Exhibit 10.20
AGREEMENT REGARDING LEASES
by and between
ALS PROPERTIES HOLDING COMPANY, LLC,
a Delaware limited liability company
and
PSLT-ALS PROPERTIES HOLDINGS, LLC,
a Delaware limited liability company
Dated as of
October 20, 2004
1. Definitions............................................................1
2. Lease.................................................................10
3. Term..................................................................10
4. Alterra Rent Payments.................................................12
5. Capital Additions.....................................................12
6. Assignment, Subletting and Material Contracts.........................13
7. Default; Remedies.....................................................14
8. Intentionally Deleted.................................................18
9. Financial and Other Statements........................................18
10. Additional Covenants of ALS Holdings..................................20
11. Limitation on Liability...............................................22
12. Facility Mortgages....................................................22
13. Representations and Warranties........................................23
14. Intentionally Deleted.................................................25
15. Notices...............................................................25
16. No Waiver.............................................................26
17. Invalidity............................................................26
18. Counterparts..........................................................26
19. Cumulative............................................................26
20. Governing Law.........................................................26
21. Successors and Assigns; Relationship..................................26
22. Entire Agreement......................................................27
23. Survival..............................................................27
24. Time..................................................................27
25. Captions and Headings.................................................27
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26. Waiver of Jury Trial..................................................27
27. Guaranty..............................................................27
28. Termination of Facility Management Agreements.........................27
29. Joinder by Alterra Management.........................................29
30. Joinder by Alterra Lessees............................................30
31. Joinder by Provident Lessors..........................................30
32. Intentionally Deleted.................................................30
33. Security Deposit......................................................30
34. Public Offering Information...........................................32
35. Special Purpose Entity Covenants of ALS Holdings......................33
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EXHIBITS:
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Exhibit A Provident Lessors
Exhibit B Alterra Lessees
Exhibit C Facilities
Exhibit D Guaranty
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AGREEMENT REGARDING LEASES
--------------------------
THIS AGREEMENT REGARDING LEASES (this "Agreement") is made as of the 20th
day of October, 2004, by and between PSLT-ALS PROPERTIES HOLDINGS, LLC, a
Delaware limited liability company ("PSLT-ALS Holdings"), and ALS PROPERTIES
HOLDING COMPANY, LLC, a Delaware limited liability company ("ALS Holdings"),
and is joined herein for certain limited purposes by ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation ("Alterra Management"), and by the Alterra
Lessees (as defined below).
RECITALS
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A. PSLT-ALS Holdings is the owner of the beneficial interest in those
certain entities listed on Exhibit A attached hereto and made a part hereof
(each, a "Provident Lessor" and collectively referred to herein as the
"Provident Lessors").
B. ALS Holdings is the owner of the beneficial interest in those certain
entities listed on Exhibit B attached hereto and made apart hereof (each, an
"Alterra Lessee" and collectively referred to herein as the "Alterra Lessees")
C. Each of the Provident Lessors, as lessor, has entered into a property
lease agreement dated as of the date hereof (each, a "Property Lease" and
collectively, the "Property Leases") with one of the Alterra Lessees, as
lessee, for senior housing and/or assisted living and/or independent living
facilities as more particularly described on Exhibit C attached hereto and
made a part hereof (such facilities, including the land and any and all
improvements thereon, are referred to herein individually as a "Facility" or
collectively as the "Facilities", as the context may require).
D. Alterra Management has entered into exclusive management and leasing
agreements, dated as of the date hereof, with each of the Alterra Lessees to
manage their respective Facilities (such agreements, as the same may be
amended from time to time are collectively referred to hereafter as the
"Facility Management Agreements").
E. PSLT-ALS Holdings and ALS Holdings desire to enter into this Agreement
regarding various agreements concerning the Facilities, and, in connection
therewith, require various undertakings from Alterra Management, all as more
particularly set forth herein.
In consideration of the mutual promises and agreements herein contained,
the parties agree as follows:
1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this paragraph shall have the meanings assigned to them in this
paragraph and elsewhere in this Agreement and include the plural as well as
the singular, (ii) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "paragraphs" or "subparagraphs" and
other subdivisions are to the designated paragraphs, subparagraphs and other
subdivisions of this Agreement, and (iv) the words
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"herein", "hereof", "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph or subparagraph
or other subdivision.
"Affiliate" shall mean, with respect to any Person, (i) in the case of
any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, fifty
percent (50%) or more of the partnership interests in such partnership; (ii)
in the case of any such Person which is a limited liability company, the
managing member of such limited liability company or any other member of such
limited liability company holding, directly or indirectly, fifty percent (50%)
or more of the membership interests in such company; (iii) any other Person
which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to
such Person or to one or more of the Persons referred to in the preceding
clauses (i) and (ii); (iv) any other Person who is an officer, director or
trustee of, or partner holding, directly or indirectly, fifty percent (50%) or
more of the partnership, membership or stock interests in, such Person or any
Person referred to in the preceding clauses (i), (ii) and (iii); and (v) any
other Person who is a member of the Immediate Family of such Person or of any
Person referred to in the preceding clauses (i) through (iv).
"Agreement" shall mean this Agreement including the exhibits attached
hereto, as it and they may be amended from time to time as herein provided.
"Alterra Rent Payments" shall mean the Master Rent and all other charges,
payments and sums due hereunder.
"Award" shall mean all compensation, sums or other value awarded, paid or
received by virtue of a complete or partial Condemnation of any Facility
(after deduction of all reasonable legal fees and other reasonable costs and
expenses, including, without limitation, expert witness fees, incurred in
connection with obtaining any such award).
"Bond Documents" shall mean, with respect to the Existing Facility
Mortgages that are structured as bond financings, any and all documents
evidencing, securing or otherwise entered into in connection with the
outstanding obligations to the Erie County Industrial Development Agency and
the Schenectady County Development Agency secured by the Facilities known as
Wynwood of Kenmore and Wynwood of Niskayuna located in Erie County, New York
and Schenectady County, New York, respectively, and with respect to any future
Facility Mortgage that is structured as a bond financing, any and all
documents evidencing, securing or otherwise entered into in connection with
such Facility Mortgage.
"Business Day" shall mean any day other than Saturday, Sunday, or any
other day on which the Federal Reserve System is authorized by law or
executive action to close.
"Capital Addition" shall mean one or more new buildings, or one or more
additional structures annexed to any portion of the improvements with respect
to any Facility, or the material expansion of existing improvements, which are
constructed on any parcel or portion of the Facility during the Term,
including the construction of a new wing or new story, the renovation of
existing improvements on such Facility in order to provide a functionally new
facility needed to provide services not previously offered, or any expansion,
construction, renovation or conversion in order to increase the number of
units of the Facility, to change the
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purpose for which such units are utilized or to improve materially the quality
of the Facility, or any related improvement whose cost would be treated as a
capital expenditure under GAAP.
"Capital Addition Allowance" shall have the meaning given to such term in
the Property Leases.
"Capital Additions Cost" shall mean the cost of any Capital Addition, any
Landlord Capital Addition or any Mandatory Capital Addition proposed to be
made by ALS Holdings or any Alterra Lessee, whether paid for by any Alterra
Lessee or Provident Lessor. Such cost shall include, but not be limited to,
the following: (i) the cost of construction of the Capital Addition, including
site preparation and improvement, materials, labor, supervision, developer and
administrative fees, legal fees, and costs of related design, engineering and
architectural services, the cost of any fixtures, the cost of equipment and
other personalty, the cost of construction financing (including, but not
limited to, capitalized interest) and other miscellaneous costs approved by
PSLT-ALS Holdings, which approval shall not be unreasonably withheld or
delayed, (ii) if agreed to by PSLT-ALS Holdings in writing, in advance, the
cost of any land (including all related acquisition costs incurred by any
Alterra Lessee) contiguous to the Facility to which such additional land is to
become a part for the purpose of placing thereon a Capital Addition or any
portion thereof or for providing means of access thereto, or parking
facilities therefor, including the cost of surveying the same; (iii) the cost
of insurance, real estate taxes, water and sewage charges and other carrying
charges for such Capital Addition during construction; (iv) title insurance
charges; (v) reasonable attorneys' fees and expenses; (vi) filing,
registration and recording taxes and fees; (vii) documentary stamp or transfer
taxes, and (viii) all actual and reasonable costs and expenses of PSLT-ALS
Holdings and any Provident Lessor or ALS Holdings and any Alterra Lessee
incurred in connection with such Capital Addition; provided, however, that in
no event shall the direct or indirect costs of any ALS Holdings employees be
deemed a Capital Additions Cost (other than construction management agreements
under the Facility Management Agreements that are arms-length and have market
terms).
