to November 17, 2003 when such release is required in accordance with
the foregoing provision shall be an immediate and non-curable Event of Default
hereunder. To the extent needed to pay the applicable release amounts in
connection with the release of the Monument Hill Property, Borrower shall cause
Mortgage Borrower to borrow such funds under the Revolving Credit Loan. Borrower
shall promptly inform Lender of (1) rejection of its Plan of Correction by the
applicable Health Care Authorities with respect to the Monument Hill Property,
(2) the issuance of a DOPNA with respect to the Monument Hill Property or (3)
any other pertinent information related to the Monument Hill Property.
5.1.32 INTENTIONALLY DELETED.
SECTION 5.2. BORROWER NEGATIVE COVENANTS. From the date
hereof until payment and performance in full of all obligations of Borrower
under the Loan Documents or the earlier release of the Collateral in accordance
with the terms of this Agreement and the other Loan Documents, Borrower
covenants and agrees with Lender that it will not do, directly or indirectly,
any of the following:
5.2.1 NEGATIVE PLEDGE. Borrower shall not pledge or ▇▇▇▇▇ ▇
▇▇▇▇ on any stock, partnership or other equity interests of any Subsidiary which
it owns at any time to any Person other than to Lender (or Agent for the benefit
of Lender).
5.2.2 LIENS. (a) Borrower shall not create, incur, assume
or suffer to exist any Lien on any portion of the Collateral or permit any such
action to be taken, except: (i) Permitted Encumbrances and (ii) Liens created by
or permitted pursuant to the Loan Documents, and (b) except for any Lien being
contested in accordance with the provisions of the Mortgage Loan Agreement,
Borrower shall not permit or cause Mortgage Borrower to create, incur, assume or
suffer to exist any Lien on any portion of any Individual Property or permit any
such action to be taken, except: (i) Permitted Encumbrances, (ii) Liens created
by or permitted pursuant to the Mortgage Loan Documents, (iii) Liens for Taxes
and Other Charges not yet due.
5.2.3 DISSOLUTION. Borrower shall not and shall not permit
Mortgage Borrower to (a) engage in any dissolution, liquidation or consolidation
or merger with or into any other business entity, (b) in the case of Borrower,
engage in any business activity not related to the ownership of the Collateral,
in the case of Mortgage Borrower, engage in any business not related to the
ownership and operation of the Properties (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower or Mortgage Borrower,
as applicable, except to the extent permitted by the Loan Documents, (d) modify
or amend in any manner effecting its status and Special Purpose Entity, waive or
terminate its organizational documents or its qualification and good standing in
any jurisdiction or (e) cause permit or suffer Borrower or Mortgage Borrower or
any Subsidiary thereof which is a Special Purpose Entity to (i) dissolve, wind
up or liquidate or take any action,
70
or omit to take an action, as a result of which Borrower or Mortgage Borrower or
such Subsidiary would be dissolved, wound up or liquidated in whole or in part,
or (ii) amend, modify in any manner effecting its status as a Special Purpose
Entity, waive or terminate the certificate of incorporation/formation or bylaws
of Borrower or Mortgage Borrower or any Subsidiary thereof which is a Special
Purpose Entity, in each case, without obtaining the prior consent of Agent.
5.2.4 CHANGE IN BUSINESS. Borrower shall not permit
Mortgage Borrower to enter into any line of business other than the ownership,
leasing and operation of the Properties, or make any material change in the
scope or nature of its business objectives, purposes or operations, or undertake
or participate in activities other than the continuance of its present business.
Borrower shall not enter into any line of business other than the ownership of
the Collateral, or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business. Borrower shall
not change Borrower's name without giving Agent thirty (30) days prior written
notice. Borrower shall, at Borrower's sole cost and expense, take all action
required by Agent for the purpose of perfecting or protecting the lien and
security interest of Lender, including, without limitation, the execution and/or
delivery of UCC-1 financing statements. Borrower shall promptly notify Agent in
writing of any change in Borrower's organizational identification number. If
Borrower does not now have an organizational identification number and later
obtains one, Borrower shall promptly notify Agent in writing of such
organizational identification number.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or
otherwise forgive or release any claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.2.6 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 7.6, Borrower shall not enter into or consummate any transaction of any
kind with any of its Affiliates or Guarantor or its Affiliates other than: (i)
salary, bonus, employee stock option and other compensation and employment
arrangements with directors or officers in the ordinary course of business,
provided, that no payment of any bonus shall be permitted if an Event of Default
under Section 8.1(a) has occurred and remains in effect or would be caused by or
result from such payment; (ii) distributions and dividends permitted pursuant to
Section 5.2.11, (iii) transactions on overall terms at least as favorable to
Borrower as would be the case in an arm's length transaction between unrelated
parties of equal bargaining power, and (iv) payments permitted under and
pursuant to written agreements entered into by and between Borrower and one or
more of its Affiliates or Guarantor or one or more of its Affiliates that both
(A) reflect and constitute transactions on overall terms at least as favorable
to Borrower as would be the case in an arm's-length transaction between
unrelated parties of equal bargaining power, and (B) are subject to such terms
and conditions as determined by Agent in its commercially reasonable discretion;
provided, that notwithstanding the foregoing or any provision of any Loan
Document, Borrower shall not (Y) enter into or consummate any transaction or
agreement pursuant to which it becomes a party to any mortgage, note,
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indenture or guarantee evidencing any Indebtedness for Borrowed Money or
Contingent Obligations of any of its Affiliates or otherwise becomes responsible
or liable, as a guarantor, surety or otherwise, pursuant to any agreement for
any Indebtedness for Borrowed Money or Contingent Obligations of any such
Affiliate or (Z) make any payment to any of its Affiliates in excess of $100,000
without the prior written consent of Agent. By execution of this Agreement,
Lender consents to the payments made to Affiliates pursuant to the agreements
set forth on SCHEDULE 7.6.
5.2.7 ZONING. Borrower shall not permit Mortgage Borrower
to initiate or consent to any zoning reclassification of any portion of any
Individual Property or seek any variance under any existing zoning ordinance or
use or permit the use of any portion of any Individual Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Agent.
5.2.8 PRINCIPAL PLACE OF BUSINESS AND ORGANIZATION.
Borrower shall not change its principal place of business set forth in the
introductory paragraph of this Agreement without first giving Agent thirty (30)
days prior notice. Borrower shall not change the place of its organization as
set forth in Section 4.1.28 without the consent of Lender, which consent shall
not be unreasonably withheld. Upon Agent's request, Borrower shall execute and
deliver additional financing statements, security agreements and other
instruments which may be necessary to effectively evidence or perfect Lender's
security interest in the Collateral or the Properties as a result of such change
of principal place of business or place of organization.
5.2.9 ERISA. (a) Borrower shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, this
Agreement or the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to
Agent such certifications or other evidence from time to time throughout the
term of the Loan, as requested by Lender in its reasonable discretion, that (i)
Borrower is not and does not maintain an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(32) of ERISA; (ii) Borrower is not subject
to any state statute regulating investments of, or fiduciary obligations with
respect to, governmental plans; and (iii) one or more of the following
circumstances is true:
(A) Equity interests in Borrower are publicly
offered securities, within the meaning of 29
C.F.R. Section 2510.3-l01(b)(2);
(B) Less than twenty-five percent (25%) of each
outstanding class of equity interests in
Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R.
Section 2510.3-101(0(2); or
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(C) Borrower qualifies as an "operating company"
or a "real estate operating company" within
the meaning of 29 C.F.R. Section 25
10.3-101(c) or (e).
5.2.10 TRANSFERS. (a) Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning the
Collateral in agreeing to make the Loan, and will continue to rely on Borrower's
ownership of the Collateral as a means of maintaining the value of the
Collateral as security for repayment of the Debt and the performance of the
obligations contained in the Loan Documents. Borrower acknowledges that Lender
has a valid interest in maintaining the value of the Collateral so as to ensure
that, should Borrower default in the repayment of the Debt or the performance of
the obligations contained in the Loan Documents, Lender can recover the Debt by
a sale of the Collateral.
(b) Without the prior consent of Agent and except to the
extent otherwise set forth in this Section 5.2.10, Borrower shall not, and shall
not permit any Restricted Party to, (i) sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer
or dispose of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) the Collateral, any Individual Property or any part thereof or any legal
or beneficial interest therein or (ii) permit a Sale or Pledge of an interest in
any Restricted Party ((i) and (ii) collectively, a "TRANSFER"), other than
pursuant to Leases of space in the Improvements to tenants in accordance with
the provisions of Section 5.1.20 hereof.
(c) A Transfer shall include, but not be limited to, (i)
an installment sales agreement wherein Borrower or Mortgage Borrower, as
applicable, agrees to sell the Collateral or any part thereof for a price to be
paid in installments; (ii) an agreement by Mortgage Borrower leasing all or a
substantial part of an Individual Property for other than actual occupancy by a
resident or space tenant thereunder or a sale, assignment or other transfer of,
or the grant of a security interest in, Mortgage Borrower's right, title and
interest in and to any Leases or any Rents; (iii) if a Restricted Party is a
corporation, any merger, consolidation or Sale or Pledge of such corporation's
stock or the creation or issuance of new stock; (iv) if a Restricted Party is a
limited or general partnership or joint venture, any merger or consolidation or
the change, removal, resignation or addition of a general partner or the Sale or
Pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest, or the Sale or Pledge of limited
partnership interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non-member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests or the
creation or issuance of new non-managing membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or
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Pledge of the legal or beneficial interest in a Restricted Party or the creation
or issuance of new legal or beneficial interests; or (vii) the removal or the
resignation of the managing agent (including, without limitation, an Affiliated
Manager).
(d) Notwithstanding the provisions of this Section
5.2.10, the following transfers shall not be deemed to be a Transfer: (i) a sale
or transfer of any direct or indirect interest in any shareholder of Guarantor,
(ii) a sale or transfer of any direct or indirect interest in any Affiliate of
Guarantor, provided such entity or entities are not a Pledgor or a Subsidiary of
a Pledgor, (iii) a sale or transfer, pledge or encumbrance of all or
substantially all of the stock or Guarantor, a merger or consolidation of
Guarantor or a sale or transfer of all or substantially all of the assets of
Guarantor, provided that (A) Agent shall receive not less than thirty (30) days
prior notice of such proposed merger, consolidation or acquisition, and (B) the
successor entity in connection with any such merger or consolidation and the
acquiring entity in connection with any such acquisition shall have a net worth
that is equal to or greater than the greater of the net worth of Guarantor on
the date hereof or the net worth of Guarantor immediately prior to such merger,
consolidation or acquisition, (iv) the issuance, sale or transfer of stock of
Guarantor in connection with an initial public offering of the stock of
Guarantor, provided that (A) Agent shall receive not less than thirty (30) days
prior notice of such proposed initial public offering, and (B) such stock will
be listed on the New York Stock Exchange or such other nationally recognized
stock immediately following such offering and such initial public offering is
widely marketed to institutional investors exchange, and (v) the subsequent
sale, transfer or issuance of stock in Guarantor, provided such stock is listed
on the New York Stock Exchange or such other nationally recognized stock
exchange. In addition, at all times, Heritage Partners must continue to own,
directly or indirectly, at least a thirty three and one-third percent (33.33%)
interest in Borrower, Mortgage Borrower and Guarantor, provided, however, that
in connection with an initial public offering permitted pursuant to subsection
(v) above, Heritage Partners must continue to own, directly or indirectly, at
least a twenty-five percent (25%) interest in Borrower and Guarantor.
(e) Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon a Transfer without
Lender's consent. This provision shall apply to every Transfer regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
5.2.11 LIMITATIONS ON DISTRIBUTIONS. Borrower shall not (i)
declare, pay or make any dividend or distribution on any shares of capital stock
or other securities or interests (other than dividends or distributions payable
in its stock, or split-ups or reclassifications of its stock); (ii) apply any of
its funds, property or assets to the acquisition, redemption or other retirement
of any capital stock or other securities or interests or of any options to
purchase or acquire any of the foregoing (provided, however, that Borrower may
redeem its capital stock from any terminated employee pursuant to, but only to
the extent required or permitted under, the terms of the related employment or
other agreements with such employee, as long as no Default or Event of Default
has occurred and is continuing or would be caused by or result therefrom), or
(iii)
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otherwise make any payments or Distributions to any stockholder, member, partner
or other equity owner in such Person's capacity as an equity owner.
Notwithstanding the foregoing, Borrower may make Distributions and other
payments to the owner of such Borrower.
5.2.12 OTHER LIMITATIONS. Prior to the payment in full of
the Debt, neither Borrower nor any of its Affiliates shall, without the prior
written consent of Lender (which may be furnished or withheld at its sole and
absolute discretion), give its consent or approval to any of the following
actions or items:
(a) except as permitted by Lender herein or otherwise
expressly permitted under the other Loan Documents (i) any refinance of the
Mortgage Loan, (ii) any prepayment in full of the Mortgage Loan, (iii) any
Transfer (except as expressly permitted herein) of any or all of the Properties
or any portion thereof, or (iv) any action in connection with or in furtherance
of the foregoing;
(b) creating, incurring, assuming or suffering to exist
any additional Liens on any portion of the Properties except for Permitted
Encumbrances; or
(c) any modification, amendment, consolidation, spread,
restatement, waiver or termination of any of the Mortgage Loan Documents.
5.2.13 REFINANCING OF GUARANTOR REVOLVING CREDIT LOAN.
Borrower shall not refinance or replace the Guarantor Revolving Credit Loan
unless it obtains the prior consent of Agent, provided that Agent shall consent
to a refinancing or replacement in full of the Guarantor Revolving Credit Loan
if, after considering the following factors, Agent determines in its reasonable
discretion that such factors have been satisfied:
(a) Agent shall have received at least thirty (30) days
prior written notice of such refinancing;
(b) no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(c) the new guarantor revolving credit loan ("NEW
GUARANTOR REVOLVING CREDIT LOAN") shall have (A) an interest rate that is no
higher than the current interest rate provided for under the Guarantor Revolving
Credit Loan (or in the event the Guarantor Revolving Credit Loan is a floating
rate loan, an interest rate that is benchmarked off the same index and with a
spread over such index which is no greater than the then current spread
applicable to the Guarantor Revolving Credit Loan), as determined by Lender
absent manifest error, (B) a maximum principal amount that is no more than the
maximum principal amount of the Guarantor Revolving Credit Loan; (C) a maturity
date that is no earlier than that provided for under the Guarantor Revolving
Credit Loan at the time of the closing hereof; (D) no provisions providing for
the payment of any additional interest, fees, participating interest or other
similar equity feature; (E) no provision in which collateral not granted for the
benefit of Guarantor Revolving Credit Lender or otherwise encumbered with
respect to the Guarantor Revolving Credit Loan as of the date hereof is granted
for the benefit of or with respect
75
to the New Revolving Credit Loan; (F) no provision whereby the New Revolving
Credit Loan is cross-defaulted with any other Indebtedness; (G) a cash
management and lockbox arrangement substantially similar to that maintained
under the Guarantor Revolving Credit Loan; and (H) no provisions that prohibit
the prepayment of the New Revolving Credit Loan without the payment of a
prepayment premium or penalty;
(d) the terms of the New Guarantor Revolving Credit Loan
shall provide the same express rights to the Lender as the Guarantor Revolving
Credit Loan and shall not conflict with the terms of the Loan and the lender
under the New Guarantor Revolving Credit Loan shall enter into an intercreditor
agreement with Lender no less favorable to Lender than the intercreditor
agreement between Lender and Guarantor Revolving Credit Lender dated as of the
date hereof;
(e) Borrower shall pay all reasonable costs and expenses
of Lender incurred in connection with the New Guarantor Revolving Credit Loan,
including, without limitation, reasonable fees and expenses of Lender's counsel;
(f) Borrower shall execute and deliver such amendments to
this Agreement and the other Loan Documents as Agent may reasonably request in
connection with such New Guarantor Revolving Credit Loan; and
(g) Agent shall have received such settlement statements,
pay-off letters, opinions and other documentation as it shall reasonably request
in connection with the New Guarantor Revolving Credit Loan.