"Capital Additions Reserve" shall have the meaning given to such term in
Paragraph 10(d).
"Change of Control" shall mean (i) the acquisition or attainment by any
means by any Person, or two or more Persons acting in concert, of direct or
indirect beneficial ownership (within the meaning of Rule 13d-3 of the SEC) or
control of 50% or more, or rights, options or warrants to acquire 50% or more,
of the voting stock or membership interests in Guarantor, ALS Holdings or in
any of the Alterra Lessees, or (ii) the merger or consolidation of Guarantor,
ALS Holdings, any Alterra Lessee or any Person that directly or indirectly
owns more than 50% of the membership interests in ALS Holdings or any Alterra
Lessee with or into any other Person, or (iii) any one or more sales or
conveyances to any Person of all or substantially all of the assets of
Guarantor, ALS Holdings or any Alterra Lessee; provided, however, that either
(a) any transfer (including, without limitation, a transfer as a result of a
merger or a business combination) of the direct or indirect equity interests
in FIT-ALT Investors LLC, Emeritus Corporation or NW Select LLC (collectively,
the "FEBC Members") or any Person holding directly or indirectly beneficial
ownership or control of voting stock or membership interests in any of the
FEBC Members or (b) any transfer of membership interests in FEBC-ALT Investors
LLC ("FEBC-ALT") solely between and among any existing members of FEBC-ALT,
shall not be deemed to be a "Change
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of Control" for purposes of this Agreement. For purposes hereof, in no event
will the Class B member interests in FEBC-ALT (the interests currently held by
Emeritus Corporation and NW Select LLC) be deemed to constitute 50% or more of
the member interests in FEBC-ALT.
"Code" shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.
"Commencement Date" shall mean the date of this Agreement.
"Condemnation" shall mean, with respect to any Facility, (i) the exercise
of any governmental power, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation; (ii) a voluntary sale or transfer of
the Facility by any Provident Lessor to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending; and
(iii) a taking or voluntary conveyance of all or part of the Facility, or any
interest therein, or right accruing thereto or use thereof, as the result or
in settlement of any condemnation or other eminent domain proceeding affecting
any such Facility, whether or not the same shall have actually been commenced.
"Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
"Current Lease Payment" shall mean the sum of the Base Rent, as defined
in each of the Property Leases, payable in the aggregate under all of the
Property Leases, calculated for the prior twelve (12) month period (or shorter
period for which the Lease Coverage Ratio is being calculated) after giving
effect to the event for which the Lease Coverage Ratio is being calculated.
"Default" shall mean any event or condition that, with the giving of
notice and/or lapse of time, may ripen into an Event of Default.
"Entity" shall mean any general partnership, limited partnership, limited
liability company or partnership, corporation, joint venture, trust, business
trust, cooperative or association.
"Equity Transfer" shall have the meaning given to such term in Paragraph
6(c).
"Event of Default" shall have the meaning given to such term in Paragraph
7(a).
"Excess Cash Flow" shall mean the difference between NOI minus the
aggregate Base Rent (as defined in the Property Leases) payable under all of
the Property Leases.
"Existing Facility Mortgage" shall mean the Facility Mortgage(s), other
than any new Facility Mortgage(s) entered into by any Provident Lessor on the
Commencement Date, that are in effect on the Commencement Date and with
respect to the Property Lease between ALS Properties Tenant II, LLC and
PSLT-ALS Properties II, LLC, shall mean the Facility Mortgages in effect on
the date of the execution and delivery of such Property Lease.
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"Extraordinary Capital Expenditures" shall mean expenditures incurred in
connection with Capital Additions to the Facilities which are not contemplated
by the then current capital budget and other non-recurring expenditures
incurred by the Alterra Lessees with respect to the Facilities that are not
ordinary course repair and maintenance items.
"Facility" or "Facilities" shall have the meaning set forth in the
recitals.
"Facility Management Agreement" shall have the meaning given to such term
in the recitals of this Agreement.
"Facility Mortgage" shall mean, with respect to any Facility, any
encumbrance securing the repayment of indebtedness (and including any
obligations in connection with any credit enhancement) now or hereafter placed
upon the fee simple interest or leasehold interest, as applicable, in such
Facility, provided such Facility is then subject to the terms of a Property
Lease, together with all other documents and instruments evidencing or
securing the indebtedness secured thereby.
"Facility Mortgagee" shall mean the holder of a Facility Mortgage.
"Facility State" shall mean the State in which the applicable Facility is
located.
"Fair Market Value" shall have the meaning set forth in the Property
Leases.
"Financial Officer's Certificate" shall mean, as to any Entity, a
certificate of the chief financial officer of such Entity, duly authorized,
accompanying the financial statements required to be delivered by such Entity
pursuant to Paragraph 9 in which such officer shall certify (i) that, to such
officer's knowledge, such statements have been properly prepared in accordance
with GAAP and are true, correct and complete in all material respects and
fairly present the consolidated financial condition of such Entity at and as
of the dates thereof and the results of its and their operations for the
periods covered thereby, and (ii) that such officer has reviewed this
Agreement and, to such officer's knowledge, has no knowledge of any Event of
Default hereunder.
"First Renewal Notice" shall have the meaning given to such term in
Paragraph 3(b).
"GAAP" shall mean generally accepted accounting principles, consistently
applied, and being principally derived from promulgations of The Financial
Accounting Standards Board and The American Institute of Certified Public
Accountants, or their successors.
"Government Agency" shall mean any court, agency, authority, board
(including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States or the Facility State or any county or any political subdivision of any
of the foregoing, whether now or hereafter in existence, having jurisdiction
over PSLT-ALS Holdings, the Provident Lessors, ALS Holdings, the Alterra
Lessees or the Facilities or any portion thereof.
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"Guarantor" shall mean the Person that is the "guarantor" under the
Guaranty. The initial Guarantor is Alterra Healthcare Corporation, a Delaware
corporation.
"Guaranty" shall have the meaning given to such term in Paragraph 27.
"Immediate Family" shall mean, with respect to any individual, such
individual's spouse, parents, brothers, sisters, children (natural or
adopted), stepchildren, grandchildren, grandparents, parents-in-law,
brothers-in-law, sisters-in-law, nephews and nieces.
"Independent Director" shall mean a Person who is not at the time of
initial appointment, or at any time while serving as a director, 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), officer,
employee, partner, member, attorney or counsel of Guarantor or any Related
Party of Guarantor; (b) a customer, supplier or other person who derives any
of its purchases or revenues from its activities with Guarantor or any Related
Party of Guarantor; (c) a Person controlling or under common control with any
such stockholder, director, officer, partner, member, customer, supplier or
other Person; or (d) a member of the Immediate Family of any such stockholder,
director, officer, employee, partner, member, customer, supplier or other
person. As used in this definition, 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, whether through ownership of
voting securities, by contract or otherwise.
"Initial Term" shall have the meaning given to such term in Paragraph
3(a).
"Inspector" shall have the meaning given to such term in Paragraph 34.
"Intended Use" shall have the meaning given to such term in the Property
Leases.
"Landlord Capital Addition" shall have the meaning given to such term in
the Property Leases.
"Lease Coverage Ratio" shall mean the ratio of NOI to the Current Lease
Payment for the applicable period.
"Lease Year" shall mean each twelve month period commencing on November
1st during the Term, provided the first Lease Year shall include the period of
time from the Commencement Date through October 31, 2005.
"Legal Requirements" shall mean, as to any Facility, all federal, state,
county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting the
applicable Facility or the maintenance, construction, alteration or operation
thereof, whether now or hereafter enacted or in existence, including, without
limitation, all Permits and Licenses.
"Letter of Credit" shall have the meaning given to such term in Paragraph
33(a).
"Management Termination Event" shall have the meaning set forth in
Paragraph 28(a).
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"Mandatory Capital Addition" shall have the meaning given to such term in
Paragraph 5.
"Mandatory Capital Addition Allowance" and "Mandatory Capital Addition
Allowances" shall have the meaning given to such term in Paragraph 5.
"Master Rent" shall mean an amount equal to (i) the aggregate Base Rent
(as defined in the Property Leases) and all Additional Rent (as defined in the
Property Leases), charges and other amounts payable under each of the Property
Leases per month of the Term, less (ii) the amount of Base Rent, Additional
Rent, charges and other amounts due and payable under the Property Leases for
such month of the Term that was actually paid by the Alterra Lessees, the
Lease Guarantor (as defined in the Property Leases) or Guarantor to the
Provident Lessors (or offset against rent paid to applicable Facility
Mortgagees in accordance with the terms of the Property Leases).
"Minimum Capital Additions Amount" shall have the meaning given to such
term in Paragraph 10(c).
"Net Worth" shall mean, with respect to any Person, (x) the assets of
such Person minus (y) the liabilities of such Person, all determined in
accordance with GAAP.
"NOI" shall mean, for the period in question, Total Revenues less
Operating Expenses.
"Notice" shall mean a notice given or received in accordance with
Paragraph 15.
"Officer's Certificate" shall mean a certificate signed by an officer of
ALS Holdings or Guarantor, as applicable, duly authorized by the member of ALS
Holdings or the board if directors of Guarantor, as applicable.
"Operating Expenses" shall mean, for the applicable period, all expenses
in the aggregate, for all of the Facilities (determined on an accrual basis in
accordance with GAAP), incurred by any of the Alterra Lessees or any Related
Party of any of them in connection with the operation of the Facilities or any
use of the Facilities on a pro forma basis for the period in question,
including a 5% management fee and an annual capital reserve equal to $400 per
residential unit, provided, however, that the Current Lease Payment payable
under the Property Leases shall not be included as an Operating Expense for
purposes hereof.
"Overdue Rate" shall mean, on any date, a per annum rate of interest
equal to the lesser of ten percent (10%) and the maximum rate then permitted
under applicable law, calculated from the date any payment obligation is due
(except with respect to payments which are indeterminable prior to Notice from
PSLT-ALS Holdings, in which event the Overdue Rate shall be calculated from
the tenth (10th) day following the date such Notice was received).
"Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Related Parties, fifty percent
(50%) or more of the voting or beneficial interest in such Person, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control such Person.
"Permits and Licenses" shall have the meaning given to such term in the
Property Leases.
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"Permitted Investments" shall mean United States Treasury securities,
bank certificates of deposit issued by banks rated at least A by Standard &
Poor's and other debt instruments rated at least A by Standard & Poor's and
having maturities not longer than one (1) year, or investments otherwise
approved by PSLT-ALS Holdings.
"Permitted Management Incentive Program" shall mean the equity incentive
plan for management of Guarantor as contemplated on the date of this
Agreement, pursuant to which not more than ten percent (10%) of the interests
in Guarantor shall be transferred (directly or indirectly).
"Permitted Transfer" shall have the meaning set forth in Paragraph 6(b).
"Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so requires.
"Property Lease" or "Property Leases" shall have the meaning given such
term in the recitals hereto, as the same may be amended from time to time,
subject to the terms of Paragraph 2 hereof.
"Provident Lessors" shall have the meaning given such term in the
recitals hereto.
"Related Party" shall mean, with respect to any Person, (i) in the case
of any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, ten
percent (10%) or more of the partnership interests in such partnership; (ii)
in the case of any such Person which is a limited liability company, the
managing member of such limited liability company or any other member of such
limited liability company holding, directly or indirectly, ten percent (10%)
or more of the membership interests in such company; (iii) any other Person
which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to
such Person or to one or more of the Persons referred to in the preceding
clauses (i) and (ii); (iv) any other Person who is an officer, director or
trustee of, or partner holding, directly or indirectly, ten percent (10%) or
more of the partnership, membership or stock interests in, such Person or any
Person referred to in the preceding clauses (i), (ii) and (iii); and (v) any
other Person who is a member of the Immediate Family of such Person or of any
Person referred to in the preceding clauses (i) through (iv).
"Renewal Determination Notice" shall have the meaning given such term in
Paragraph 3(b).
"Renewal Term" shall have the meaning given such term in Paragraph 3(b).
"SEC" shall mean the Securities and Exchange Commission.
"Security Deposit" shall have the meaning set forth in Paragraph 33(a).
"Special Purpose Entity" shall have the meaning given to such term in
Paragraph 35(b).
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"Stock Purchase Agreement" shall mean that certain Amended and Restated
Stock Purchase Agreement dated as of October 19, 2004, between Alterra
Healthcare Corporation, as seller, and Provident Senior Living Trust, as
acquiror.
"Subsidiary" shall mean, with respect to any Person, any Entity (a) in
which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty percent (50%) or more of the voting or beneficial
interest, or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).
"Successor Guarantor" shall have the meaning set forth in Paragraph 6(b).
"Term" shall mean, collectively, the Initial Term and each Renewal Term,
to the extent properly exercised pursuant to the provisions of Paragraph 3,
unless sooner terminated pursuant to the provisions of this Agreement.
"Third Party Payor Programs" shall mean all third party payor programs in
which any Alterra Lessee presently or in the future may elect to participate
(but only during the time that any such Alterra Lessee has so elected to
participate therein), including, without limitation, Medicare, Medicaid,
CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans and other private
insurance programs.
"Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue Cross
and/or Blue Shield, private insurers and any other Person which presently or
in the future maintains Third Party Payor Programs.
"Total Revenues" shall mean, for the period in question, all revenues in
the aggregate for all of the Facilities (determined on an accrual basis in
accordance with GAAP) received by the Alterra Lessees or any Affiliate of any
of them (without duplication) from the operation of the Facilities or any
other use of the Facilities, or any portion thereof, including, without
limitation, all resident rents and revenues received or receivable for the use
of or otherwise by reason of all units, beds and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold
on the Facilities, including, without limitation, and except as provided
below, any other arrangements with third parties relating to the possession or
use of the Facilities; provided, however, that Total Revenues shall not
include: (i) allowances according to GAAP for uncollectible accounts,
including credit accounts and charity care and other administrative discounts
(other than allowance for uncollectible accounts related to Third Party Payor
reimbursements properly submitted, which shall be deducted in determining
Total Revenues), (ii) revenue from professional fees or charges by physicians
and unaffiliated providers of services, when and to the extent such charges
are paid over to such physicians or unaffiliated providers of services, or are
separately billed and not included in comprehensive fees; (iii) non-operating
revenues such as interest income or income from the sale of assets not sold in
the ordinary course of business; (iv) revenues attributable to services
actually provided off-site or otherwise away from a Facility, such as home
health care, to persons that are not residents of a Facility; (v) security
deposits of residents of a Facility; (vi) proceeds of any insurance coverage
other than Third Party Payor Programs and rent loss or business interruption
coverage; and (vii) any Award from any Condemnation.
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"Wrongful Distribution" shall mean, in the event that Alterra Rent
Payments are due and owing and have not been made as required hereunder, the
distribution of all or any portion of Total Revenues by ALS Holdings or any
Alterra Lessee to the Parent of ALS Holdings or any Affiliate (other than ALS
Holdings) thereof that results in inadequate monies being available to make
the Alterra Rent Payments, to the extent of any such shortfall on a cumulative
basis (it being the intent of the parties that no such distribution to ALS
Holdings' Parent or any Related Party thereto (other than to ALS Holdings,
PSLT-ALS Holdings or PSLT-ALS Holdings' Affiliates) should be made unless all
Alterra Rent Payments due hereunder are current).
2. Lease.
PSLT-ALS Holdings hereby grants to ALS Holdings certain rights contained
herein relating to the Property Leases and ALS Holdings hereby grants to
PSLT-ALS Holdings certain rights contained herein relating to the Property
Leases, all as more particularly set forth herein. The parties hereto agree
and acknowledge that from and after the effective date of any termination of
any Property Lease as it relates to any individual Deleted Property (as
defined in each of the Property Leases) in connection with a casualty event or
Condemnation, such Deleted Property shall no longer be deemed to be a
"Facility" for purposes of this Agreement.