Upon the satisfaction of the foregoing, Borrower may consummate a replacement or
a refinancing of the Guarantor Revolving Credit Loan , whereupon such New
Guarantor Revolving Credit Loan shall be deemed to be the Guarantor Revolving
Credit Loan as defined herein.
5.2.14 REFINANCING OF REVOLVING CREDIT LOAN. Borrower shall
not refinance or replace the Revolving Credit Loan unless it obtains the prior
consent of Agent, provided that Agent shall consent to a refinancing or
replacement in full of the Revolving Credit Loan if, after considering the
following factors, Agent determines in its reasonable discretion that such
factors have been satisfied:
(a) Lender shall have received at least thirty (30) days
prior written notice of such refinancing;
(b) no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(c) the new revolving credit loan ("NEW REVOLVING CREDIT
LOAN") shall have (A) an interest rate that is no higher than the current
interest rate provided for under the Revolving Credit Loan (or in the event the
Revolving Credit Loan is a floating rate loan, an interest rate that is
benchmarked off the same index and with a spread over such index which is no
greater than the then current spread applicable to the Revolving Credit Loan),
as determined by Lender absent manifest error, (B) a maximum principal
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amount that is no more than the maximum principal amount of the Revolving Credit
Loan; (C) a maturity date that is no earlier than that provided for under the
Revolving Credit Loan at the time of the closing hereof; (D) no provisions
providing for the payment of any additional interest, fees, participating
interest or other similar equity feature; (E) no provision in which collateral
not granted for the benefit of Revolving Credit Lender or otherwise encumbered
with respect to the Revolving Credit Loan as of the date hereof is granted for
the benefit of or with respect to the New Revolving Credit Loan; (F) no
provision whereby the New Revolving Credit Loan is cross-defaulted with any
other Indebtedness; (G) a cash management and lockbox arrangement substantially
similar to that maintained under the Revolving Credit Loan; and (H) no
provisions that prohibit the prepayment of the New Revolving Credit Loan without
the payment of a prepayment premium or penalty;
(d) the terms of the New Revolving Credit Loan shall
provide the same express rights to the Lender as the Revolving Credit Loan and
shall not conflict with the terms of the Loan and the lender under the New
Revolving Credit Loan shall enter into an intercreditor agreement with Lender no
less favorable to Lender than the intercreditor agreement between Lender and
Revolving Credit Lender dated as of the date hereof;
(e) Borrower shall pay all costs and expenses of Lender
incurred in connection with the New Revolving Credit Loan, including, without
limitation, reasonable fees and expenses of Lender's counsel;
(f) Borrower shall execute and deliver such amendments to
this Agreement and the other Loan Documents as Lender may request in connection
with such New Revolving Credit Loan; and
(g) Lender shall have received such settlement
statements, pay-off letters, opinions and other documentation as it shall
reasonably request in connection with the New Revolving Credit Loan.
Upon the satisfaction of the foregoing, Borrower may
consummate a replacement or a refinancing of the Revolving Credit Loan,
whereupon such New Revolving Credit Loan shall be deemed to be the Revolving
Credit Loan as defined herein.
5.2.15 REFINANCING OF MORTGAGE LOAN. (a) Borrower shall not
consent to or permit a refinancing of the Mortgage Loan unless it obtains the
prior consent of Lender, provided that Lender shall consent to a refinancing in
full of the Mortgage Loan if, after considering the following factors, Lender
determines in its reasonable discretion that such factors have been satisfied:
(i) no Event of Default or event which with the
giving of notice and/or lapse of time would constitute an Event of
Default under this Agreement shall have occurred and be continuing;
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(ii) the new mortgage loan including, without
limitation, any successive refinancing ("NEW MORTGAGE LOAN") shall have
(i) an interest rate that is no higher than the current interest rate
provided for under the Mortgage Loan (or in the event the Mortgage Loan
is a floating rate loan, an interest rate that is benchmarked off the
same index and with a spread over such index which is no greater than
the then current spread applicable to the Mortgage Loan), as determined
by Lender in its sole discretion (and shall provide for an interest
rate cap substantially identical to the Interest Rate Cap Agreement),
provided, however, that in connection with a permitted refinancing
during the three (3) months prior to the Maturity Date the interest
rate may be at the then prevailing market rate; (ii) a principal
balance that is no more than the balance of the Mortgage Loan on the
date of the refinancing plus any advances made by the Mortgage Lender
or the Servicer in order to protect or preserve the Property or the
lien of the Mortgage Loan Documents on the Property; provided, however,
that in connection with a permitted refinancing during the three (3)
months prior to the Maturity Date, the principal balance may also
include reasonable and customary closing costs; (iii) if the New
Mortgage Loan provides for amortization, amortization amounts not
greater than that calculated on the basis of an equal monthly payment
self liquidating twenty-five (25) year loan using the initial interest
rate for the permitted refinancing in question for such calculation;
provided, however, that the amount of amortization may be greater than
the amortization under the Mortgage Loan due to an increase in the
principal balance as permitted under subsection (ii) above; (iv) a
maturity date that is no earlier than that provided for under the
Mortgage Loan at the time of the closing hereof; (v) no provisions
providing for the payment of any additional interest, fees,
participating interest or other similar equity feature; (vi) no
provision in which collateral not granted for the benefit of Mortgage
Lender or otherwise encumbered with respect to the Mortgage Loan as of
the date hereof is granted for the benefit of or with respect to the
New Mortgage Loan; (vii) no provision whereby the New Mortgage Loan is
cross-defaulted with any other Indebtedness; (viii) reserves
substantially the same as those maintained under the Mortgage Loan and
a cash management and lockbox arrangement substantially similar to that
maintained under the Mortgage Loan; and (ix) no provisions that
prohibit the prepayment of the New Mortgage Loan from and after the
Permitted Prepayment Date (as defined in the Mortgage Loan Agreement)
without the payment of a prepayment premium or penalty that is greater
than the prepayment premium or penalty required under the Mortgage Loan
Agreement;
(iii) the terms of the New Mortgage Loan shall
permit the Loan, shall provide the same express rights to the Lender as
the Mortgage Loan and shall not conflict with the terms of the Loan and
the new mortgage lender shall assume the existing Intercreditor
Agreement without amendment or modification;
(iv) Borrower shall pay all reasonable costs and
expenses of Lender incurred in connection with any such refinancing,
including, without limitation, reasonable fees and expenses of Lender's
counsel;
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(v) Agent shall have received at least thirty
(30) days prior written notice of such refinancing.
(b) Upon the satisfaction of the foregoing, Borrower may
permit or consent to a refinancing of the Mortgage Loan, whereupon such New
Mortgage Loan shall be deemed to be the Mortgage Loan as defined herein.
(c) Borrower may permit or consent to a refinancing of
the Revolving Credit Loan upon satisfaction of the terms and conditions set
forth in the Mortgage Loan Agreement.
5.2.16 CONTRACTUAL OBLIGATIONS. Other than the Loan
Documents and the organizational documents of such entity and the Summit Note,
neither Borrower nor any of its assets shall be subject to any Contractual
Obligations, and Borrower shall not enter into any agreement, instrument or
undertaking by which it or its assets are bound, except for such liabilities,
not material in the aggregate, that are incidental to its activities, as a
limited partner or regular member, as applicable, of its Subsidiaries shown in
the Organizational Chart.
5.2.17 LIMITATIONS ON SECURITIES ISSUANCES. None of Borrower
of any of its Subsidiaries shall issue any membership, partnership or other
ownership interests, stock or other securities other than those issued as of the
date hereof unless pledged to Lender in an agreement substantially similar in
form and substance to the Pledge Agreement.
5.2.18 ASSETS. Borrower shall not purchase or own any
property other than the Collateral. Borrower shall not permit Mortgage Borrower
to purchase or own any property of than the Properties and any property
necessary or incidental for the operation of the Properties, except as permitted
under the Mortgage Loan Documents.
5.2.19 MASTER LEASES AND OPERATING LEASES. Borrower shall
not and shall not permit the Mortgage Borrower or any Operator to amend, modify,
terminate, cancel or surrender the Master Leases or the Operating Leases, as
applicable, without the prior written consent of Agent.
SECTION 5.3. GUARANTOR COVENANTS
5.3.1 NEGATIVE PLEDGE. Guarantor shall at all times be in
compliance with the financial covenants set forth on ANNEX I to this Agreement,
which is incorporated herein and made a part hereof.
5.3.2 PERMITTED INDEBTEDNESS. Guarantor shall not create,
incur, assume or suffer to exist any Indebtedness for Borrowed Money, except the
following (collectively, "PERMITTED INDEBTEDNESS"): (a) Indebtedness under the
Loan Documents or the Guarantor Revolving Credit Loan Documents; (b) any
Indebtedness set forth on SCHEDULE 5.3.2 and any Indebtedness which refinances
or replaces such Indebtedness to the extent such refinanced Indebtedness does
not increase the total principal amount thereof, extend the maturity date,
accelerate the amortization or is otherwise on terms and
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conditions which are not materially more onerous to Guarantor ("PERMITTED
REFINANCED INDEBTEDNESS"); (c) (i) Capitalized Lease Obligations incurred after
the Closing Date and Indebtedness incurred pursuant to purchase money Liens
permitted by Section 5.3.3(v) and any Permitted Refinanced Indebtedness with
respect thereto, provided that the aggregate amount thereof outstanding at any
time shall not exceed $5,000,000; (ii) Indebtedness on a non-recourse (other
than customary carve-outs for non-recourse financings) basis to any assets of
Guarantor other than the asset or assets that are collateral securing such
Indebtedness and which is secured by a Lien permitted pursuant to Section
5.3.3(v) and any Permitted Refinancing Indebtedness with respect thereto and
(iii) Indebtedness incurred in connection with the Eureka Transaction; provided
that the aggregate amount outstanding under at any time under Section
5.3.2(c)(ii) plus Section 5.3.2(c)(iii) shall not exceed $30,000,000; (d)
Indebtedness in connection with advances made by a stockholder in order to cure
any default of the financial covenants set forth on Annex I; provided, however,
that such Indebtedness shall be on an unsecured basis, subordinated in right of
repayment and remedies to all of the Debt and to all of Lender's rights and in
form and substance reasonably satisfactory to Lender; (e) borrowings incurred in
the ordinary course of business and not exceeding $10,000,000 individually or in
the aggregate outstanding at any one time; provided, however, that such
Indebtedness shall be on an unsecured basis, subordinated in right of repayment
and remedies to all of the Debt and to all of Lender's rights and in form and
substance satisfactory to Lender; (f) Subordinated Debt, provided, however, the
aggregate principal amount of Subordinated Debt (i) evidenced by the Indenture
and the Indenture Notes and any Permitted Refinanced Indebtedness with respect
thereto shall not exceed $106,761,608, and (ii) evidenced by the Bergen Note and
any Permitted Refinanced Indebtedness with respect thereto shall not exceed
$1,237,880, (i) Indebtedness constituting Priority Claims; (j) Indebtedness in
respect of insurance premiums payable to the Insurance Subsidiary in an
aggregate amount not to exceed $10,000,000 and (k) additional unsecured
Indebtedness in the ordinary course of business in an aggregate amount not to
exceed $2,000,000. Notwithstanding anything in this Section 5.3.2 or this
Agreement to the contrary, the aggregate amount of Indebtedness for Borrowed
Money of Guarantor on a Consolidated Basis, exclusive of the Obligations (as
defined in the Revolving Loan Documents) shall not exceed $255,000,000 in the
aggregate.
5.3.3 PERMITTED LIENS. Guarantor shall not create, incur,
assume or suffer to exist any Lien upon, in or against, or pledge of, any of its
properties or assets, whether now owned or hereafter acquired, except the
following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan Documents
or the Guarantor Revolving Credit Loan Documents or otherwise arising in favor
of Lender or the Guarantor Revolving Credit Lender; (ii) Liens imposed by law
for taxes, assessments or charges of any Governmental Authority for claims not
yet due or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP; (iv) statutory Liens of
landlords (provided, that with respect to any landlord for leased locations
acquired after the Closing Date, Borrower shall have used reasonable efforts
(which shall not include the unreasonable payment of money) in accordance with
the terms of Section 5.3.12 hereof, to cause such landlord to execute a Landlord
Waiver and a memorandum of lease in form and substance reasonably satisfactory
to Agent in its commercially
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reasonable discretion, provided, further, in the event Borrower is unable to
obtain any such Landlord Waiver and/or memorandum of lease, Borrower shall
maintain a duplicate up to date set of any books and records maintained at the
location related to the real property owned by the applicable landlord at a
location owned by Borrower or with respect to which a Landlord Waiver reasonably
satisfactory to Agent shall have been obtained) and of carriers, warehousemen,
mechanics, materialmen and (B) other Liens imposed by law or that arise by
operation of law in the ordinary course of business from the date of creation
thereof, in each case only for amounts not yet due or which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained by such Person in
accordance with GAAP; (v) Liens (A) incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations, or (B) arising as a result
of progress payments under government contracts; (vi) purchase money Liens and
Liens securing Capitalized Lease Obligations (A) securing Indebtedness permitted
under Section 5.3.2(c), or (B) in connection with the purchase by such Person of
assets in the normal course of business, provided that (x) such payables shall
not exceed any limits on Indebtedness provided for herein and shall otherwise be
Permitted Indebtedness hereunder and (y) with respect to Indebtedness incurred
pursuant to Section 5.3.2(c)(ii) such Liens shall not extend to or cover any
property of Guarantor other than the property being acquired and improvements
thereon or which is the subject of the applicable Capital Lease, (vii)
easements, rights-of-way, restrictions and other similar encumbrances which do
not materially interfere with the conduct of the business of Guarantor; (viii)
any intercompany Liens between a Subsidiary Borrower or Guarantor on the one
hand and another Subsidiary Borrower or Guarantor on the other; (ix) any
interest or title of a lessor under a operating lease; (x) Liens pursuant to
Subordinated Debt; (xi) Liens securing the Priority Claims; (xii) the Vendors'
Lien in accordance with the Plan of Reorganization so long as the amount secured
does not exceed $8,000,000 and is otherwise subject to the Revolving Loan
Documents; (xiii) Liens securing Class 10 Deferred Obligations and Continuing
Creditor Deferred Obligations in accordance with the Plan of Reorganization so
long as the amount secured does not exceed $25,000,000 and is otherwise subject
to the Revolving Loan Documents; and (xiv) Liens disclosed on SCHEDULE 5.3.3.