3. Term.
(a) Term. Subject to ALS Holdings' right to renew this Agreement and the
Property Leases as set forth below, the initial term of this Agreement shall
be coterminous with the term of each of the Property Leases, it being
acknowledged that the initial term of the Property Leases expires at midnight
on October 31, 2019, unless modified or earlier terminated pursuant to the
terms of this Agreement or the Property Leases ("Initial Term").
(b) Renewal Terms. Provided (i) there is not an existing and continuing
Event of Default under this Agreement or under any of the Property Leases
either on the date that ALS Holdings exercises the applicable Renewal Term or
on the commencement date thereof, (ii) there is not an existing and continuing
Management Termination Event under this Agreement either on the date that ALS
Holdings exercises the first Renewal Term or on the commencement date thereof,
(iii) the Alterra Lessees or their approved successors-in-interest (including
any approved sublessees) shall continue to be lessees of the Facilities, (iv)
Guarantor shall deliver to PSLT-ALS Holdings an affirmation of the Guaranty,
and (v) ALS Holdings shall deliver to PSLT-ALS Holdings affirmations of each
Lease Guaranty (as defined in the Property Leases) with respect to each of the
Property Leases, ALS Holdings, acting on behalf of each of the Alterra
Lessees, shall have the option to renew all, but not less than all, of the
Property Leases for two (2) additional five (5) year periods in accordance
with the terms of the Property Leases (each, a "Renewal Term", and
collectively, the "Renewal Terms"); provided, however, that the second five
(5) year renewal option shall be additionally conditioned upon ALS Holdings
having exercised the first five (5) year renewal option with respect to all,
but not less than all of the Property Leases. If ALS Holdings desires to
exercise its option under this Paragraph 3(b) to renew all of the Property
Leases, ALS Holdings shall deliver to PSLT-ALS Holdings written Notice (the
"First Renewal Notice") not less than one (1) year prior to the expiration of
the Initial Term or the initial Renewal Term, as applicable, requesting that
PSLT-ALS Holdings deliver to ALS Holdings written Notice (the "Renewal
Determination Notice") setting forth PSLT-ALS
10
Holdings' determination of the Lease Basis (as defined in the Property Leases)
with respect to each of the Facilities to be used in the calculation of Base
Rent (as defined in the Property Leases) under each of the Property Leases
during the applicable Renewal Term. Within fifteen (15) days after the receipt
by PSLT-ALS Holdings of the First Renewal Notice, PSLT-ALS Holdings shall
deliver to ALS Holdings the Renewal Determination Notice, and, within fifteen
(15) days after delivery by PSLT-ALS Holdings to ALS Holdings of the Renewal
Determination Notice, ALS Holdings shall, by written notice to PSLT-ALS
Holdings, either (x) decline to extend the Property Leases and this Agreement
for the applicable Renewal Term, in which event, ALS Holdings shall have no
further renewal rights pursuant to this Paragraph 3(b), (y)(i) agree with
PSLT-ALS Holdings' determination of the Lease Basis with respect to all of the
Facilities as set forth in the Renewal Determination Notice and (ii) extend
the Term of the Property Leases and this Agreement for the applicable Renewal
Term using the Lease Basis for each of the Facilities as set forth in the
Renewal Determination Notice for purposes of determining the Base Rent payable
under the Property Leases for the applicable Renewal Term, or (z) disagree
with one (1) or more of the determinations of Lease Basis set forth in the
Renewal Determination Notice, in which event, the parties shall immediately
initiate the appraisal procedures set forth in Paragraph 53 of the Property
Leases with respect to the applicable Facility(ies). If ALS Holdings exercises
its option pursuant to clause (z) of the immediately preceding sentence, ALS
Holdings shall either accept or reject the determination of the Lease Basis
for each of the Facilities either as set forth in the Renewal Determination
Notice or as determined in accordance with the appraisal procedures set forth
in Paragraph 53 of the Property Leases, as the case may be, not later than two
hundred seventy (270) days prior to the expiration of the Initial Term or the
expiration of the initial Renewal Term, as applicable, by written Notice to
PSLT-ALS Holdings, which Notice shall constitute ALS Holdings' irrevocable
election hereunder to (A) extend the Term of the Property Leases and this
Agreement for the applicable Renewal Term using the Lease Basis for each of
the Facilities determined in accordance with the terms of this Paragraph, or
(B) decline to extend the Property Leases and this Agreement for the
applicable Renewal Term; provided, however, that if the appraisal procedures
with respect to the applicable Facility(ies) are continuing in good faith
between the parties, but the parties have not yet determined the Base Rent for
all of the Facilities for the applicable Renewal Term, then ALS Holdings shall
have an additional thirty (30) days to make its decision; provided, further,
that in any event, ALS Holdings must make its election whether or not to
extend the Property Leases and this Agreement not later than two hundred forty
(240) days prior to the expiration of the Initial Term or the expiration of
the initial Renewal Term, as applicable, based upon either the Lease Basis set
forth in the Renewal Determination Notice or the results of the appraisal
procedures that have been completed as of such date. Upon the renewal of the
Property Leases by ALS Holdings as provided in this Paragraph 3(b), this
Agreement shall automatically, and without any action by any Person, be deemed
to have been extended for the same term. In the event of such exercise, (1)
PSLT-ALS Holdings and ALS Holdings shall enter into such confirmatory
documents as may be necessary to effect such renewal of this Agreement, and
(2) PSLT-ALS Holdings and ALS Holdings shall cause and direct the Provident
Lessors and the Alterra Lessees, respectively, to enter into such confirmatory
documents as may be necessary to effect such renewals. Time shall be of the
essence with respect to the giving of notices under this Paragraph 3(b).
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4. Alterra Rent Payments.
(a) Alterra Rent Payments. ALS Holdings shall pay to PSLT-ALS Holdings
(or to such Person as PSLT-ALS Holdings may direct), in lawful money of the
United States of America which shall be legal tender for the payment of public
and private debts, without offset, abatement, demand or deduction, the Alterra
Rent Payments required hereunder during the Term, except as hereinafter
expressly provided. All payments to PSLT-ALS Holdings shall be made by wire
transfer of immediately available federal funds or by other means acceptable
to PSLT-ALS Holdings in its sole discretion. Payments for any partial month
shall be prorated on a per diem basis based on a 360 day year and twelve (12)
thirty (30) day months.
(b) Master Rent. The Master Rent shall be paid in arrears on the first
(1st) day of each calendar month for the immediately preceding month, or if
such day is not a Business Day, the immediately preceding Business Day.
(c) Overdue Interest. If ALS Holdings fails to make any Alterra Rent
Payment on or before the date such payment is due and payable and such amount
remains unpaid for a period of five (5) Business Days, such past due payment
shall bear interest at the Overdue Rate; provided, however, that with respect
to any other sums or amounts to be paid by ALS Holdings hereunder, the Overdue
Rate shall apply if such amounts remain unpaid for a period of five (5)
Business Days after Notice thereof from PSLT-ALS Holdings is received by ALS
Holdings (calculated from the date of such receipt). The amount of any
interest due under this Paragraph 4(d) shall not be diminished by ALS
Holdings' making a partial payment, except in such circumstances where ALS
Holdings provides evidence reasonably satisfactory to PSLT-ALS Holdings that
the payment rendered was intended as a full payment, and that the shortfall
was due to a good faith mistake. Notwithstanding anything to the contrary
contained in this Paragraph 4(c), in no event shall ALS Holdings have any
obligation to pay interest to PSLT-ALS Holdings on any overdue amounts
(including, without limitation, on the Master Rent) to the extent any Alterra
Lessee has paid interest on such overdue amount under the applicable Property
Lease, and, to the extent PSLT-ALS Holdings and any Provident Lessor each
collect interest on the same overdue amount, PSLT-ALS shall promptly refund
such interest payment to ALS Holdings.
(d) Payment Without Abatement. No abatement, diminution or reduction of
any payments required hereunder shall be allowed to ALS Holdings or any person
claiming under ALS Holdings, under any circumstances or for any reason
whatsoever, except to the extent expressly herein provided or to the extent
expressly provided in the Property Leases.
5. Capital Additions.
(a) Mandatory Capital Addition Allowances. PSLT-ALS Holdings agrees to
make available, in its reasonable discretion, to ALS Holdings, from time to
time, as hereinafter provided, the aggregate amount of up to Five Million
Dollars ($5,000,000) for the purpose of funding the following Capital
Additions to the Facilities: (i) if PSLT-ALS Holdings and ALS Holdings
mutually agree in their reasonable discretion that a Capital Addition is
necessary for the applicable Facility to be in compliance with Legal
Requirements, subject to the right of ALS Holdings or the applicable Alterra
Lessee to contest the applicable Legal Requirement pursuant to Paragraph 26 of
the applicable Property Lease (including, without limitation, by reason of
12
compliance of the applicable Facility with such Legal Requirement pursuant to
a grandfather clause), or (ii) if PSLT-ALS Holdings, ALS Holdings and Alterra
Management mutually agree in their reasonable discretion in writing that the
cost of a Capital Addition proposed by ALS Holdings would constitute an
Extraordinary Capital Expenditure (any such Capital Addition described in
clause (i) or (ii) above is herein referred to as a "Mandatory Capital
Addition", and any portion of the $5,000,000 disbursed in PSLT-ALS Holdings'
reasonable discretion in connection with any such Mandatory Capital Addition
is herein referred to as a "Mandatory Capital Addition Allowance" and
collectively, the "Mandatory Capital Addition Allowances"). Notwithstanding
the foregoing, if an Event of Default arises under the applicable Property
Lease (as defined thereunder) as a result of the failure by ALS Holdings or
the applicable Alterra Lessee to make any Mandatory Capital Addition described
in clause (i) of the immediately preceding sentence, then PSLT-ALS Holdings
and the applicable Provident Lessor shall have all rights and remedies
available to such party under this Agreement or the applicable Property Lease,
as applicable, to perform such work. ALS Holdings agrees that, in connection
with any Mandatory Capital Addition Allowance, ALS Holdings shall, or shall
cause the applicable Alterra Lessee to, provide PSLT-ALS Holdings or the
applicable Provident Lessor with the information required to be provided
pursuant to Paragraph 11(c) of the Property Leases relating to Landlord
Capital Additions. The provisions of Paragraph 11(d) of the Property Leases
shall govern the disbursement of Mandatory Capital Addition Allowances,
provided that PSLT-ALS Holdings shall have no obligation to make any Mandatory
Capital Addition Allowance pursuant to this Paragraph 5(a), if at the time of
a disbursement of any Mandatory Capital Addition Allowance, an Event of
Default shall have occurred and is continuing.
(b) Mandatory Capital Addition Allowances Added to Lease Basis. All
Mandatory Capital Addition Allowances made by PSLT-ALS Holdings pursuant to
this Paragraph 5 shall be added to the Lease Basis under the related Property
Lease for the applicable Facility such that the Base Rent under such Property
Lease shall be adjusted in accordance with its terms (each such term as
defined in the Property Lease).
6. Assignment, Subletting and Material Contracts.
(a) Transfers Prohibited Without Consent. ALS Holdings shall not, without
the prior written consent of PSLT-ALS Holdings, which consent may be withheld
in PSLT-ALS Holdings' sole and absolute discretion, in each instance, sell,
assign, pledge, hypothecate or otherwise transfer its ownership interest in
any Alterra Lessee, in whole or in part, or any rights or interest which ALS
Holdings may have under this Agreement. For the purposes of this Paragraph
6(a), except to the extent expressly permitted pursuant to this Paragraph 6, a
Change of Control shall be deemed to constitute a prohibited sale of an
ownership interest in each of the Alterra Lessees. If Guarantor pledges all or
any portion of the equity interests in ALS Holdings, and if the holder of such
pledge forecloses on its security interest in such equity interests, then the
Person (including the pledgee) that acquires the pledged equity interests at
foreclosure or otherwise and the circumstances of such transfer must comply
with the provisions of this Paragraph 6. If given, the consent of PSLT-ALS
Holdings to any such transfer shall in no event be construed to relieve ALS
Holdings or such transferee from the obligation of obtaining the express
consent in writing of PSLT-ALS Holdings to any further transfer. Any
assignment or transfer in violation of this Paragraph 6(a) shall be voidable
at PSLT-ALS Holdings' option.
13
(b) Permitted Transfers. Notwithstanding anything to the contrary
contained herein, and subject to the terms of any Facility Mortgage, PSLT-ALS
Holdings shall have the right to consent, such consent not to be unreasonably
withheld, conditioned or delayed, to the proposed sale (including a sale in
the form of a merger or business combination) of fifty percent (50%) or more
of the outstanding shares of voting stock of Guarantor or voting stock or
membership interests of any Parent of Guarantor, but excluding any Permitted
Management Incentive Program from such calculation (a "Permitted Transfer"),
provided that, PSLT-ALS Holdings' consent shall not be required if: (i) ALS
Holdings provides PSLT-ALS Holdings written Notice of such proposed Permitted
Transfer not less than thirty (30) days prior to the effective date thereof,
together with evidence reasonably satisfactory to PSLT-ALS Holdings of
compliance with clause (ii) below, (ii) ALS Holdings furnishes evidence
reasonably satisfactory to PSLT-ALS Holdings that the industry experience in
owning, operating and managing senior living facilities similar to the
Facilities (as determined by PSLT-ALS Holdings) of the senior management of
Guarantor or the Successor Guarantor, after giving effect to such transfer, is
at least comparable to or better than that of Guarantor, (iii) ALS Holdings
furnishes evidence to PSLT-ALS Holdings that the Net Worth of Guarantor or any
successor entity proposed to be delivering a guaranty of this Agreement
following any such Permitted Transfer (the "Successor Guarantor") shall at
least equal the Net Worth of Guarantor immediately prior to such Permitted
Transfer (which Net Worth determination shall not take into account any
extraordinary and non-recurring transactions during the twelve (12) months
prior to such Permitted Transfer which reduce the net worth of Guarantor),
(iv) ALS Holdings furnishes evidence to PSLT-ALS Holdings that Guarantor or
the Successor Guarantor, as the case may be, shall continue to own all of the
membership interests in ALS Holdings, (v) ALS Holdings furnishes evidence to
PSLT-ALS Holdings that ALS Holdings shall continue to be a Special Purpose
Entity and shall continue to own all of the membership interests in each of
the Alterra Lessees, and (vi) Guarantor or the Successor Guarantor, as the
case may be, shall execute and deliver to PSLT-ALS Holdings either an
affirmation of the Guaranty in form and substance reasonably satisfactory to
PSLT-ALS Holdings, or a new guaranty of this Agreement in form and substance
identical to the Guaranty, as the case may be.
(c) Equity Transfers. Notwithstanding anything to the contrary contained
herein, PSLT-ALS Holdings' consent shall not be required in connection with
any of the following (each, an "Equity Transfer"): (i) an initial public
offering of Guarantor or any Parent or any other equity owner of Guarantor or
similar equity sale transaction targeted to raise capital for Guarantor or any
Parent or other equity owner of Guarantor, or (ii) any direct or indirect
equity transfer in Guarantor of less than fifty percent (50%) of the ownership
interest, excluding any Permitted Management Incentive Program from such
calculation, provided that, in each case, the current shareholders of
Guarantor which control the management of Guarantor as of the date hereof
continue to control the management of Guarantor following any such Equity
Transfer.
(d) Material Contracts. Prior to entering into any contract or modifying
any existing contract that materially changes the scope of services provided
to the residents of any Facility or that engages any subsidiary of Guarantor
(except for any such subsidiary which is a subsidiary of ALS Holdings), ALS
Holdings shall obtain PSLT-ALS Holdings' consent, which consent shall not be
unreasonably withheld or delayed.