5.3.4 INVESTMENTS; NEW FACILITIES OR COLLATERAL;
SUBSIDIARIES. Guarantor, directly or indirectly, shall not (a) purchase, own,
hold, invest in or otherwise acquire obligations or stock or securities of, or
any other interest in, or all or substantially all of the assets of, any Person
or any joint venture or (b) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur
any obligation of any Person (collectively, an "INVESTMENT"), in each case,
other than (i) Investments in any Borrower (as defined in the Guarantor
Revolving Credit Agreement) or any Subsidiary of any Borrower (as defined in the
Guarantor Revolving Credit Loan Agreement); (ii) Investments in any Person to
the extent such Person either (x) becomes a Borrower or guarantor under the
Revolving Credit Loan Documents or the
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Guarantor Revolving Loan Documents, (y) becomes a borrower or a guarantor under
the Loan Documents or (z) with respect to investments existing on the Closing
Date by Guarantor in any Person or Subsidiary which is a borrower or guarantor
under the Mortgage Loan Documents; (iii) Investments in Cash Equivalents; (iv)
Investments listed on SCHEDULE 5.3.4; (v) trade credit extended in the ordinary
course of business, (vi) advances for business travel and similar temporary
advances made in the ordinary course of business to officers, directors and
employees, (vii) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; (viii)
guaranties by Guarantor or any Subsidiary of Guarantor of obligations of a
Borrower or a guarantor under the Guarantor Revolving Credit Documents to the
extent the obligation guaranteed is otherwise permitted under this Agreement;
(ix) Investments in the Insurance Subsidiary in an amount not to exceed
$1,500,000; and (x) additional Investments in an amount not to exceed
$2,000,000. Guarantor, directly or indirectly, shall not purchase, own, operate,
hold, invest in or otherwise acquire any facility, property or assets that is
not located at the locations set forth on SCHEDULE 5.3.4 unless Guarantor shall
provide to Agent at least ten (10) Business Days prior written notice. Guarantor
shall not have any Subsidiaries other than (i) Borrowers under the Guarantor
Revolving Credit Documents, (ii) or as set forth in the Organizational Chart,
(iii) such Subsidiaries which execute a Joinder Agreement or a Guaranty and
Security Agreement pursuant to Section 5.3.14 or (iv) Excluded Subsidiaries.
5.3.5 DIVIDENDS; REDEMPTIONS. Guarantor shall not (i)
declare, pay or make any dividend or distribution on any shares of capital stock
or other securities or interests (other than dividends or distributions payable
in its stock, or split-ups or reclassifications of its stock); (ii) apply any of
its funds, property or assets to the acquisition, redemption or other retirement
of any capital stock or other securities or interests or of any options to
purchase or acquire any of the foregoing (provided, however, that Guarantor may
redeem its capital stock from any terminated employee pursuant to, but only to
the extent required or permitted under, the terms of the related employment or
other agreements with such employee, as long as no Default or Event of Default
has occurred and is continuing or would be caused by or result therefrom), or
(iii) otherwise make any payments or Distributions to any stockholder, member,
partner or other equity owner in such Person's capacity as an equity owner.
5.3.6 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 5.3.6, Guarantor shall not enter into or consummate any transaction of
any kind with any of its Affiliates or any guarantor of any obligations of
Borrower under the Loan Documents or any of their respective Affiliates other
than: (i) salary, bonus, employee stock option and other compensation and
employment arrangements with directors or officers in the ordinary course of
business, provided, that no payment of any bonus shall be permitted if an Event
of Default under Section 8.1(a)(i) has occurred and remains in effect or would
be caused by or result from such payment; (ii) distributions and dividends
permitted pursuant to Section 5.3.4 or Section 5.3.5, (iii) transactions on
overall terms at least as favorable to Guarantor as would be the case in an
arm's length transaction between unrelated parties of equal bargaining power,
and (iv) payments permitted under and pursuant to written agreements entered
into by and between Guarantor and one or more of its Affiliates that both (A)
reflect and constitute transactions on overall terms at
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least as favorable to Guarantor as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, and (B) are
subject to such terms and conditions as determined by Lender in its commercially
reasonable direction; provided, that notwithstanding the foregoing or any
provision of any Loan Document, Guarantor shall not (Y) enter into or consummate
any transaction or agreement pursuant to which it becomes a party to any
mortgage, note, indenture or guarantee evidencing any Indebtedness for Borrowed
Money or Contingent Obligations of any of its Affiliates (other than a direct or
indirect subsidiary of Guarantor) or otherwise becomes responsible or liable, as
a guarantor, surety or otherwise, pursuant to any agreement for any Indebtedness
for Borrowed Money or Contingent Obligations of any such Affiliate (other than a
direct or indirect subsidiary of Guarantor) or (Z) make any payment to any of
its Affiliates in excess of $100,000 without the prior written consent of Agent.
By execution of this Agreement, the Lender consents to the payments made to
Affiliates pursuant to the agreements set forth on SCHEDULE 5.3.6.
5.3.7 CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION.
Guarantor shall not (i) amend, modify, restate or change its certificate of
incorporation or formation or bylaws or similar charter documents in a manner
that would be adverse to Lender, (ii) change its fiscal year unless Guarantor
demonstrates to Agent's reasonable satisfaction compliance with the covenants
contained herein for both the fiscal year in effect prior to any change and the
new fiscal year period by delivery to Agent of appropriate interim and annual
pro forma, historical and current compliance certificates for such periods and
such other information as Agent may reasonably request, (iii) amend, alter or
suspend or terminate or make provisional in any material way, any permit
material to the business of Guarantor without the prior written consent of
Agent, which consent shall not be unreasonably withheld or delayed, or (iv) use
any proceeds of the Loan for "purchasing" or "carrying" "margin stock" as
defined in Regulations U, T or X of the Board of Governors of the Federal
Reserve System.
5.3.8 TRANSFER OF ASSETS. Guarantor shall not sell, lease,
transfer, pledge, assign or otherwise dispose of any facility, property or
assets or any interest therein or agree to do any of the foregoing, except that:
(a) Guarantor may lease (other than by a sale-leaseback
transaction) as lessee real or personal property or surrender all or a portion
of a lease of the same, in each case in the ordinary course of business (so long
as such lease does not create or result in and is not otherwise a Capitalized
Lease Obligation prohibited under this Agreement); provided that, if books and
records relating to any facility, property or assets or any interest therein
which has been granted to Lender pursuant to the Loan Documents are to be kept
at any new leased location, a Landlord Waiver is executed, reasonably
satisfactory in form and substance to Agent;
(b) Guarantor may sell obsolete, worn-out or replaced
assets or excess assets no longer needed in the ordinary course of business;
(c) Guarantor may sell Inventory in the ordinary course
of business;
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(d) the sale, transfer, lease or other disposition by
Guarantor of assets aggregating not more than $5,000,000 during in the term of
the Loan;
(e) Guarantor may sell or transfer any of its facilities,
properties or assets to any Subsidiary of Guarantor, provided no such
facilities, properties or assets constitute security for this Loan or the
Mortgage Loan;
(f) the sale, transfer, lease or other disposition by
Guarantor of not more than five (5) Facilities during the term of the Loan,
provided that any such sale, transfer, lease or other disposition shall not
result in a Default or Event of Default and shall be in accordance with the
applicable provisions of the Mortgage Loan Agreement and this Agreement; and
(g) the sale, transfer, lease or other disposition by
Guarantor of all or any portion of the pharmacy business or the locomotion
business, provided that any such sale, transfer, lease or other disposition
shall not result in a Default or an Event of Default.
5.3.9 CONTINGENT OBLIGATIONS. Guarantor shall not enter
into any Contingent Obligations or assume, guarantee, endorse, contingently
agree to purchase or otherwise become liable for or upon or incur any obligation
of any Person except for (a) Contingent Obligations permitted pursuant to
Section 5.3.2 or Section 5.3.4; (b) Contingent Obligations of Guarantor for
Borrower, to the extent the underlying obligation is otherwise permitted under
this Agreement; (c) Contingent Obligations of Guarantor for any borrower or a
guarantor under the Revolving Credit Loan Agreement, the Guarantor Revolving
Credit Loan Agreement, or the Mortgage Loan Documents, to the extent the
underlying obligations is otherwise permitted under this Agreement; (d)
Contingent Obligations set forth in SCHEDULE 5.3.9 hereof; and (e) refinancings
and replacements of Contingent Obligations otherwise permitted hereunder.
5.3.10 PAYMENT ON SUBORDINATED DEBT. Guarantor shall not (i)
make any payment of any part or all of any Subordinated Debt or repurchase,
redeem or retire any instrument evidencing any such Subordinated Debt prior to
maturity except, in each case, to the extent permitted in the Guarantor
Revolving Credit Loan Documents or Article 12 of the Indenture as in effect on
the Closing Date or the applicable Subordination Agreement, provided that (x) no
payment, repurchase or redemption may be made in respect of Subordinated Debt if
an Event of Default shall exist or be continuing or would exist after giving
effect to such payment and (y) no principal prepayments may be made in respect
of the Indenture Notes, the Continuing Creditor Deferred Obligation or the Class
10 Deferred Obligations until the outstanding balance of the Loan and the
Promissory Note B has been paid in full and the Special Advance Amount (as
defined in and pursuant to the Guarantor Revolving Credit Agreement) has been
reduced to zero; or (ii) enter into any agreement (oral or written) which could
in any way be construed to amend, modify, alter or terminate any one or more
instruments or agreements evidencing or relating to any Subordinated Debt (other
than Vendors' liens) which increases the principal amount of such Subordinated
Indebtedness, increases the interest rate charged with respect thereto,
accelerates the maturity date of any payment of
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principal or interest or increases any fees or other compensation payable
thereunder or amends any event of default or any other material covenant or
agreement of any obligor thereunder or in respect thereof in a manner materially
adverse to Lender; provided, however, so long as (x) no Default or Event of
Default shall exist or be continuing at the time of or after giving effect to
any such payment and (y) the outstanding balance of the Loan and the Promissory
Note B has been paid in full and the Special Advance Amount (as defined in and
pursuant to the Guarantor Revolving Credit Agreement) has been reduced to zero,
Guarantor may make prepayments of Subordinated Indebtedness; and provided,
further, no mandatory prepayments or redemptions from excess cash flow of
Borrowers may be made in respect of Subordinated Indebtedness until all
mandatory prepayments from excess cash flow have been made in accordance with
this Agreement, the Mortgage Loan Agreement and the Special Advance Amount (as
defined in and pursuant to the Guarantor Revolving Credit Agreement) has been
reduced to zero.
5.3.11 LEASEHOLD PROPERTIES. Guarantor shall cause Lender to
have a perfected first priority Lien on all Leasehold Properties, subject only
to Liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, and such other Liens as Agent has approved or may approve in writing
in Agent's commercially reasonable discretion. After the recordation of the
Leasehold Mortgages in the appropriate jurisdiction, Lender shall have a
perfected first priority Lien in such Leasehold Property senior to any Lien
asserted by the Indenture Trustee or any other Person with respect thereto. To
the extent any Leasehold Mortgage cannot be recorded because of a missing or
inaccurate legal description thereto, Borrower shall, within thirty (30) days
after it is notified that any legal description to a Leasehold Mortgage is
missing or inaccurate, obtain a corrected legal description and cause the
Leasehold Mortgage with such corrected legal description to be recorded.
5.3.12 LEASEHOLD MORTGAGES. Guarantor and Borrower shall
record and provide Lender with a copy of the recorded memorandum of lease with
respect to each Leasehold Property and shall use commercially reasonable efforts
to provide Lender with a landlord waiver and consent (each in form and substance
reasonably satisfactory to Agent) with respect to each Leasehold Property;
provided, however, that neither Guarantor nor Borrower shall be required to
expend any sums of money other than de minimus amounts and such other reasonable
amounts to obtain the foregoing and the reasonable costs and expenses incurred
by counsel for the landlords for such properties in connection with reviewing
proposed the foregoing documents.
5.3.13 ADDITIONAL COLLATERAL. On the date hereof, Revolving
Credit Lender, Indenture Trustee, Lender and Guarantor are entering into that
certain Intercreditor Agreement (the "INDENTURE INTERCREDITOR AGREEMENT").
Borrower and Guarantor hereby covenant and agree that Lender has a perfected
first priority security interest in all of the Collateral (as defined in the
Indenture Intercreditor Agreement) and that Lender's Lien in and to the
Collateral (as defined in the Indenture Intercreditor Agreement) is senior in
priority to the Lien thereon granted to the Indenture Trustee.
5.3.14 NEW SUBSIDIARIES. Within thirty (30) calendar days of
any Person becoming a Subsidiary (other than an Excluded Subsidiary) after the
Closing Date,
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Guarantor shall cause such Person to (a) deliver to Agent a Joinder Agreement to
this Agreement and to each other Loan Document or a Guaranty and Security
Agreement to which Borrower or Guarantor is a party duly executed by such
Person, which Joinder Agreement or Guaranty and Security Agreement shall be in
substantially the forms of the Exhibits C and D, respectively to the Guarantor
Revolving Credit Loan Agreement, (b) provide Agent with copies of such Person's
organizational documents, material contracts, financial information, and any
other information reasonably requested by Lender, in order to perform legal and
financial diligence and UCC, tax and judgment lien searches, (c) cause to be
delivered a written legal opinion of counsel substantially consistent with the
opinions of counsel delivered on the Closing Date and otherwise in form and
substance reasonably satisfactory to Agent which shall cover such matters
incident to the transactions contemplated by this Section 5.3.14 and the other
agreements and instruments executed and delivered pursuant hereto in
substantially the form as delivered at the Closing and (d) cause such Person to
duly execute and deliver such further agreements, assignments, instructions or
documents as Agent may request in its commercially reasonable discretion with
respect to the purposes, terms and conditions of the Loan Documents.
5.3.15 COMPLIANCE WITH PLAN OF REORGANIZATION. Guarantor
shall comply with the Plan of Reorganization approved by the Bankruptcy Court
having jurisdiction thereof and with the order of such Bankruptcy Court
confirming the Plan of Reorganization.
5.3.16 USURY. Guarantor, by reason of its own business and
financial experience or that of its professional advisors has the capacity to
protect its interests in connection with the Loan and the transactions
contemplated by this Agreement and the other Loan Documents to which it is a
party.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION 6.1. INSURANCE. (a) Borrower shall cause Mortgage
Borrower to maintain at all times during the term of the Loan the Policies
required under Section 6.1 of the Mortgage Loan Agreement, including meeting all
insurer requirements thereunder. In addition, Borrower shall cause Agent to be
named as an additional named insured under each of the Policies described in
Sections 6.1 (a)(ii), (v), (vii), (viii), (ix) and (x) of the Mortgage Loan
Agreement. In addition, Borrower shall cause Lender to be named as a named
insured together with Mortgage Lender, as their interest may appear, under the
Policies required under Sections 6.1 (a)(i), (iii), (iv) and (vi) of the
Mortgage Loan Agreement. Borrower shall also cause all insurance policies
required under this Section 6.1 to provide for at least thirty (30) days prior
notice to Agent in the event of policy cancellation or material changes.
Borrower shall provide Agent with evidence of all such insurance required
hereunder simultaneously with Mortgage Borrower's provision of such evidence to
Mortgage Lender.
(b) If at any time Agent is not in receipt of written
evidence that all Policies are in full force and effect, Lender shall have the
right, without notice to
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Borrower, to take such action as Lender deems necessary to protect its interest
in the Properties, including, without limitation, the obtaining of such
insurance coverage as Lender in its reasonable discretion deems appropriate. All
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and shall bear interest at the Default Rate.