7. Default; Remedies.
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(a) Default. Upon the occurrence of any Event of Default (defined below),
ALS Holdings shall have the affirmative obligation to notify PSLT-ALS Holdings
as soon as it knows of any such event. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and in
connection therewith, PSLT-ALS Holdings shall have the right to exercise any
rights or remedies available in this Agreement, at law or in equity:
(i) Any default by any of the Alterra Lessees under the terms of
their respective Property Leases with the Provident Lessors, and the
continuation of such default beyond any applicable notice and cure period
therefor;
(ii) ALS Holdings' failure to pay when due hereunder any of the
Alterra Rent Payments (whether due to a Wrongful Distribution or otherwise)
and such failure is not cured within five (5) Business Days;
(iii) ALS Holdings' failure to perform any other of the terms,
covenants or conditions contained in this Agreement if not remedied within
thirty (30) days after receipt of Notice thereof, or, if such default cannot
reasonably be remedied within such period, ALS Holdings does not within thirty
(30) days after Notice thereof commence such act or acts as shall be necessary
to remedy the default and shall not thereafter diligently complete such act or
acts within a reasonable time, provided, however, in no event shall such cure
period extend beyond one hundred eighty (180) days after Notice thereof;
(iv) if (w) ALS Holdings or Guarantor becomes bankrupt or insolvent,
or files any debtor proceedings, or files pursuant to any statute a petition
in bankruptcy or insolvency or for reorganization, or files a petition for the
appointment of a receiver or trustee for all or substantially all of its
assets, or (x) any of the foregoing are filed against ALS Holdings or
Guarantor and such petition or appointment shall not have been set aside
within ninety (90) days from the date of such petition or appointment, or (y)
ALS Holdings or Guarantor makes an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they become
due, or (z) ALS Holdings' or Guarantor's interest in all or portion of the
Total Revenues is attached, levied upon, seized or made subject to any other
judicial seizure and such seizure or attachment is not discharged within
ninety (90) days;
(v) if either of ALS Holdings or Guarantor is liquidated or
dissolved, or begins proceedings toward such liquidation or dissolution, or in
any manner permits the sale or divestiture of substantially all of its assets;
(vi) a default occurs under Paragraph 6;
(vii) Intentionally Deleted;
(viii) if any material representation or warranty made by or on
behalf of ALS Holdings under this Agreement shall prove to be false or
misleading in any material respect on the date when made and the same has a
material adverse effect on the financial condition of ALS Holdings or ALS
Holdings' ability to perform under this Agreement or the Lease Guaranty (as
defined in the Property Leases);
15
(ix) if any material representation or warranty made by or on behalf
of Guarantor under the Guaranty shall prove to have been false or misleading
in any material respect on the date when made and the same has a material
adverse effect on the financial condition of Guarantor or Guarantor's ability
to perform under the Guaranty;
(x) Intentionally Deleted;
(xi) the issuance or entry against Guarantor of any final,
unappealable award or judgment (after any applicable appeal periods have
expired) in an amount of One Million Six Hundred Thousand Dollars
($1,600,000.00) or more, and such award or judgment shall continue unsatisfied
and in effect for a period of ten (10) consecutive days without ALS Holdings
demonstrating, to PSLT-ALS Holdings' reasonable satisfaction, that an
insurance policy exists that would cover such award or judgment; or
(xii) Intentionally Deleted; or
(xiii) if Guarantor fails to perform any of the terms, covenants or
conditions contained in the Guaranty beyond any applicable notice and cure
periods set forth therein.
Notwithstanding anything to the contrary set forth in this Section 7(a), as to
any Facility that is encumbered by one or more Facility Mortgages (any such
encumbered Facility, an "Applicable Facility" and each Facility Mortgage
encumbering the Applicable Facility, an "Applicable Facility Mortgage"), if
and to the extent that:
(A) a default occurs under clause (i), clause (ii), clause (iii),
clause (vi) or clause (xiii) of this Section 7(a), and
(B)such default arises solely as a result of a default under or
relating to a Property Lease other than the Property Lease demising the
Applicable Facility (and not as result of a default under the Property Lease
demising the Applicable Facility),
then, provided that no other independent Event of Default then exists under
the Property Lease demising the Applicable Facility, such default shall not
constitute an Event of Default, unless the holders of each Applicable Facility
Mortgage (if any) encumbering the Applicable Facility consents in writing to
such default's constituting an Event of Default.
(b) Remedies. If any of the Events of Default hereinabove specified shall
occur and be continuing, PSLT-ALS Holdings shall have and may exercise any one
or more of the following rights and remedies, exclusive of any remedies that
may be available to any of the Provident Lessors under the Property Leases if
the facts creating such Event of Default also create an event of default under
any of the applicable Property Lease(s):
(i) With respect to any Property Lease(s) and any Event(s) of
Default thereunder as contemplated by Paragraph 7(a)(i) hereof, PSLT-ALS
Holdings may cause and direct the applicable Provident Lessor(s) to terminate
the applicable Property Lease(s) and, peaceably or pursuant to appropriate
legal proceedings, re-enter, retake and resume possession of the Facilities
demised thereunder;
16
(ii) PSLT-ALS Holdings may recover immediately from ALS Holdings any
and all Alterra Rent Payments and other sums and damages due or in existence
at the time of such termination, including, without limitation, the Master
Rent and other sums, charges, payments, costs and expenses agreed and/or
required to be paid by ALS Holdings to PSLT-ALS Holdings hereunder with
interest thereon at the Overdue Rate provided herein.
(iii) If an Event of Default continues uncured for a period of six
(6) months, PSLT-ALS Holdings may, by written notice thereof to ALS Holdings,
terminate ALS Holdings' and the Alterra Lessees' option to renew the Property
Leases for one or both of the Renewal Terms; provided, however, that if, as a
result of any such Event of Default, PSLT-ALS Holdings causes the applicable
Provident Lessor(s) to terminate the applicable Property Lease(s) and PSLT-ALS
Holdings and the applicable Provident Lessor(s) have actually collected all
damages required to be paid hereunder and thereunder with respect to such
Event of Default, then such Event of Default shall no longer be deemed to
exist for purposes of this Paragraph 7(b)(iii).
(iv) PSLT-ALS Holdings may, without causing or directing any of the
Provident Lessors to re-enter, retake or resume possession of the applicable
Facility, xxx ALS Holdings for all Alterra Rent Payments and all other sums,
charges, payments, costs and expenses due from ALS Holdings to PSLT-ALS
Holdings hereunder (or any Alterra Lessee under a Property Lease under which
an Event of Default (as defined thereunder) has occurred for all rents and
other sums, charges, payments, costs and expenses due from the applicable
Alterra Lessee under its applicable Property Lease) either: (A) as they become
due under this Agreement (or the applicable Property Lease); or (B) at
PSLT-ALS Holdings' option, accelerate the maturity and due date of the whole
or any part of the Alterra Rent Payments for the entire then-remaining
unexpired balance of the Initial Term or the applicable Renewal Term, as the
case may be (reduced to its present value, applying an interest rate of eight
percent (8%)), less the fair rental value of the Facilities reduced to its
present value, as well as all other sums, charges, payments, costs and
expenses required to be paid by ALS Holdings to PSLT-ALS Holdings hereunder,
including, without limitation, damages (other than consequential damages) for
breach or default of ALS Holdings' obligations hereunder in existence at the
time of such acceleration, such that all sums due and payable under this
Agreement shall, following such acceleration, be treated as being and, in
fact, be due and payable in advance as of the date of such acceleration.
PSLT-ALS Holdings may then proceed to recover and collect all such unpaid
Alterra Rent Payments and other sums so sued for from ALS Holdings by
distress, levy, execution or otherwise.
(v) PSLT-ALS Holdings may pursue its remedies under the against
Guarantor under the Guaranty.
(c) Remedies Not Exclusive. In addition to the remedies hereinabove
specified and enumerated, so long as an Event of Default has occurred and is
continuing, PSLT-ALS Holdings shall have and may exercise such other rights
and remedies as are available at law or in equity, and the mention in this
Agreement of any particular remedy shall not preclude PSLT-ALS Holdings from
having or exercising any other remedy at law or in equity. So long as an Event
of Default has occurred and is continuing, nothing herein contained shall be
construed as precluding PSLT-ALS Holdings from having or exercising such
lawful remedies as may be or become necessary in order to preserve its rights
hereunder, even before the expiration of any notice periods provided for in
this Agreement, if under the particular circumstances then existing, the
17
allowance of such notice periods will result in the termination of the
ownership interests of the Provident Lessors in the Facilities. In addition,
with respect to any Property Lease under which an Event of Default (as defined
thereunder) has occurred and is continuing, the applicable Provident Lessor
shall be entitled to exercise all of its rights and remedies under the
applicable Property Lease. Notwithstanding anything to the contrary contained
herein, in no event shall PSLT-ALS Holdings and any Provident Lessor have the
right, by exercise of their respective remedies under this Agreement and/or
the applicable Property Lease, to double recovery of any amounts, including,
without limitation, Rent (as defined in the Property Leases) or any interest
thereon.