SECTION 6.2. CASUALTY AND CONDEMNATION.
6.2.1 CASUALTY. If an Individual Property shall be damaged
or destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrower shall give prompt notice of such damage to Agent and shall cause
Mortgage Borrower to promptly commence and diligently prosecute the completion
of the Restoration of the Individual Property as nearly as possible to the
condition the Individual Property was in immediately prior to such Casualty,
with such alterations as may be reasonably approved by Mortgage Lender and
otherwise in accordance with Section 6.4 of the Mortgage Loan Agreement.
Notwithstanding any Casualty, Borrower shall continue to pay the Debt at the
time and in the manner provided for in the Note and this Agreement.
6.2.2 CONDEMNATION. Borrower shall promptly give Agent
notice of the actual or threatened commencement of any proceeding for the
Condemnation of all or any part of any Individual Property and shall cause
Mortgage Borrower to deliver to Lender copies of any and all papers served in
connection with such proceedings. Notwithstanding any taking by any public or
quasi public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for in the Note and in this Agreement and the Debt shall not be
reduced until any Award shall have been actually received and applied by Lender,
after the deduction of expenses of collection, to the reduction or discharge of
the Debt. If any Individual Property or any portion thereof is taken by
Condemnation, Borrower shall cause Mortgage Borrower to promptly commence and
diligently prosecute the Restoration of such Individual Property and otherwise
comply with the provisions of Section 6.4 of the Mortgage Loan Agreement.
6.2.3 RESTORATION. Borrower shall, or shall cause Mortgage
Borrower to, deliver to Agent all reports, plans, specifications, documents and
other materials that are delivered to Mortgage Lender under Section 6.4 of the
Mortgage Loan Agreement in connection with the Restoration of the Property after
a Casualty or Condemnation.
VII. RESERVE FUNDS
SECTION 7.1. RESERVE FUNDS GENERALLY. Borrower shall
cause Mortgage Borrower to maintain the Reserve Funds and corresponding accounts
in accordance with all of the terms and conditions set forth in Article 7 of the
Mortgage Loan Agreement. To extent that the Mortgage Loan Agreement is no longer
in place, Borrower shall cause Mortgage Borrower to maintain substantially
similar reserve funds and accounts required in accordance with the terms of the
Mortgage Loan Agreement or
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if the Mortgage Loan is refinanced or paid off in full (without a prepayment of
the Loan) and Reserve Funds that are required hereunder are not required under
the new mortgage loan, if any, then Borrower shall cause any amounts that would
have been deposited into any reserves or escrow accounts in accordance with the
terms of the Mortgage Loan Agreement to be transferred to and deposited with
Lender in accordance with the terms of this Article VII (and Borrower shall
enter into a cash management and lockbox agreement for the benefit of Lender
substantially similar to the arrangement entered into at the time of the closing
of the Mortgage Loan), and, if any Letters of Credit have been substituted by
Mortgage Borrower for any such reserves or escrows as may be specifically
permitted by the Mortgage Loan Agreement, then Borrower shall also cause such
Letters of Credit to be transferred to Lender to be held by Lender upon the same
terms and provisions as set forth in the Mortgage Loan Agreement.
VIII. DEFAULTS
SECTION 8.1. EVENT OF DEFAULT. (a) Each of the following
events shall constitute an event of default hereunder (an "EVENT OF DEFAULT"):
(i) (a) if any portion of the Debt Service
(excluding any Excess Cash Flow Principal Payments), including, without
limitation, any amounts due and payable on maturity, whether on the
scheduled Maturity Date or by acceleration or otherwise, is not paid
when due, or if any other amounts payable hereunder are not paid within
five (5) days after the date on which such amounts are due and payable;
and (b) if any Excess Cash Flow Principal Payment is not paid within
five (5) days after delivery of notice to Borrower following a failure
of Borrower to make any such payment;
(ii) if any of the Taxes or Other Charges are not
paid when the same are due and payable and prior to delinquency;
(iii) if the Policies are not kept in full force
and effect, or if certified copies of the Policies are not delivered to
Agent upon request;
(iv) if Borrower Transfers or otherwise encumbers
any portion of the Properties or the Collateral without Agent's prior
consent in violation of the provisions of this Agreement (including,
without limitation, Section 5.2.10) or the Pledge Agreement or any
other Loan Document;
(v) if any representation or warranty made by
Borrower or Guarantor herein or in any other Loan Document, or in any
report, certificate, financial statement or other instrument, agreement
or document furnished to Lender shall have been false or misleading in
any material respect as of the date the representation or warranty was
made;
(vi) if any Significant Party shall make an
assignment for the benefit of creditors;
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(vii) if a receiver, liquidator or trustee shall
be appointed for any Significant Party or if any Significant Party
shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by
or against, consented to, or acquiesced in by, any Significant Party or
if any proceeding for the dissolution or liquidation of any Significant
Party shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented
to by such Significant Party upon the same not being discharged, stayed
or dismissed within thirty (30) days;
(viii) if Borrower attempts to assign its rights
under this Agreement or any of the other Loan Documents or any interest
herein or therein in contravention of the Loan Documents;
(ix) (a) if Borrower breaches any of its
respective negative covenants contained in Section 5.2 (provided, that
with respect a breach of Section 5.2.2(a), such breach shall not be
deemed to be a default unless same is not cured within five (5) days
after delivery of notice to Borrower) or any covenant contained in
Section 4.1.30, Section 5.1.11 or 5.1.26 hereof; or (b) if Guarantor
breaches any of its covenants contained in Section 5.3 or Annex I;
(x) with respect to any term, covenant or
provision set forth herein which specifically contains a notice
requirement or grace period, if Borrower or Guarantor shall be in
default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;
(xi) Intentionally Deleted;
(xii) if Borrower or Guarantor shall continue to
be in Default under any of the other terms, covenants or conditions of
this Agreement not specified in Subsections (i) to (xi) above, for
fifteen (15) days after notice to Borrower from Agent, in the case of
any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other
Default; provided, however, that if such non-monetary Default is
susceptible of cure but cannot reasonably be cured within such thirty
(30) day period, and, provided, further, that Borrower shall have
commenced to cure such Default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed sixty (60) days;
(xiii) if there shall be default under any of the
other Loan Documents beyond any applicable cure periods contained in
such documents, whether as to Borrower, Guarantor or any of the
Collateral, or if any other such event shall occur or condition shall
exist, if the effect of such event or condition is
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to accelerate the maturity of any portion of the Debt or to permit
Agent to accelerate the maturity of all or any portion of the Debt;
(xiv) Mortgage Borrower ceases to continuously
operate any Individual Property or any material portion thereof as a
Facility for any reason whatsoever (other than temporary cessation as a
result of a total Casualty or in connection with any Restoration
thereof undertaken with the consent of Agent);
(xv) Mortgage Borrower, any manager of any
Facility, or any Facility violates any applicable law or regulation and
shall fail to correct, within the time deadlines set by any Health Care
Authority, managed care company, insurance company or other third-party
payor any deficiency, and the violation or deficiency would reasonably
be expected to result in any of the following actions by such entities
with respect to the Facility:
(a) a termination of Mortgage
Borrower's or the Facility's Medicare contract or
Medicaid contract, or the Facility Licenses;
(b) a ban on payment for new admissions
generally or on payment for residents otherwise
qualifying for Medicaid or Medicare coverage with no
opportunity to correct or to contest (provided such
contest shall stay enforcement actions or exercise of
remedies by Health Care Authorities) prior to
termination; or
(c) a suspension, discontinuance,
elimination or material reduction or recoupment of
reimbursement for services (without opportunity to
correct or to contest (provided such contest shall
stay enforcement actions or exercise of remedies by
Health Care Authorities)); or
(xvi) Mortgage Borrower shall revoke or modify the
Medicare/Medicaid Receivables Agreement (as defined in the Cash
Management Agreement) without the prior written consent of Lender.
(xvii) (a) any of the Loan Documents ceases to be
in full force and effect, or (b) any Lien created thereunder ceases to
constitute a valid perfected first priority Lien on the Collateral
(other than Priority Liens) in accordance with the terms thereof, or
Lender ceases to have a valid perfected first priority security
interest (subject to Priority Liens) in any of the Collateral or any
securities pledged to Lender pursuant to the Loan Documents;
(xviii) (i) a Mortgage Loan Event of Default shall
occur or (ii) an Event of Default (as defined in each of the Revolving
Loan Agreement and the Guarantor Revolving Loan Agreement shall occur
and be continuing or (iii) an Event of Default (as defined in the
Indenture) shall occur and be continuing;
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(xix) if Guarantor breaches in any material
respect any covenant, warranty or representation contained in the
Guaranty or herein;
(xx) Intentionally Deleted;
(xxi) if any Operator fails to pay and rent,
additional rent or other charges under any Operating Lease; or
(xxii) if any Master Lease or any Operating Lease
shall be terminated in violation of the terms of this Agreement or any
other Loan Document.
(b) Upon the occurrence of an Event of Default (other
than an Event of Default described in clauses (vi), (vii) or (viii) above) and
at any time thereafter, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, Agent may take such action, without notice or demand, that Agent deems
advisable to protect and enforce its rights against Borrower and in and to the
Collateral, including, without limitation, declaring the Debt to be immediately
due and payable, and Agent may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents and may exercise all the rights and
remedies of a secured party under the Uniform Commercial Code, as adopted and
enacted by the State or States where any of the Collateral is located against
Borrower and the Collateral, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.
SECTION 8.2. REMEDIES. (a) Upon the occurrence of an
Event of Default, all or any one or more of the rights, powers, privileges and
other remedies available to Agent against Borrower under this Agreement or any
of the other Loan Documents executed and delivered by, or applicable to,
Borrower or at law or in equity may be exercised by Agent at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Agent shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to all or any of the Collateral. Any such
actions taken by Agent shall be cumulative and concurrent and may be pursued
independently, singularly, successively, together or otherwise, at such time and
in such order as Agent may determine in its sole discretion, to the fullest
extent permitted by law, without impairing or otherwise affecting the other
rights and remedies of Agent permitted by law, equity or contract or as set
forth herein or in the other Loan Documents. Without limiting the generality of
the foregoing, Borrower agrees that if an Event of Default is continuing (i) to
the fullest extent permitted by applicable law, Agent and Lender shall not be
subject to any "one action" or "election of remedies" law or rule, and (ii) all
liens and other rights, remedies or privileges provided to Lender shall remain
in full force and effect until Agent has exhausted all of its remedies against
the Collateral
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and the Collateral has been foreclosed upon, sold and/or otherwise realized upon
in satisfaction of the Debt or the Debt has been paid in full.
(b) Upon the occurrence of an Event of Default and
acceleration of the Loan, Agent shall have the right from time to time to
partially foreclose upon the Collateral in any manner and for any amounts
secured by the Pledge Agreement then due and payable as determined by Agent in
its sole discretion including, without limitation, the following circumstances:
(i) in the event Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Agent may
foreclose upon the Collateral to recover such delinquent payments, or (ii) in
the event Agent elects to accelerate less than the entire outstanding principal
balance of the Loan, Agent may foreclose upon the Collateral to recover so much
of the principal balance of the Loan as Agent may accelerate and such other sums
secured by the Collateral as Agent may elect. Notwithstanding one or more
partial foreclosures, the Collateral shall remain subject to the Pledge
Agreement and the other Loan Documents to secure payment of sums secured by the
Loan Documents and not previously recovered.
(c) With respect to Borrower and the Collateral, nothing
contained herein or in any other Loan Document shall be construed as requiring
Agent to resort to any portion of the Collateral for the satisfaction of any of
the Debt in any preference or priority to any other portion of the Collateral,
and Agent may seek satisfaction out of all of the Collateral or any part
thereof, in its absolute discretion in respect of the Debt. In addition, Agent
shall have the right from time to time to partially foreclose upon the
Collateral in any manner and for any amounts secured by the Pledge Agreement
then due and payable as determined by Agent in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of Debt Service, Agent may foreclose upon the Collateral to
recover such delinquent payments, or (ii) in the event Agent elects to
accelerate less than the entire outstanding principal balance of the Loan, Agent
may foreclose upon the Collateral to recover so much of the principal balance of
the Loan as Agent may accelerate and such other sums secured by the Collateral
as Agent may elect. Notwithstanding one or more partial foreclosures, the
Collateral shall remain subject to the Pledge Agreement and the other Loan
Documents to secure payment of sums secured by the Pledge Agreement and the
other Loan Documents and not previously recovered.
(d) Agent shall have the right from time to time to sever
the Note and the other Loan Documents into one or more separate notes, pledges
and other security documents (the "SEVERED LOAN DOCUMENTS") in such
denominations as Agent shall determine in its reasonable discretion for purposes
of evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Agent from time to time, promptly after the request
of Agent, a severance agreement and such other documents as Agent shall
reasonably request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Agent. Borrower
hereby absolutely and irrevocably appoints Agent as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all
92
that its said attorney shall do by virtue thereof; provided, however, Agent
shall not make or execute any such documents under such power until five (5)
days after notice has been given to Borrower by Agent of Agent's intent to
exercise its rights under such power. Borrower shall not be obligated to pay any
costs or expenses incurred in connection with the preparation, execution,
recording or filing of the Severed Loan Documents, and the Severed Loan
Documents shall not contain any representations, warranties or covenants not
contained in the Loan Documents and any such representations and warranties
contained in the Severed Loan Documents will be given by Borrower only as of the
Closing Date.
(e) Any amounts recovered from the Collateral after an
Event of Default may be applied by Agent toward the payment of any interest
and/or principal of the Loan and/or any other amounts due under the Loan
Documents in such order, priority and proportions as Agent in its sole
discretion shall determine.
(f) Agent may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder or being deemed to have cured any Event of Default
hereunder, make, do or perform any obligation of Borrower hereunder in such
manner and to such extent as Agent may deem necessary. All such costs and
expenses incurred by Agent in remedying such Event of Default or such failed
payment or act or in appearing in, defending, or bringing any action or
proceeding shall bear interest at the Default Rate, for the period after such
cost or expense was incurred into the date of payment to Agent. All such costs
and expenses incurred by Agent together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by the liens, claims and security interests provided to Agent under the Loan
Documents and shall be immediately due and payable upon demand by Agent
therefore.
(g) The rights, powers and remedies of Agent under this
Agreement shall be cumulative and not exclusive of any other right, power or
remedy which Agent may have against Borrower pursuant to this Agreement or the
other Loan Documents, or existing at law or in equity or otherwise. Agent's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Agent may determine in Agent's sole
discretion. No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default shall impair any such remedy, right or power or shall
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default with respect to Borrower shall not be construed
to be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.
(h) For the purpose of carrying out the provisions and
exercising the rights, powers and privileges granted in this Section 8.2,
Borrower hereby irrevocably constitutes and appoints the Agent its true and
lawful attorney-in-fact to execute, acknowledge and deliver any instruments and
do and perform any acts such as are referred to in this subsection in the name
and on behalf of Borrower. This power of attorney is a power coupled with an
interest and cannot be revoked.
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IX. SPECIAL PROVISIONS
SECTION 9.1. INTENTIONALLY DELETED.
SECTION 9.2. INTENTIONALLY DELETED.
SECTION 9.3. INTENTIONALLY DELETED.
SECTION 9.4. INTENTIONALLY DELETED.
SECTION 9.5. SERVICER. At the option of Agent, the Loan
may be serviced by a servicer/trustee (the "SERVICER") selected by Agent and
Agent may delegate all or any portion of its responsibilities under this
Agreement and the other Loan Documents to the Servicer pursuant to a servicing
agreement (the "SERVICING AGREEMENT") between Agent and Servicer. Agent shall be
responsible for all fees and costs relating to or arising under the Servicing
Agreement.
X. MISCELLANEOUS
SECTION 10.1. SURVIVAL. This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect so long as all or any of the Debt is outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan Documents.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the legal representatives, successors and
assigns of such party. All covenants, promises and agreements in this Agreement,
by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
SECTION 10.2. LENDER'S DISCRETION. Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Agent to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Agent and shall be final and
conclusive. Whenever this Agreement expressly provides that Lender or Agent may
not withhold its consent or its approval of an arrangement or term, such
provisions shall also be deemed to prohibit Lender or Agent from delaying or
conditioning such consent or approval.
SECTION 10.3. GOVERNING LAW. (A) THIS AGREEMENT WAS
NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY
BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF
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THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER TO
THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER
OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW
OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
95
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
SECTION 10.4. MODIFICATION, WAIVER IN WRITING. No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION 10.5. DELAY NOT A WAIVER. Neither any failure nor
any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount. Lender shall have the
right to waive or reduce any time periods that Lender is entitled to under the
Loan Documents in its sole and absolute discretion.
SECTION 10.6. NOTICES. All notices, demands, consents,
approvals and requests required or permitted hereunder or under any other Loan
Document shall be given in writing and shall be effective for all purposes if
hand delivered or sent by
96
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a notice to the other parties hereto in the manner provided for in
this Section 10.6):
If to Agent: CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group,
Portfolio Manager
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group,
Portfolio Manager
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Highbridge/▇▇▇▇▇ Special Opportunities
Fund, L.P.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Fortress Credit Opportunities I, LP
1251 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Pack
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
97
If to Borrower: c/o Fountain View, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender's receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming.
SECTION 10.7. TRIAL BY JURY. BORROWER AND LENDER HEREBY
AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND
LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER AND
BORROWER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.
SECTION 10.8. HEADINGS. The Article and/or Section
headings and the Table of Contents in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 10.9. SEVERABILITY. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
SECTION 10.10. PREFERENCES. Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any
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portion of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
SECTION 10.11. WAIVER OF NOTICE. Borrower hereby expressly
waives, and shall not be entitled to, any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice.
SECTION 10.12. REMEDIES OF BORROWER. In the event that a
claim or adjudication is made that Lender or its agents have acted unreasonably
or unreasonably delayed acting in any case where by law or under this Agreement
or the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
SECTION 10.13. EXPENSES; INDEMNITY. (a) Borrower covenants
and agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon
receipt of notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the preparation, negotiation, execution and delivery of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect the Collateral); (ii) Borrower's ongoing performance of
and compliance with Borrower's respective agreements and covenants contained in
this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental, healthcare and insurance requirements; (iii)
Lender's ongoing performance and compliance with all agreements and conditions
contained in this Agreement and the other Loan Documents on its part to be
performed or complied with after the Closing Date (except as otherwise expressly
provided for herein); (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
reasonably requested by Lender; (v) securing Borrower's compliance with any
requests made pursuant to the provisions of this Agreement; (vi) the filing and
recording fees and expenses, title insurance and
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reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating and perfecting
the Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (vii) enforcing or preserving any rights, either in response to third
party claims or in prosecuting or defending any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents or the Collateral, or any other security given for the
Loan; and (viii) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Collateral, including the Operators, or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender. Any cost and expenses due and
payable to Lender may be paid from any amounts in the Mezzanine Deposit Account.
(b) Borrower shall indemnify, defend and hold harmless
Lender from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for Lender in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not Lender shall be designated a party thereto), that may
be imposed on, incurred by, or asserted against Lender in any manner relating to
or arising out of (i) any breach by Borrower of its obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
(c) Borrower covenants and agrees to pay for or, if
Borrower fails to pay, to reimburse Lender for, any fees and expenses incurred
by any Rating Agency in connection with any Rating Agency review of the Loan,
the Loan Documents or any transaction contemplated thereby or any consent,
approval, waiver or confirmation obtained from such Rating Agency pursuant to
the terms and conditions of this Agreement or any other Loan Document and the
Lender shall be entitled to require payment of such fees and expenses as a
condition precedent to the obtaining of any such consent, approval, waiver or
confirmation.
SECTION 10.14. SCHEDULES INCORPORATED. The Schedules
annexed hereto are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.
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SECTION 10.15. OFFSETS, COUNTERCLAIMS AND DEFENSES. Any
assignee of any constituent Lender's interest in and to this Agreement, such
constituent Lender's Note and the other Loan Documents shall take the same free
and clear of all offsets, counterclaims or defenses which are unrelated to such
documents which Borrower may otherwise have against any assignor of such
documents, and no such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon such documents and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Borrower.
SECTION 10.16. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD
PARTY BENEFICIARIES
(a) Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties, or the Collateral
other than that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are
solely for the benefit of Lender and Borrower and nothing contained in this
Agreement or the other Loan Documents shall be deemed to confer upon anyone
other than Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein.
All conditions to the obligations of Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
SECTION 10.17. PUBLICITY. All news releases, publicity or
advertising by Borrower or their Affiliates through any media intended to reach
the general public which refers to the Loan Documents, the financing evidenced
by the Loan Documents, to Lender or any of its Affiliates shall be subject to
the prior approval of Agent.
SECTION 10.18. WAIVER OF MARSHALLING OF ASSETS. To the
fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower's members partners and others with interests in Borrower, and of the
Collateral, or to a sale in inverse order of alienation in the event of
foreclosure of the Mortgage, and agrees not to assert any right under any laws
pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Collateral for the collection of the
Debt without any prior or different resort
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for collection or of the right of Lender to the payment of the Debt out of the
net proceeds of the Collateral in preference to every other claimant whatsoever.
SECTION 10.19. WAIVER OF OFFSETS/COUNTERCLAIMS. Borrower
hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender.
SECTION 10.20. CONFLICT; CONSTRUCTION OF DOCUMENTS;
RELIANCE. In the event of any conflict between the provisions of this Loan
Agreement and any of the other Loan Documents, the provisions of this Loan
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower
shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates.
SECTION 10.21. BROKERS AND FINANCIAL ADVISORS. Borrower
hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender's attorneys' fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.
SECTION 10.22. PRIOR AGREEMENTS. This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written,
including, without limitation, the Conditional Commitment Letter dated March 6,
2003 (as amended) between Borrower and Lender are superseded by the terms of
this Agreement and the other Loan Documents.
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SECTION 10.23. CERTAIN ADDITIONAL RIGHTS OF LENDER (VCOC).
Notwithstanding anything which may be contained in this Agreement to the
contrary, Agent and each Lender shall have:
(a) the right to routinely consult with Borrower's
management regarding the significant business activities and business and
financial developments of Borrower, provided, however, that such consultations
shall not include discussions of environmental compliance programs or disposal
of hazardous substances. Consultation meetings should occur at Agent's or the
Lender's request on a regular basis (no less frequently than quarterly) with
Agent or each Lender having the right to call special meetings at any reasonable
times and upon reasonable advance notice; and
(b) the right, in accordance with the terms of this
Agreement, to examine the books and records of Borrower at any time upon
reasonable notice.
SECTION 10.24. SUCCESSORS AND ASSIGNS. All covenants,
promises, and agreements in this Agreement, by or on behalf of Borrower, shall
insure to the benefit of the legal representatives, successors and assigns of
Lender, provided that any assignment by Lender is in accordance with Section
11.6 hereof.
SECTION 10.25. COUNTERPARTS; LOST NOTES. This Agreement may
be executed by one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Upon receipt of notice of the
mutilation, destruction, loss or theft of any Note and the ownership thereof,
Borrower shall, upon the written request of the holder of such Note, execute and
deliver in replacement thereof a new Note in the same form, in the same original
principal amount, so mutilated, destroyed, lost or stolen; and such Note so
mutilated, destroyed, lost or stolen shall then be deemed no longer outstanding
hereunder. If the Note being replaced has been mutilated, it shall be
surrendered to Borrower after receipt of the replacement Note; and if such
replaced Note has been destroyed, lost or stolen, the holder of such Note shall
furnish Borrower with a written indemnity in form reasonably satisfactory to
Borrower to save them harmless in respect of such replaced Note.
SECTION 10.26. REINSTATEMENT. This Agreement and each other
Loan Document shall continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Debt or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by Borrower, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Debt shall be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 10.27. JOINT AND SEVERAL. If Borrower or Guarantor
consists of more than one person or party, the obligations and liabilities of
each such person or party shall be joint and several.
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XI. AGENCY PROVISIONS; ASSIGNMENTS AND PARTICIPATIONS
SECTION 11.1. AGENT
(a) Appointment. Each Lender hereby designates and
appoints CapitalSource Finance LLC as administrative agent and collateral agent
under this Agreement and the other Loan Documents, and each Lender hereby
irrevocably authorizes Agent, as administrative agent and collateral agent for
such Lender, to take such action or to refrain from taking such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are delegated to Agent, as
administrative agent and the collateral agent, by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Agent agrees to act as such on the conditions contained in
this Article. Except for rights specifically noted, the provisions of this
Article are solely for the benefit of Agent and Lenders, and Borrower shall have
no rights as a third-party beneficiary of any of the provisions hereof. Agent
may perform any of its duties hereunder, or under the Loan Documents, by or
through its agents or employees. Notwithstanding anything herein contained to
the contrary or in any other Loan Document, Agent, as administrative agent and
collateral agent, and each of the Lenders agree that the rights and benefits
conferred upon Agent in its capacity as administrative agent and collateral
agent under this Agreement or any other Loan Document and/or its exercise or
enforcement of the rights and remedies under this Agreement or at law or in
equity with respect to this Agreement or any other Loan Document shall be for
the benefit of Agent on behalf of itself and the Lenders.
(b) Nature of Duties. In performing its functions and
duties under this Agreement, Agent is acting solely on behalf of Lenders and its
duties are administrative in nature and it does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Lenders, other than as expressly set forth herein and in the other
Loan Documents, or for Borrower. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of Lenders. Except for information, notices,
reports, and other documents expressly required to be furnished to Lenders by
Agent hereunder or given to Agent for the account of or with copies for Lenders,
Lenders shall make their own independent investigation of the financial
condition and affairs of Borrower in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of Borrower,
and Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide Lenders with any credit or other information with
respect thereto, whether coming into its possession before the Closing Date or
at any time or times thereafter. If Agent seeks the consent or approval of
Lenders to the taking or refraining from taking any action hereunder, then Agent
shall send prior written notice thereof to Lenders. Agent shall promptly notify
(in writing) each Lender any time that the applicable percentage of Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
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(c) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, managers, members, equity owners, employees or agents
shall be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms
set forth herein for performance of its express duties and obligations
hereunder, and Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith, and if any such apportionment
or distribution is subsequently determined to have been made in error, the sole
recourse of such Lender to whom payment was due but not made shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such Lender hereby agrees to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account. Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties made
by Borrower herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of Borrower. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions,
or conditions of this Agreement or any of the Loan Documents or the financial
condition of Borrower, or the existence or possible existence of any Default or
Event of Default. Agent may at any time request instructions from any Lender
with respect to any actions or approvals which by the terms of this Agreement or
of any of the other Loan Documents Agent is permitted or required to take or to
grant, and Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from taking any action or withholding any approval
under any of the Loan Documents until it shall have received such instructions
from the Required Lenders. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of the Required Lenders and notwithstanding
the instructions of any Lender, Agent shall have no obligation to take any
action if it, in good faith believes that such action exposes Agent or any of
its officers, directors, managers, members, equity owners, employees or agents
to any personal liability unless Agent receives an indemnification reasonably
satisfactory to it from any Lender with respect to such action.
(d) Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not
jointly, agree to reimburse and indemnify Agent and its officers, directors,
managers, members, equity
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owners, employees and agents (to the extent not reimbursed by Borrower or
Guarantor), ratably according to their respective Pro Rata Share in effect on
the date on which indemnification is sought under this subsection of the total
outstanding obligations (or, if indemnification is sought after the date the
Loan shall have been paid in full, ratably in accordance with their Pro Rata
Share immediately prior to such date of the total outstanding obligations), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances, or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent or any of its officers, directors, managers, members, equity
owners, employees or agents in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
Agent under this Agreement or any of the other Loan Documents; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct. The obligations of Lenders under this Article
XI shall survive the payment in full of the Debt and the termination of this
Agreement.
(f) Agent Individually. With respect to the Loan made by
it, Agent shall have and may exercise the same rights and powers hereunder and
under the other Loan Documents and is subject to the same obligations and
liabilities as and to the extent set forth herein and the other Loan Documents
as any other Lender. The terms "Lenders" or "Required Lenders" or any similar
terms shall, unless the context clearly otherwise indicates, include Agent in
its individual capacity as a Lender or one of the Required Lenders. Agent may
lend money to, and generally engage in any kind of banking, trust or other
business with any Borrower or any Subsidiary of any Borrower as if it were not
acting as administrative agent and collateral agent pursuant hereto.
(g) Successor Agent.
(i) Resignation and Removal. Agent may resign
from the performance of all its functions and duties hereunder at any time by
giving at least thirty (30) days' prior written notice to Borrower and Lenders.
Such resignation shall take effect upon the acceptance by a successor to Agent
of appointment pursuant to clause (ii) below or as otherwise provided below.
Agent may be removed as agent by the Required Lenders, on at least thirty (30)
days' prior written notice to Borrower and Agent and the other Lenders.
(ii) Appointment of Successor. Upon any such
notice of resignation or removal pursuant to clause (g)(i) above, Required
Lenders shall appoint a successor to Agent (a "SUCCESSOR AGENT") with, so long
as no Event of Default shall have occurred and be continuing, the consent of
Agent (which consent shall not be unreasonably withheld or delayed). If a
Successor Agent shall not have been so appointed within said thirty (30) day
period, Agent, upon notice to Borrower, may, on behalf of Lenders, then appoint
a Successor Agent who shall serve as administrative agent and collateral agent
until such time as Required Lenders (with, so long as no Event of Default shall
have occurred and be continuing, the consent of Agent (which consent
106
shall not be unreasonably withheld or delayed)), appoint a Successor Agent as
provided above. If no Successor Agent has been appointed pursuant to the
foregoing within said thirty (30) day period, the resignation shall become
effective and Required Lenders shall thereafter perform all the duties of Agent
hereunder, until such time, if any, as Lenders appoint a Successor Agent as
provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment under the Loan Documents by a Successor Agent, such Successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of Agent, as administrative agent and collateral agent
and, upon the earlier of such acceptance or the effective date of Agent's
resignation, Agent shall be discharged from its duties and obligations under the
Loan Documents, except that any indemnity rights or other rights in favor of
Agent, as administrative agent and collateral, shall continue. After Agent's
resignation as administrative agent and collateral agent under the Loan
Documents, the provisions of this Article XI shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was administrative agent
and collateral agent under the Loan Documents. In the event that Agent shall
have resigned or otherwise been replaced, references in this Article XI to Agent
shall be deemed to mean a Successor Agent.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any
action taken by Agent or the Required Lenders (or, where required by the express
terms of this Agreement, a greater proportion of Lenders) in accordance with the
provisions of this Agreement or of the other Loan Documents relating to the
Collateral, and the exercise by Agent or the Required Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders and Agent. Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for Lenders with
respect to all payments and collections arising in connection herewith and with
the Loan Documents in connection with the Collateral; (ii) execute and deliver
each Loan Document relating to the Collateral and accept delivery of each such
agreement delivered by Borrowers or any of their Subsidiaries; (iii) act as
collateral agent for Lenders for purposes of the perfection of all security
interests and Liens created by such agreements and all other purposes stated
therein; (iv) subject to the terms of this Article XI, manage, supervise and
otherwise deal with the Collateral; (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
Liens created or purported to be created by the Loan Documents relating to the
Collateral, and, (vi) subject to the terms of this Article XI, exercise all
remedies given to such Agent and Lenders with respect to the Collateral under
the Loan Documents relating thereto, applicable law or otherwise.