8. Intentionally Deleted.
9. Financial and Other Statements. ALS Holdings shall furnish the following
statements to PSLT-ALS Holdings during the Term:
(a) Financial Statements, Budgets and Reports.
(i) within thirty (30) days after each of the first three quarters
of each calendar year during the Term, the most recent operating statements of
ALS Holdings (reflecting a "roll-up" of all of the Facilities), in each case
accompanied by the Financial Officer's Certificate;
(ii) within thirty (30) days after the end of each calendar year
during the Term, the most recent operating statements of ALS Holdings
(reflecting a "roll-up" of all of the Facilities), in each case accompanied by
a Financial Officer's Certificate;
(iii) within thirty (30) days after the end of each calendar month,
an unaudited statement of income and occupancy for the Facilities on an
aggregate basis;
(iv) promptly, upon Notice from PSLT-ALS Holdings, such other
information concerning the business, financial condition and affairs of ALS
Holdings and any Alterra Lessees as PSLT-ALS Holdings may reasonably request
from time to time;
(v) thirty (30) days prior to the first day of each calendar year
during the Term, a capital budget for such calendar year describing in
reasonable detail all anticipated Capital Additions to be made to each
Facility, together with a description of the source of funds therefor;
(vi) within thirty (30) days after each calendar quarter during the
Term, an Officer's Certificate setting forth the Lease Coverage Ratio and the
calculation of Excess Cash Flow for such calendar quarter;
(vii) within thirty (30) days after each calendar quarter during the
Term, an Officer's Certificate setting forth Total Revenues and NOI for such
calendar quarter;
(viii) upon reasonable request in writing from PSLT-ALS Holdings,
the following reports as of any calendar quarter end or with respect to any
other period for which PSLT-ALS Holdings may reasonably request: all loss runs
and material actuarial reports,
18
studies, reviews and analysis, if any, prepared by or on behalf of ALS
Holdings and each of the Alterra Lessees or their insurance actuaries,
quarterly and otherwise, concerning ALS Holdings' and each of the Alterra
Lessees' reserves for expenses relating to malpractice or professional
liability and malpractice or professional liability insurance; and
(ix) copies of other financial statements required to be delivered
in connection with any Facility Mortgage.
(b) Proprietary Information. Any proprietary information obtained by the
parties hereunder pursuant to the provisions of this Agreement shall be
treated as confidential, except that such information may be used, subject to
the appropriate confidentiality safeguards, in any litigation between the
parties or in connection with other Legal Requirements or as otherwise
required by securities or other laws. The obligations of ALS Holdings and
PSLT-ALS Holdings contained in this Paragraph 9(b) shall survive the
expiration or earlier termination of this Agreement; and
(c) Record Keeping. ALS Holdings shall utilize, or cause the Alterra
Lessees to utilize, an accounting system of the Facilities in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record all NOI, and ALS Holdings or the Alterra Lessees shall
retain, for as long as required to be retained for tax purposes, the
accounting books and records supporting the determination of NOI for such
Lease Year. PSLT-ALS Holdings, at its own expense except as provided herein,
shall have the right from time to time by its accountants or representatives
to audit the information set forth in the Officer's Certificate and, in
connection with such audits, to examine ALS Holdings and any Alterra Lessee's
books and records (upon reasonable notice during customary business hours)
with respect thereto (including supporting data and sales and excise tax
returns) subject to any prohibitions or limitations on disclosure of any such
data under applicable law or regulations, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient relationship
and the physician-patient privilege and/or other similar privilege or
confidentiality obligations.
(d) Financial Statements of Guarantor. ALS Holdings shall cause Guarantor
to furnish to PSLT-ALS Holdings the following: (i) within thirty (30) days
after each of the first three quarters of any calendar year during the Term,
the most recent unaudited income statements and balance sheets of Guarantor,
and (ii) as soon as available, and in any event within eighty (80) days after
the close of each calendar year during the Term, financial statements prepared
for such year, including a balance sheet and operating statement as of the end
of such year, together with related statements of income and members'
partners' or owner's capital for such calendar year, audited by a "Big Four"
accounting firm or a nationally recognized, independent certified public
accounting firm reasonably satisfactory to PSLT-ALS Holdings, whose opinion
shall be to the effect that such financial statements have been prepared in
accordance with GAAP, applied on a consistent basis, and shall not be
qualified as to the scope of the audit. Together with Guarantor's quarterly
and annual financial statements, ALS Holdings shall cause Guarantor to furnish
to PSLT-ALS Holdings an Officer's Certificate certifying as of the date
thereof whether, to Guarantor's knowledge, there exists an event or
circumstance that constitutes an Event of Default under this Agreement or
that, with the giving of notice or the passage of time, or both, would
constitute a default by Guarantor under the Guaranty, and if such
19
Event of Default hereunder or default under the Guaranty exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.
(e) Quarterly Meetings; Facility Level Meetings and Reviews. On a
quarterly basis, ALS Holdings shall permit, and upon request by PSLT-ALS
Holdings, shall make appropriate arrangements for, PSLT-ALS Holdings and/or
its representatives to discuss the affairs, operations, finances and accounts
of ALS Holdings, each Alterra Lessee and Guarantor with, and be advised as to
the same by, senior officers of ALS Holdings or Guarantor (and, at PSLT-ALS
Holdings' request and expense, such of ALS Holdings' or Guarantor's
independent accountants and other financial advisors as would be relevant to
the topic(s) of the particular meeting), all as PSLT-ALS Holdings may
reasonably deem appropriate for the purpose of verifying any report(s)
delivered by ALS Holdings to PSLT-ALS Holdings under this Agreement or by the
Alterra Lessees under the Property Leases, or for otherwise ascertaining
compliance with this Agreement by ALS Holdings or compliance with the Property
Leases by the Alterra Lessees, or the business, operational or financial
condition of ALS Holdings, each Alterra Lessee, Guarantor and/or any of the
Facilities. Without limitation of the foregoing, from time to time promptly
following receipt of written notice from PSLT-ALS Holdings to ALS Holdings
(and in any event within five (5) Business Days of such receipt), ALS Holdings
shall permit, and shall make appropriate arrangements for, PSLT-ALS Holdings
and/or PSLT-ALS Holdings' representatives to discuss the business, operational
and financial condition of specific Facilities designated by PSLT-ALS Holdings
with, and be advised as to the same by, appropriate personnel of ALS Holdings,
the Alterra Lessees and Guarantor having operational and accounting
responsibilities for the Facilities so specified by PSLT-ALS Holdings, and to
review, and make abstracts from and copies of, the books, accounts and records
of ALS Holdings, the Alterra Lessees and Guarantor relative to any such
Facilities. Unless otherwise agreed in writing by PSLT-ALS Holdings and ALS
Holdings, all of the discussions, reviews, abstracting and copying referenced
in this Paragraph 9(e) shall occur during normal business hours.
10. Additional Covenants of ALS Holdings.
(a) Indebtedness of ALS Holdings. ALS Holdings shall not create, incur,
assume or guarantee, or permit to exist, or become or remain liable directly
or indirectly upon, any indebtedness, without PSLT-ALS Holdings' prior written
consent, which consent shall not be unreasonably withheld or delayed.
(b) Modification of Organizational Documents. ALS Holdings shall not,
without the prior written consent of PSLT-ALS Holdings in each instance,
permit any amendment of its certificate of formation and operating agreement,
or amend the certificate of formation or operating agreement of any of the
Alterra Lessees.