(ii) Release of Collateral. Lenders hereby
irrevocably authorize Agent, and Agent and Lenders agree for the benefit of
Borrower, to release any Lien granted to or held by Agent for the benefit of
Lenders upon (A) all Collateral upon termination of this Agreement and payment
and satisfaction in full of all Debt; or (B) any
107
portion of the Collateral which is sold, transferred or otherwise disposed of in
accordance with the provisions of this Agreement, if Borrower certifies to Agent
that such sale, transfer or other disposition is made in compliance with the
provisions of this Agreement (and Agent may rely in good faith conclusively on
any such certificate, without further inquiry). Upon at least five (5) Business
Days prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent for the benefit of Lenders herein or
pursuant hereto upon all or any portion of the Collateral in accordance with the
previous sentence.
(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that the
property covered by this Agreement or the Loan Documents exists or is owned by
Borrower or is cared for, protected or insured or has been encumbered or that
the Liens granted to Agent on behalf of Lenders herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Section 11.1(h) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by this
Agreement or the Loan Documents or any act, omission, or event related thereto,
Agent may act in any manner consistent with the provisions of this Agreement and
the other Loan Documents and as it may otherwise deem appropriate, in its
commercially reasonable discretion, given Agent's own interest in property
covered by this Agreement or the Loan Documents as one of Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders;
provided, that Agent shall exercise the same care which it would in dealing with
loans for its own account. Notwithstanding the foregoing, Agent shall be liable
with respect to its own gross negligence or willful misconduct.
(i) Agency for Perfection. Each Lender hereby appoints
Agent as agent for the purpose of perfecting each Lenders' security interest in
Collateral which, in accordance with Article 9 of the UCC in any applicable
jurisdiction, can be perfected only by possession. Should any Lender (other than
Agent) obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor, shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
(j) Exercise of Remedies. Except as set forth in Section
11.3, each Lender agrees that it will not have any right individually to enforce
or seek to enforce this Agreement or any Loan Document or to realize upon any
collateral security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
SECTION 11.2. ACTIONS BY AGENT AND LENDERS.
(a) If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other
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Loan Document, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, Lenders shall not have any right of
action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.
(b) All amendments, waivers and consents to any provision
of this Agreement or the other Loan Documents may be amended or waived or
consented to if, but only if, such amendment or waiver or consent is in writing
and is signed by the Borrowers and the Required Lenders (and, if the rights or
duties of the Agent are affected thereby, by the Agent); provided that no such
amendment or waiver or consent shall, unless signed by all the Lenders, (i)
increase or decrease the Commitment of any Lender (except for a ratable decrease
in the Commitment of all Lenders) or subject any Lender to any additional
obligation, (ii) reduce the principal of or rate of interest hereunder or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on the Loan or any fees hereunder or change the amortization terms
hereunder, (iv) release the Lien of Agent on any other collateral (except
pursuant to Section 11.1(h)(ii)), or (v) change the percentage of the aggregate
unpaid principal amount of the Notes, or the number of Lenders which shall be
required for the Agent or the Lenders to take any action under this Section or
any other provision of this Agreement.
(c) Upon the occurrence of an Event of Default, Agent
shall consult with the Lenders in respect of any such Event of Default to
determine the course of action which is acceptable to the Required Lenders.
Agent shall pursue such course of action approved by the Required Lenders in
respect of any such Event of Default, including, without limitation,
commencement of any suit to foreclose any security for the Loan and acquire
title to the Collateral or any portion thereof in connection with such
foreclosure, or defend, settle or compromise any claims. In the event the
Required Lenders cannot decide which remedies, if any, are to be pursued within
thirty (30) days after notice of such Event of Default from Agent to the
Lenders, Agent may commence foreclosure proceedings on behalf of the Lenders;
provided, however, that if at any time thereafter the Required Lenders shall
direct that a different or additional remedial action shall be taken, such
different or additional remedial action shall be taken by Agent in lieu of or in
addition to such foreclosure.
SECTION 11.3. SET OFF AND SHARING OF PAYMENTS. In addition
to any rights and remedies now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized by
Borrower at any time or from time to time, to the fullest extent permitted by
law, with reasonably prompt subsequent notice to Borrower or to any other Person
(any prior or contemporaneous notice being hereby expressly waived) to set off
and to appropriate and to apply any and all (a) balances (general or special,
time or demand, provisional or final) held by such Lender at any of its offices
for the account of Borrower or the Guarantor (regardless of whether such
balances are then due to Borrower or the Guarantor), and (b) other property at
any time held or
109
owing by such Lender or such holder to or for the credit or for the account of
Borrower or the Guarantor, against and on account of any of the Debt which are
not paid when due; except that no Lender shall exercise any such right without
the prior written consent of Agent; provided, however, that the failure to give
notice to Borrower shall not affect the validity of such set-off and
application. Any Lender which has exercised its right to set off or otherwise
has received any payment on account of the Debt shall, to the extent the amount
of any such set off or payment exceeds its Pro Rata Share of payments obtained
by all of Lenders on account of such Debt, purchase for cash participations in
each such other Lender's Pro Rata Share of Debt as would be necessary to cause
such Lender to share such excess with each other Lender or holder in accordance
with their respective Pro Rata Shares; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
purchasing Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the Debt and
may sell participations in such excess to other Lenders and holders, and (b) any
Lender or holder so purchasing a participation in the Loan made or other Debt
held by other Lenders or holders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of the Loan and other Debt in the amount
of such participation.
SECTION 11.4. PAYMENTS.
(a) Advances and Payments; Interest and Fee Payments. If
payments are made directly to Agent, payments of principal, interest and fees in
respect of the Loan will be settled, in accordance with each Lender's Pro Rata
Share on the first Business Day after such payments are received. Such payments
will be made by such Lender without set-off, counterclaim or reduction of any
kind.
(b) Return of Payments. If Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related payment
has been or will be received by Agent from Borrowers and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from
such Lender without set-off, counterclaim or deduction of any kind. If Agent
determines at any time that any amount received by Agent under this Agreement
must be returned to Borrower or paid to any other Person pursuant to any
solvency law or otherwise, then, notwithstanding any other term or condition of
this Agreement, Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Agent on demand any portion
of such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
SECTION 11.5. DISSEMINATION OF INFORMATION. Agent will
distribute promptly to each Lender copies of all notices, schedules, reports,
projections, financial statements, agreements and other material and other
information, including, but not limited to, financial and reporting information
received from Borrower, the Guarantor or their Subsidiaries or generated by a
third party (and excluding only internal information
110
generated by Agent for its own use as a Lender), as provided for in this
Agreement and the other Loan Documents as received by Agent. Agent shall
promptly give notice to Lenders of the receipt or sending of any notice,
schedule, report, projection, financial statement or other document or
information pursuant to this Agreement or any of the other Loan Documents and
shall promptly forward a copy thereof to each Lender. Agent shall request
information from Borrower, the Guarantor or their Subsidiaries as Lenders may
request from time to time. Agent shall not be liable to Lenders for any failure
to comply with its obligations under this Section 11.6, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct.
SECTION 11.6. ASSIGNMENTS AND PARTICIPATIONS
(a) Any constituent Lender may assign to one or more
Persons all or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all or a portion of
such Lender's Note); provided that the parties to each such assignment shall
execute and deliver to Agent and Borrower an assignment and acceptance agreement
(an "ASSIGNMENT AND ACCEPTANCE") in connection with such assignment, and to, to
the extent substitute Notes are required in connection with such assignment,
deliver the Note(s) held by the assigning Lender to Agent, to be held until such
replacement Notes are delivered to Agent. In addition any constituent Lender may
participate to one or more Persons all or any portion of its rights and
obligations under this Agreement and the other Loan Documents (including without
limitation, all or a portion of such Lender's Note) utilizing such documentation
to evidence such participation and the parties' respective rights thereunder as
such Lender, in its sole discretion, shall elect, provided, however, that (i)
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible for the performance thereof, (iii) such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents and Borrower and Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and he other Loan Documents and and (iv) any agreement pursuant to
which any Lender shall sell any such participation shall provide that such
participant's rights and responsibilities to exercise such Lender's rights and
enforce each of Borrowers' obligations hereunder, including the right to consent
to any amendment, supplement, modification or waiver of any provision of this
Agreement or any of the other Loan Documents, shall, prior to an Event of
Default, be limited to the right to consent to (A) a reduction of the principal
of, or rate or amount of interest on the Loan subject to such participation
(other than by payment or prepayment thereof), (B) postponement of any date
fixed for any payment of principal of, or interest on, the Loan subject to such
participation and (C) release of any guarantor of the Debt or release of any
collateral that Lender is not otherwise required to release under the Loan.
(b) Upon such execution and delivery, from and after the
effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of the assigning Lender, as the case
may be, hereunder and such assignee shall be deemed to
111
have assumed such rights and obligations, and (ii) the assigning Lender shall,
to the extent that rights and obligations hereunder have been assumed by the
assignee pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement and the other Loan
Documents (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of Lender's rights and obligations under this Agreement and
the other Loan Documents, Lender shall cease to be a party hereto) accruing from
and after the effective date of the Assignment and Acceptance.
(c) Upon its receipt of an Assignment and Acceptance
executed by an assignee, Agent shall (i) accept such Assignment and Acceptance,
and (ii) give prompt written notice thereof to Borrower along with notice of any
replacement Notes required in connection with such assignment (and shall make
specify to Borrower that upon receipt of such replacement Notes, it shall
deliver the Notes being replaced). Within five (5) Business Days after its
receipt of such notice, Borrower, shall execute and deliver to Agent a new Note
or Notes to the order of such parties and in such amounts specified in Agent's
notice, and Agent shall make a notation of such transaction in the Note Register
referenced in Section 11.7. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate then outstanding principal amount of the
to be surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
the Note.
(d) Prior to the occurrence of an Event of Default, a
Lender may assign or pledge its interest in the Loan only to a Person (an
"Eligible Assignee") that either, (i) is an Affiliate of such Lender, (ii) on an
aggregate basis with its Affiliates, has at least $50 million of shareholder's
equity or capital/statutory surplus and $100 million of total assets (in name or
under management), (iii) is a "Qualified Transferee" under the Mortgagae
Intercreditor Agreement or (iv) qualifies as a "Loan Pledgee" or "Conduit" under
the Mortgage Intercreditor Agreement. Upon the occurrence and during the
continuance of an Event of Default, none of the foregoing restrictions on
assignments or pledges shall be applicable. Addtionally, (x) none of the
restrictions on assignments contained in this Agreement shall be applicable to
participations in any Lender's interest in the Loan and (y) any lender may
assign all or a portion of its rights in the Loan to the Federal Reserve Bank.
SECTION 11.7. NOTE REGISTER. The ownership of an interest
in each Note shall be registered on a record of ownership maintained by Borrower
or its agent. Notwithstanding anything else in the Loan Agreement or any Note to
the contrary, the right to the principal of, and stated interest on, a Note may
be transferred only if the transfer is registered on such record of ownership
and the transferee is identified as the owner of an interest in the obligation.
All parties to this Agreement shall be entitled to treat the registered holder
of a Note (as recorded on such record of ownership) as the owner in fact thereof
for all purposes and shall not be bound to recognize any equitable or other
claim to or interest in a Note on the part of any other person or entity.
112
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113
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
SHG PROPERTY RESOURCES, LLC
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
SHG INVESTMENTS, LLC
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
Commitment $11,500,000.00 CAPITALSOURCE FINANCE LLC
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
Commitment $5,750,000.00 HIGHBRIDGE/▇▇▇▇▇ SPECIAL
OPPORTUNITIES FUND, L.P.
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Principal
Commitment $5,750,000.00 FORTRESS CREDIT OPPORTUNITIES I, LP
By: FORTRESS CREDIT
OPPORTUNITIES I GP LLC, its
General Partner
By: \s\ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
Solely for the purposes set forth in the last sentence
of Section 2.6.3, Section 4.1.39 and Section 5.3 of this Agreement:
FOUNTAIN VIEW, INC., a
Delaware corporation
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
SCHEDULE I
PROPERTIES AND MORTGAGE BORROWERS
MORTGAGE BORROWERS
TYPE OF -------------------------------------------------------
INDIVIDUAL PROPERTIES FACILITY COUNTY STATE OPERATOR FEE OWNERS MASTER LESSEE
------------------------------------------------------------------------------------------------------------------------
1. Carehouse Care Center SNF Orange CA Carehouse SHG Secured California Secured
Healthcare Center, Resources, LP Resources, LLC
LLC
------------------------------------------------------------------------------------------------------------------------
2. Devonshire Care Center SNF Riverside CA Devonshire Care SHG Secured California Secured
Center, LLC Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
3. Fountain Care Center SNF Orange CA Fountain Care SHG Secured California Secured
Center, LLC Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
4. Fountain Senior Assisted ALF Orange CA Fountain Senior SHG Secured California Secured
Living Assisted Living, Resources, LP Resources, LLC
LLC
------------------------------------------------------------------------------------------------------------------------
5. Spring Assisted Living ALF Los Angeles CA Spring Senior SHG Secured California Secured
and Retirement Assisted Living, Resources, LP Resources, LLC
LLC
------------------------------------------------------------------------------------------------------------------------
6. Earlwood Care Center SNF Los Angeles CA The Earlwood, LLC SHG Secured California Secured
Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
7. Valley Health Care Center SNF Fresno CA Valley Healthcare SHG Secured California Secured
Center, LLC Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
8. ▇▇▇▇▇ ▇▇▇▇▇ Care Center SNF Santa CA ▇▇▇▇▇ ▇▇▇▇▇ SHG Secured California Secured
▇▇▇▇▇▇▇ Healthcare Center, Resources, LP Resources, LLC
LLC
------------------------------------------------------------------------------------------------------------------------
9. Willow Creek Health Care SNF Fresno CA Willow Creek SHG Secured California Secured
Center Healthcare Center, Resources, LP Resources, LLC
LLC
------------------------------------------------------------------------------------------------------------------------
10. Briarcliff Nursing and SNF ▇▇▇▇▇▇▇ TX Briarcliff Nursing SHG Secured Texas Secured
Rehabilitation Center and Rehabilitation Resources, LP Resources, LLC
Center, LP
------------------------------------------------------------------------------------------------------------------------
11. ▇▇▇▇▇▇▇▇▇ Nursing Home SNF Jefferson TX ▇▇▇▇▇▇▇▇▇ SHG Secured Texas Secured
(Beaumont) Beaumont, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
12. ▇▇▇▇▇▇▇▇▇ Nursing Home SNF ▇▇▇▇▇ TX ▇▇▇▇▇▇▇▇▇ SHG Secured Texas Secured
(Longview) Longview, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
13. Colonial Manor Care SNF Comal TX Colonial New SHG Secured Texas Secured
Center Braunfels Care Resources, LP Resources, LLC
Center, LP
------------------------------------------------------------------------------------------------------------------------
14. Colonial Manor (Tyler) SNF ▇▇▇▇▇ TX Colonial Tyler SHG Secured Texas Secured
Care Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
15. Comanche Trail Nursing SNF ▇▇▇▇▇▇ TX Comanche Nursing SHG Secured Texas Secured
Center Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
Sched. I-1
MORTGAGE BORROWERS
TYPE OF -------------------------------------------------------
INDIVIDUAL PROPERTIES FACILITY COUNTY STATE OPERATOR FEE OWNERS MASTER LESSEE
------------------------------------------------------------------------------------------------------------------------
16. Coronado Nursing Center SNF Taylor TX Coronado Nursing SHG Secured Texas Secured
Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
17. Oak Manor Nursing Center SNF Fayetee TX Flatonia Oak SHG Secured Texas Secured
Manor, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
18. ▇▇▇▇▇▇▇▇▇ Valley Nursing SNF ▇▇▇▇▇▇▇▇▇ TX ▇▇▇▇▇▇▇▇▇ Valley SHG Secured Texas Secured
Center Nursing Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
19. Hallettsville Nursing SNF Lavaca TX Hallettsville SHG Secured Texas Secured
Center Rehabilitation and Resources, LP Resources, LLC
Nursing Center, LP
------------------------------------------------------------------------------------------------------------------------
20. Lubbock Hospitality House SNF Lubbock TX Hospitality SHG Secured Texas Secured
Nursing and Resources, LP Resources, LLC
Rehabilitation
Center, LP
------------------------------------------------------------------------------------------------------------------------
21. Live Oak Nursing Center SNF Live Oak TX Live Oak Nursing SHG Secured Texas Secured
Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
22. Monument Hill Nursing SNF Fayette TX Monument SHG Secured Texas Secured
Center Rehabilitation and Resources, LP Resources, LLC
Nursing Center, LP
------------------------------------------------------------------------------------------------------------------------
23. Oak Crest Nursing Center SNF Aransas TX Oak Crest Nursing SHG Secured Texas Secured
Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
24. Oakland Manor Nursing SNF ▇▇▇ TX Oakland Manor SHG Secured Texas Secured
Center Nursing Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
25. Southwood Care Center SNF ▇▇▇▇▇▇ TX Southwood Care SHG Secured Texas Secured
Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
26. Cityview Care Center SNF Tarrant TX Texas Cityview SHG Secured Texas Secured
Care Center, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
27. Heritage Oaks Nursing SNF Lubbock TX Texas Heritage SHG Secured Texas Secured
and Rehabilitation Center Oaks Nursing and Resources, LP Resources, LLC
Rehabilitation
Center, LP
------------------------------------------------------------------------------------------------------------------------
28. ▇▇▇▇▇▇▇▇▇ Nursing Home SNF ▇▇▇▇▇ TX The ▇▇▇▇▇▇▇▇▇ SHG Secured Texas Secured
(Tyler) Tyler, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
29. Town & Country Manor SNF ▇▇▇▇▇▇▇ TX Town and Country SHG Secured Texas Secured
Manor, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
30. West Side Campus of Care SNF Tarrant TX West Side Campus SHG Secured Texas Secured
of Care, LP Resources, LP Resources, LLC
------------------------------------------------------------------------------------------------------------------------
Sched. 1-2
SCHEDULE II
LICENSES
Fountain Senior Assisted Living
Spring Assisted Living and Retirement
Sched. II-1
SCHEDULE III
FORM OF OCCUPANCY REPORT
See attached.
Sched. III-1
SCHEDULE IV
ORGANIZATIONAL STRUCTURE
See attached.
Sched. IV-1
SCHEDULE V
LICENSED BED CAPACITY
LICENSED
BED/UNIT
INDIVIDUAL PROPERTIES CAPACITY
-------------------------------------------------------
1. Carehouse Care Center 174 beds
-------------------------------------------------------
2. Devonshire Care Center 99 beds
-------------------------------------------------------
3. Fountain Care Center 179 beds
-------------------------------------------------------
4. Fountain Senior Assisted Living 153 units
-------------------------------------------------------
5. Spring Assisted Living and Retirement 51 units
-------------------------------------------------------
6. Earlwood Care Center 87 beds
-------------------------------------------------------
7. Valley Health Care Center 99 beds
-------------------------------------------------------
8. ▇▇▇▇▇ ▇▇▇▇▇ Care Center 88 beds
-------------------------------------------------------
9. Willow Creek Health Care Center 159 beds
-------------------------------------------------------
10. Briarcliff Nursing and Rehabilitation 194 beds
Center
-------------------------------------------------------
11. ▇▇▇▇▇▇▇▇▇ Nursing Home (Beaumont) 148 beds
-------------------------------------------------------
12. ▇▇▇▇▇▇▇▇▇ Nursing Home (Longview) 178 beds
-------------------------------------------------------
13. Colonial Manor Care Center 172 beds
-------------------------------------------------------
14. Colonial Manor (Tyler) 172 beds
-------------------------------------------------------
15. Comanche Trail Nursing Center 119 beds
-------------------------------------------------------
16. Coronado Nursing Center 221 beds
-------------------------------------------------------
17. Oak Manor Nursing Center 90 beds
-------------------------------------------------------
18. ▇▇▇▇▇▇▇▇▇ Valley Nursing Center 150 beds
-------------------------------------------------------
19. Hallettsville Nursing Center 120 beds
-------------------------------------------------------
Sched. V-1
\
LICENSED
BED/UNIT
INDIVIDUAL PROPERTIES CAPACITY
-------------------------------------------------------
-------------------------------------------------------
20. Lubbock Hospitality House 117 beds
-------------------------------------------------------
21. Live Oak Nursing Center 100 beds
-------------------------------------------------------
22. Monument Hill Nursing Center 110 beds
-------------------------------------------------------
23. Oak Crest Nursing Center 92 beds
-------------------------------------------------------
24. Oakland Manor Nursing Center 120 beds
-------------------------------------------------------
25. Southwood Care Center 120 beds
-------------------------------------------------------
26. Cityview Care Center 210 beds
-------------------------------------------------------
27. Heritage Oaks Nursing and 159 beds
Rehabilitation Center
-------------------------------------------------------
28. ▇▇▇▇▇▇▇▇▇ Nursing Home (Tyler) 120 beds
-------------------------------------------------------
29. Town & Country Manor 126 beds
-------------------------------------------------------
30. West Side Campus of Care 240 beds
-------------------------------------------------------
Sched. V-1
SCHEDULE VI
INTENTIONALLY DELETED.
Sched. VI-1
SCHEDULE VII
MEZZANINE LOAN ALLOCATED AMOUNTS
TEXAS FACILITIES MEZZANINE LOAN ALLOCATION
---------------- -------------------------
City View Care Center $ 734,225.16
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 1,328,534.12
▇▇▇▇▇▇▇▇▇ of Longview $ 1,235,722.35
Colonial Manor Tyler $ 908,080.45
▇▇▇▇▇▇▇▇▇ of Tyler $ 1,100,482.35
Coronado Nursing Center $ 786,248.24
Colonial Manor Care Center $ 674,914.24
Lubbock Hospitality House $ 393,976.47
Halletsville Rehab and Nursing Center $ 73,261.91
Heritage Oaks Nursing and Rehab $ 1,092,905.88
Monument Hill Nursing $ 684,155.29
Oak Crest Center $ 197,556.47
Oak Manor Nursing Center $ 239,984.71
Oakland Manor Nursing Center $ 92,438.41
Southwood Care Center $ 385,831.76
Town and Country Manor $ 380,717.65
West Side Campus of Care $ 620,512.94
Briarcliff Nursing and Rehab Center $ 2,040,776.47
Comanche Trail Nursine Center $ 268,964.71
▇▇▇▇▇▇▇▇▇ Valley Nursing Center $ 917,510.59
Live Oak Nursing Center $ 700,065.88
SUB TOTALS $ 14,856,866.05
CALIFORNIA FACILITIES
---------------------
Fountain Assisted Living Center $ 332,715.37
Spring Retirement Center $ 413,204.15
Carehouse Care Center $ 1,076,888.20
Devonshire Care Center $ 799,844.55
Earlwood Care Center $ 799,642.92
Fountain Care Center $ 883,225.37
Valley Health Care Center $ 1,448,201.02
▇▇▇▇▇ ▇▇▇▇▇ Care Center $ 714,803.26
Willow Creek Care Center $ 1,674,609.12
SUB TOTALS $ 8,143,133.95
TOTAL COMBINED $ 23,000,000.00
Sched. VIII-1
SCHEDULE VIII
BORROWER PLEDGED ENTITY INTERESTS
DE 1-21 ENTITIES
Texas Cityview Care Center GP, LLC, a Delaware limited liability company
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ GP, LLC, a Delaware limited liability company
▇▇▇▇▇▇▇▇▇ Longview GP, LLC, a Delaware limited liability company
The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GP, LLC, a Delaware limited liability company
Colonial New Braunfels GP, LLC, a Delaware limited liability company
Colonial ▇▇▇▇▇ ▇▇, LLC, a Delaware limited liability company
Coronado Nursing Center GP, LLC, a Delaware limited liability company
Hallettsville Rehabilitation GP, LLC, a Delaware limited liability company
Texas Heritage Oaks Nursing and Rehabilitation Center GP, LLC, a Delaware
limited liability company
Hospitality Nursing GP, LLC, a Delaware limited liability company
Monument Rehabilitation GP, LLC, a Delaware limited liability company
Oak Crest Nursing Center GP, LLC, a Delaware limited liability company
Flatonia Oak Manor GP, LLC, a Delaware limited liability company
Oakland Manor GP, LLC, a Delaware limited liability company
Southwood Care Center GP, LLC, a Delaware limited liability company
Town and Country Manor GP, LLC, a Delaware limited liability company
West Side Campus of Care GP, LLC, a Delaware limited liability company
Comanche Nursing Center GP, LLC, a Delaware limited liability company
▇▇▇▇▇▇▇▇▇ Valley Nursing Center GP, LLC, a Delaware limited liability company
Briarcliff Nursing and Rehabilitation Center GP, LLC, a Delaware limited
liability company
Live Oak Nursing Center GP, LLC, a Delaware limited liability company
DE 24-32 ENTITIES
Carehouse Healthcare Center, LLC, a Delaware limited liability company
Devonshire Care Center, LLC, a Delaware limited liability company
The Earlwood, LLC, a Delaware limited liability company
Fountain Care Center, LLC, a Delaware limited liability company
Fountain Senior Assisted Living, LLC, a Delaware limited liability company
Spring Senior Assisted Living, LLC, a Delaware limited liability company
Valley Healthcare Center, LLC, a Delaware limited liability company
▇▇▇▇▇ ▇▇▇▇▇ Healthcare Center, LLC, a Delaware limited liability company
Willow Creek Healthcare Center, LLC, a Delaware limited liability company
NTLP 1-21 ENTITIES
Texas Cityview Care Center, LP, a Delaware limited partnership
Sched. VIII-2
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LP, a Delaware limited partnership
▇▇▇▇▇▇▇▇▇ Longview, LP, a Delaware limited partnership
The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, LP, a Delaware limited partnership
Colonial New Braunfels Care Center, LP, a Delaware limited partnership
Colonial Tyler Care Center, LP, a Delaware limited partnership
Coronado Nursing Center, LP, a Delaware limited partnership
Hallettsville Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
Texas Heritage Oaks Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
Hospitality Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
Monument Rehabilitation and Nursing Center, LP, a Delaware limited partnership
Oak Crest Nursing Center, LP, a Delaware limited partnership
Flatonia Oak Manor, LP, a Delaware limited partnership
Oakland Manor Nursing Center, LP, a Delaware limited partnership
Southwood Care Center, LP, a Delaware limited partnership
Town and Country Manor, LP, a Delaware limited partnership
West Side Campus of Care, LP, a Delaware limited partnership
Comanche Nursing Center, LP, a Delaware limited partnership
▇▇▇▇▇▇▇▇▇ Valley Nursing Center, LP, a Delaware limited partnership
Briarcliff Nursing and Rehabilitation Center, LP, a Delaware limited partnership
Live Oak Nursing Center, LP, a Delaware limited partnership
Sched. VIII-3
SCHEDULE IX
EXCEPTIONS TO HEALTH CARE REPRESENTATIONS
SUBSTANDARD DENIAL OF
FACILITY SURVEY DATE TAG QUALITY OF CARE PAYMENT
DEFICIENCY DEFICIENCY
------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ Nursing Home 4/16/03 F224G None None
(Tyler)
------------------------------------------------------------------------------------
Colonial Manor (Tyler) 6/13/03 F314G None None
------------------------------------------------------------------------------------
Comanche Trail Nursing 6/19/03 F279G, F324G None None
Center
------------------------------------------------------------------------------------
Monument Hill Nursing 7/15/03 F224G None None
Center
------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ Valley Nursing 3/28/03 F327G None None
Center
------------------------------------------------------------------------------------
Sched. IX-1
SCHEDULE 4.2(h)
MEDICARE MEDICAID
INDIVIDUAL PROPERTIES PROVIDER # PROVIDER #
-----------------------------------------------------------------
1. Carehouse Care Center 05-6332 LTC55765F
-----------------------------------------------------------------
2. Devonshire Care Center 05-6095 ZZT06095F
-----------------------------------------------------------------
3. Fountain Care Center 55-5259 LTC55259F
-----------------------------------------------------------------
4. Earlwood Care Center 05-5032 ZZT05032G
-----------------------------------------------------------------
5. Valley Health Care Center 05-6225 ZZR06225F
-----------------------------------------------------------------
6. ▇▇▇▇▇ ▇▇▇▇▇ Care Center 05-5830 ZZT05830H
-----------------------------------------------------------------
7. Willow Creek Health Care Center 55-5652 LTC55652F
-----------------------------------------------------------------
8. Briarcliff Nursing and 67-5162 H06751629
Rehabilitation Center
-----------------------------------------------------------------
9. ▇▇▇▇▇▇▇▇▇ Nursing Home (Beaumont) 45-5757 ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------
10. ▇▇▇▇▇▇▇▇▇ Nursing Home (Longview) 45-5684 ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------
11. Colonial Manor Care Center 45-5020 H04550201
-----------------------------------------------------------------
12. Colonial Manor (Tyler) 45-5429 ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------
13. Comanche Trail Nursing Center 67-5462 H06754623
-----------------------------------------------------------------
14. Coronado Nursing Center 67-5746 H04556817
-----------------------------------------------------------------
15. Oak Manor Nursing Center 67-5445 H06754457
-----------------------------------------------------------------
16. ▇▇▇▇▇▇▇▇▇ Valley Nursing Center 45-5869 H04558697
-----------------------------------------------------------------
17. Hallettsville Nursing Center 67-5095 H06750955
-----------------------------------------------------------------
18. Lubbock Hospitality House 45-5940 H04559403
-----------------------------------------------------------------
19. Live Oak Nursing Center 67-5104 H06751045
-----------------------------------------------------------------
Sched. 4.2(h)-1
MEDICARE MEDICAID
INDIVIDUAL PROPERTIES PROVIDER # PROVIDER #
-----------------------------------------------------------------
20. Monument Hill Nursing Center 45-5715 H04557157
-----------------------------------------------------------------
21. Oak Crest Nursing Center 45-5974 H04559745
-----------------------------------------------------------------
22. Oakland Manor Nursing Center 67-5101 H06751011
-----------------------------------------------------------------
23. Southwood Care Center 45-5887 H04558871
-----------------------------------------------------------------
24. Cityview Care Center 67-5622 001004921
-----------------------------------------------------------------
25. Heritage Oaks Nursing and 67-5346 H06753467
Rehabilitation Center
-----------------------------------------------------------------
26. ▇▇▇▇▇▇▇▇▇ Nursing Home (Tyler) 45-5485 ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------
27. Town & Country Manor 45-5796 ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------
28. West Side Campus of Care 45-5592 H04555927
-----------------------------------------------------------------
Sched. 4.2(h)-1
SCHEDULE 4.2(j)
None.
Sched. 5.3.2-1
SCHEDULE 5.3.2
PERMITTED INDEBTEDNESS
Indebtedness as contemplated or permitted by the Loan Documents and the Plan of
Reorganization.
Sched. VIII-2
SCHEDULE 5.3.3
PERMITTED LIENS
---------------------------------------------------------------------------------------------------------------------
DEBTOR LIEN COLLATERAL
(SEARCH NAME) JURISDICTION SECURED PARTY TYPE FILING INFO DESCRIPTION
---------------------------------------------------------------------------------------------------------------------
Fountain View Inc. Woodland Care California Minolta Business Systems UCC 9821760613 Equipment
Center ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Inc. filed: 8-3-98
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Park Convalescent Hospital California BCL Capital UCC 199823960967 Equipment
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Secretary of State ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ filed: 8-27-98
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Rio Hondo Convalescent Hospital California Ecolab Inc. UCC 199932360360 Equipment
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. Secretary of State ▇▇▇ ▇▇▇▇▇▇▇ ▇▇ filed: 11-12-99
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care-California, Inc. California Safeco Credit Co, Inc. UCC 0112961109 Equipment
▇▇▇▇ ▇. ▇▇ ▇▇▇▇ ▇▇▇ Secretary of State dba Safeline Leasing filed: 5-7-01
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
Fountain Care Center
▇▇▇▇ ▇. ▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care Corp., Texas Secretary of IKON Office Solutions UCC 9900115658 Equipment
dba Oak Crest Nursing Center State 2090 ▇▇▇▇▇▇▇▇ filed: 6-7-99
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Sched. 5.3.3-1
---------------------------------------------------------------------------------------------------------------------
DEBTOR LIEN COLLATERAL
(SEARCH NAME) JURISDICTION SECURED PARTY TYPE FILING INFO DESCRIPTION
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Summit Care Corporation Texas Secretary of Mellon First United UCC 9800136642 Equipment
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇ ▇▇▇▇▇ Leasing filed: ▇-▇-▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of ▇▇▇▇▇▇▇▇▇▇▇ Incorporated UCC 9800160360 Equipment
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Ste filed: 8-6-03
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 103
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Safeco Credit Co., Inc. UCC 0100088987 Equipment
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ dba Safeline Leasing filed: ▇-▇-▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
West Side Campus Care
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Norwest Financial UCC 9900093404 Equipment
▇▇▇▇ ▇. ▇▇▇▇ ▇▇ ▇▇▇▇▇ Leasing, Inc. filed: 5-10-99
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of ▇▇▇ ▇▇▇▇▇ UCC 020008568685 Equipment
▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ PO Box 12380 filed: 5-10-99
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Sched. VIII-2
SCHEDULE 5.3.4
INVESTMENTS; NEW FACILITIES OR COLLATERAL
None.
Sched. 5.3.4-1
SCHEDULE 5.3.6
TRANSACTIONS WITH AFFILIATES
1. Agreements, whether written or oral, regarding the reimbursement of certain
out-of-pocket and allocated overhead expenses incurred by Heritage Partners
in connection with the management and operation of Guarantor.
2. $32,392,800 Promissory Note by SHG Investments, LLC in favor of Summit Care
Texas, L.P.
3. Long-term care facilities leases with ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇:
a. Fountainview Convalescent Hospital, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇.
b. Rio Hondo Nursing Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇.
c. Sycamore Park Convalescent Hospital, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
d. Montebello Convalescent Hospital, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇
4. Intercompany agreements to provide services and supplies at the facilities.
Sched. 5.3.6-1
SCHEDULE 5.3.9
CONTINGENT OBLIGATIONS
None.
Sched. 5.3.9-1
SCHEDULE 5.3.11
LEASEHOLD PROPERTIES
TYPE OF
INDIVIDUAL PROPERTIES FACILITY COUNTY STATE
------------------------------------------------------------------
1. Alexandria Convalescent SNF Los Angeles CA
Hospital
-----------------------------------------------------------------
2. Brier Oak Terrace Care SNF Los Angeles CA
Center
-----------------------------------------------------------------
3. Elmcrest Convalescent SNF Los Angeles CA
-----------------------------------------------------------------
4. ▇▇▇▇▇▇▇ Park Convalescent SNF Los Angeles CA
-----------------------------------------------------------------
5. ▇▇▇▇▇▇▇ Park Retirement ALF Los Angeles CA
Hotel
-----------------------------------------------------------------
6. Fountainview Convalescent SNF Los Angeles CA
-----------------------------------------------------------------
7. Rio Hondo Nursing Center SNF Los Angeles CA
-----------------------------------------------------------------
8. Sycamore Park SNF Los Angeles CA
Convalescent
-----------------------------------------------------------------
9. Montebello Convalescent SNF Los Angeles CA
-----------------------------------------------------------------
10. Anaheim Terrace Care SNF Orange CA
Center
-----------------------------------------------------------------
11. Bay Crest Care Center SNF Los Angeles CA
-----------------------------------------------------------------
12. Palm Grove Care Center SNF Orange CA
-----------------------------------------------------------------
13. Royalwood Care Center SNF Los Angeles CA
-----------------------------------------------------------------
14. ▇▇▇▇▇▇ Care Center SNF Los Angeles CA
-----------------------------------------------------------------
15. Woodland Care Center SNF Los Angeles CA
-----------------------------------------------------------------
16. Carson Retirement ALF Los Angeles CA
-----------------------------------------------------------------
17. Hemet Assisted Living ALF Riverside CA
Retirement Center
-----------------------------------------------------------------
18. Foothill Ranch Corporate n/a Orange CA
Office
-----------------------------------------------------------------
19. Texas Regional Office n/a Comal TX
-----------------------------------------------------------------
20. Skilled Care Pharmacy n/a Los Angeles CA
(Monrovia)
-----------------------------------------------------------------
21. Skilled Care Pharmacy n/a Orange CA
(▇▇▇▇▇ ▇▇▇▇▇)
-----------------------------------------------------------------
Sched. 5.3.11-1
EXHIBIT A
INTENTIONALLY DELETED.
Exhibit A-1
ANNEX I
FINANCIAL COVENANTS
1) Minimum EBITDA
Guarantor shall not permit EBITDA as of the end of any fiscal quarter during any
fiscal year (calculated for the four fiscal quarter period ended as of the end
of such fiscal quarter) to be less than the amounts set forth below
corresponding to such fiscal year.
FISCAL YEAR ENDED MINIMUM EBITDA
----------------- --------------
12/31/03 $ 42,000,000
12/31/04 and as at the end of each
fiscal quarter during each fiscal
year thereafter $ 45,000,000
2) Net Total Leverage Ratio (Total Debt to EBITDA)
Guarantor shall not permit the Net Total Leverage Ratio of Guarantor on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 6.5 to 1.
3) Net Senior Leverage Ratio (Senior Debt to EBITDA)
Guarantor shall not permit the Net Senior Leverage Ratio of Guarantor on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 4 to 1.
4) Net Interest Coverage Ratio (EBITDA/Interest Expense)
Guarantor shall not permit the Net Interest Coverage Ratio of Guarantor on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter to be less than 1.75 to 1.
5) Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)
Guarantor shall not permit the Fixed Charge Ratio of Guarantor on a Consolidated
Basis as of the end of any fiscal quarter during any fiscal year (calculated as
of the end of such fiscal quarter) to be less than the ratio set forth below for
such fiscal year:
FISCAL YEAR ENDED FIXED CHARGE COVERAGE RATIO
----------------- ---------------------------
December 31, 2003 1.10 to 1
Annex I-1
December 31, 2004 and at the end of each 1.25 to 1
of each fiscal quarter during each fiscal
year thereafter
6) Tangible Net Worth
Until full performance and satisfaction, and indefeasible payment in full in
cash, of all the Obligations (other than Unmatured Surviving Obligations),
Guarantor on a Consolidated Basis will at all times maintain Tangible Net Worth
of not less than ($100,000,000).
7) Minimum Liquidity
At Closing and at all other times Guarantor and the Borrowers under the
Guarantor Revolving Credit Agreement shall have not less than $3,000,000 of
Available Cash on hand.
8) Capital Expenditures
Guarantor on a Consolidated Basis shall not permit Maintenance Capital
Expenditures made during any fiscal year to exceed $7,000,000.
For purposes of the covenants set forth in this Annex I, the
terms listed below shall have the following meanings:
"Available Cash" shall mean, for any date of determination,
the sum without duplication of the following for Guarantor and the Borrowers
under the Guarantor Revolving Credit Agreement: (a) unrestricted cash on hand on
such date, (b) Cash Equivalents held on such date, and (c) the unborrowed
Availability (as defined in the Guarantor Revolving Credit Agreement) on and as
of such date.
"Consolidated Basis" shall mean the consolidation in
accordance with GAAP of the accounts or other items of Guarantor and its
Subsidiaries.
"EBITDA" shall mean, for any period, the sum, without
duplication, of the following for Guarantor on a Consolidated Basis (i) Net
Income, (ii) Interest Expense, (iii) taxes on income, whether paid, payable or
accrued, (iv) depreciation expense, (v) amortization expense, (vi) the impact on
Net Income of FASB 121 and 142, (vii) Restructuring Costs and (viii) the impact
on Net Income of any gains and losses from the sales of fixed assets, and (ix)
the impact on Net Income of any extraordinary items, each calculated for such
period in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio for Guarantor on a Consolidated Basis of (i) EBITDA to
(ii) Fixed Charges, in each case for the four fiscal quarter period ended as of
such date of determination.
Annex I-2
"Fixed Charges" shall mean for any period for Guarantor on a
Consolidated Basis, the sum during such period of (i) Total Debt Service, (ii)
Capital Expenditures not financed with Non-Recourse Indebtedness (as defined in
the Guarantor Revolving Credit Agreement), (iii) taxes on income whether paid,
payable or accrued, and (iv) dividends whether paid, payable or accrued, each
calculated in accordance with GAAP.
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, intellectual
property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income, restricted funds, investments in Subsidiaries,
intercompany receivables and accumulated depreciation.
"Interest Expense" shall mean, for any period, total interest
expense (including attributable to Capital Leases in accordance with GAAP) of
Guarantor on a Consolidated Basis for such period, calculated in accordance with
GAAP, including capitalized interest, provided, however, for purposes of this
Agreement for any fiscal quarter ended prior to September 30, 2004, Interest
Expense shall be calculated as follows: (i) for the four fiscal quarters ended
September 30, 2003 Interest Expense shall equal $23,700,000, (ii) for the four
fiscal quarters ended December 31, 2003, Interest Expense shall equal actual
Interest Expense for the fiscal quarter ended December 31, 2003 multiplied by 4,
(iii) for the four fiscal quarters ended March 31, 2004, Interest Expense shall
equal actual Interest Expense for the 2 fiscal quarters ended March 31, 2004
multiplied by 2 and (iv) for the four fiscal quarters ended June 30, 2004,
Interest Expense shall equal actual Interest Expense for the three fiscal
quarters ended June 30, 2004 multiplied by 1.33.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures other than Capital Expenditures that are made in connection with
the acquisition by Borrower or any Subsidiary of Borrower of a Facility or the
operations related to a Facility.
"Net Income" shall mean, for any period, the net income (or
loss) of Guarantor on a Consolidated Basis for such period, determined in
conformity with GAAP, provided that there shall be excluded (i) the income (or
loss) of any Person in which any other Person (other than Guarantor) has a joint
interest, but the amount of dividends or other distributions actually paid to a
Borrower by such Person shall be included in net income (or loss), (ii) the
income (or loss) of any Person accrued prior to the date it became a Borrower or
is merged into or consolidated with a Borrower or that Person's assets are
acquired by a Borrower, (iii) the income of any Subsidiary of any Borrower to
the extent that the declaration or payment of dividends or similar distributions
of that income by such Subsidiary is not at the time permitted by operation of
the terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary, (iv)
compensation expense resulting from the issuance of capital stock, stock options
or stock appreciation rights issued to former or current employees, including
officers, of any Borrower or any Subsidiary of any Borrower, or the exercise of
such options or rights, in each case to the
Annex I-3
extent the obligation (if any) associated therewith is not expected to be
settled by the payment of cash by a Borrower or any Subsidiary thereof, and (v)
compensation expense resulting from the repurchase of capital stock, options and
rights described in clause (iv) of this definition of Net Income.
"Net Interest Coverage Ratio" shall mean, as of any date of
determination, the ratio for Guarantor on a Consolidated Basis of (i) EBITDA, to
(ii) Interest Expense, in each case for the four fiscal quarter period ended as
of such date of determination.
"Net Senior Leverage Ratio" shall mean, as of any date of
determination, the ratio for Guarantor on a Consolidated Basis of (i) the amount
of Senior Debt as of such date of determination, to (ii) EBITDA for the four
fiscal quarter period ended as of such date of determination.
"Net Total Leverage Ratio" shall mean, as of any date of
determination, the ratio for Guarantor on a Consolidated Basis of (i) the amount
of Total Debt as of such date of determination, to (ii) EBITDA for the four
fiscal quarter period ended as of such date of determination.
"Restructuring Costs" shall mean, for any period,
restructuring and/or reorganization costs relating to the Bankruptcy Case
incurred by Guarantor on a Consolidated Basis during such period, calculated in
accordance with GAAP.
"Senior Debt" shall mean at any date of determination, the sum
of the amount (determined in accordance with GAAP) on such date of determination
of (i) the Obligations (as defined in the Guarantor Revolving Credit Agreement),
(ii) Indebtedness in respect of the Senior Mortgage Loan, (iii) Indebtedness in
respect of the Mezzanine Loan, (iv) Indebtedness in respect of the Revolving
Credit Loan and (v) Indebtedness in respect of Priority Claims.
"Tangible Net Worth" shall mean assets (excluding Intangible
Assets) less liabilities (determined in accordance with GAAP).
"Total Debt" shall mean, as of any date of determination, the
aggregate amount of Indebtedness for Borrowed Money on such date of
determination of Guarantor, on a Consolidated Basis calculated in accordance
with GAAP.
"Total Debt Service" shall mean for any period the sum during
such period of (i) scheduled or other required payments of principal on Total
Debt during such period, and (ii) Interest Expense during such period, in each
case calculated exclusive of payments on Total Debt (x) which was repaid or
satisfied in full prior to the Closing Date and which does not survive after the
Closing Date and (y) required to be made pursuant to the Plan of Reorganization
on, or within thirty (30) days after, the Closing Date.
Annex I-4