(c) Minimum Capital Additions Amount. ALS Holdings shall cause the
Alterra Lessees to expend on Capital Additions made to the Facilities during
each Lease Year during the Term an amount, in the aggregate, at least equal to
the Minimum Capital Additions Amount. As used herein and in the Property
Leases, the term "Minimum Capital Additions Amount" shall mean, with respect
to the Facilities, the product of (i) the number of units contained in the
Facilities (in the aggregate) multiplied by (ii) Four Hundred Dollars ($400)
during the first (1st) Lease Year of the Term, as such amount shall be
increased on the first day of each succeeding
20
Lease Year after the first Lease Year of the Term in proportion to increases
in the Consumer Index (as defined in the Property Leases), provided that in no
event shall the Minimum Capital Additions Amount be less than the Minimum
Capital Additions Amount for the prior Lease Year. If in any Lease Year the
Alterra Lessees fail to expend the entire Minimum Capital Additions Amount as
required pursuant to this Paragraph 10(c) prior to the end of such Lease Year,
such failure shall not constitute a Default or Event of Default hereunder or
under the Property Leases so long as ALS Holdings or the applicable Alterra
Lessee pays any such shortfall to the applicable Provident Lessor or PSLT-ALS
Holdings, which funds shall be deposited into the Capital Additions Reserve
(or a similar account required in connection with any Facility Mortgage(s)),
for expenditure as required herein and pursuant to Paragraph 25(d) of the
Property Leases. Subject to the provisions of Paragraph 12(a) hereof, the
Minimum Capital Additions Amount may be adjusted from time to time based on
the requirements of any Facility Mortgagee, provided any such provisions
regarding the funding of capital replacement reserves under any future
Facility Mortgage shall be in compliance with the requirements of Paragraph
54(b) of the Property Leases. In addition, PSLT-ALS Holdings and ALS Holdings
agree to review the Minimum Capital Additions Amount periodically (but in no
event less than annually), to provide for the proper operation and maintenance
of each of the Facilities.
(d) Capital Additions Reserve. Upon PSLT-ALS Holdings' or the applicable
Provident Lessor's request, or if ALS Holdings or any Alterra Lessee deposits
any funds in accordance with Paragraph 10(c) hereof, or if otherwise required
by an Facility Mortgagee, ALS Holdings shall, or, if required by any Facility
Mortgagee with respect to any one or more of the Facilities, ALS Holdings
shall cause the applicable Alterra Lessee(s) to, establish a reserve fund for
the Minimum Capital Additions Amount (the "Capital Additions Reserve"), which
reserve shall be held in PSLT-ALS Holdings' name or in the name of the
Facility Mortgagee, if applicable. If the Capital Additions Reserve is
established, ALS Holdings shall, or shall cause the applicable Alterra
Lessee(s) to, deposit therein one-twelfth (1/12th) of the Minimum Capital
Additions Amount each month. The fact that funds are on deposit in the Capital
Additions Reserve shall in no way limit or relieve ALS Holdings' obligations
to cause the Alterra Lessees to expend the Minimum Capital Additions Amount
with respect to any Lease Year, without taking into account any funds then on
deposit in the Capital Additions Reserve. If at the end of the Term or earlier
expiration of any Property Lease, funds remain in the Capital Additions
Reserve which have been funded as a result of a shortfall described in the
immediately preceding sentence, such funds shall become the property of
PSLT-ALS Holdings or the applicable Provident Lessor, and ALS Holdings and the
Alterra Lessee shall have no further right, interest or title in or to such
funds. Provided no Event of Default exists hereunder or under the applicable
Property Leases(s), PSLT-ALS Holdings shall cause the applicable Provident
Lessor(s) to disburse, in accordance with the terms and conditions set forth
in Paragraph 11(d) of the Property Leases, funds deposited in the Capital
Additions Reserve to the applicable Alterra Lessee(s) from time to time as the
applicable Alterra Lessee(s) shall request in writing to fund or reimburse the
applicable Alterra Lessee(s) for Capital Additions made to the Facilities;
provided, however, that no funds will be disbursed from the Capital Additions
Reserve in any given Lease Year until after ALS Holdings has satisfied its
obligations under this Paragraph 10(d) and caused the Alterra Lessees to
expend an amount at least equal to the Minimum Capital Additions Amount for
such Lease Year with respect to Capital Additions to the Facilities. All
moneys deposited into the Capital Additions Reserve shall be maintained for
the payment of, or reimbursement to the applicable Alterra Lessee(s) for,
Capital Additions Costs (other than
21
Landlord Capital Additions or Mandatory Capital Additions). ALS Holdings
shall, or shall cause the applicable Alterra Lessee(s) to, convey, pledge and
grant to PSLT-ALS Holdings or the Facility Mortgagee, as applicable, a
security interest in the Capital Additions Reserve in order to secure the
Alterra Lessees' obligations to pay Rent (as defined in the Property Leases)
and other charges under the Property Leases. ALS Holdings shall, and shall
cause the Alterra Lessees to, cooperate with PSLT-ALS Holdings and the
Facility Mortgagee, if applicable, in connection with perfecting any such
security interest.
11. Limitation on Liability. If ALS Holdings is awarded a money judgment
against PSLT-ALS Holdings, then ALS Holdings' sole recourse for satisfaction
of such judgment shall be limited to execution against PSLT-ALS Holdings'
ownership interest in the Provident Lessors. In no event shall any trustee,
stockholder, shareholder, member, manager, partner, employee, officer or
beneficiary of PSLT-ALS Holdings be personally liable for the obligations of
PSLT-ALS Holdings or any Provident Lessor hereunder. Except to the extent
provided in the terms of the Guaranty or any other Parent guaranty or
indemnity, in no event shall any trustee, shareholder, member, guarantor,
partner, employee, officer or beneficiary of ALS Holdings be personally liable
for any of the obligations of ALS Holdings hereunder.
12. Facility Mortgages.
(a) Cooperation in Obtaining Facility Mortgages. ALS Holdings shall, and
shall cause the Alterra Lessees to, reasonably cooperate with PSLT-ALS
Holdings and the Provident Lessors, at PSLT-ALS Holdings' and the Provident
Lessors' cost and expense, to assist PSLT-ALS Holdings and the Provident
Lessors in obtaining Facility Mortgages (including any refinancing of any
Existing Facility Mortgage), with respect to the Provident Lessors' fee
interests in the Facilities. Subject to the execution of a reasonably
satisfactory confidentiality agreement, and provided there is no violation of
(i) any security, health, safety or confidentiality requirements of any
Governmental Agency or imposed by applicable law or regulations and/or (ii)
any Alterra Lessee's ordinary business practices and standard resident
agreements, if any, requiring such Alterra Lessee to maintain the confidential
nature of certain personal information relating to individual residents living
in the Facility, ALS Holdings shall, and shall cause the Alterra Lessees to,
provide such information as is reasonably requested by PSLT-ALS Holdings or
any proposed Facility Mortgagee with respect to ALS Holdings, the Alterra
Lessees, Guarantor or the operation of any Facility to facilitate in obtaining
such Facility Mortgage. PSLT-ALS Holdings shall, or shall cause the applicable
Provident Lessor to, reimburse ALS Holdings or the applicable Alterra Lessee
for reasonable out-of-pocket expenses actually incurred by ALS Holdings or the
applicable Alterra Lessee in connection with its compliance with the terms of
this Paragraph 12(a). Neither ALS Holdings nor any Alterra Lessee shall have
any right to approve the terms of any Facility Mortgage, and PSLT-ALS Holdings
may, and may cause the applicable Provident Lessor to, obtain any Facility
Mortgage as it may determine in its sole discretion; provided, however, that
PSLT-ALS Holdings agrees that the business terms, provisions and conditions
contained in any Facility Mortgage (other than any Existing Facility Mortgage)
shall be commercially reasonable in the then current market at the time that
such Facility Mortgage is obtained and shall be reasonably consistent with the
then current standards for similar-type financing transactions affecting
similar types of properties, as reflected, generally, in mortgages, deeds of
trust and security deeds encumbering other assisted living and independent
living facilities which are similar to those owned and/or managed by Guarantor
or
22
any of its direct or indirect subsidiaries (provided, however, that with
respect to assessing whether the insurance requirements under the proposed
Facility Mortgage satisfy the foregoing requirements, the standard set forth
in Paragraph 18(a)(xiv) of each of the Property Leases shall govern);
provided, further, that in no event shall the terms of any Facility Mortgage
increase the Base Rent (as defined in the applicable Property Lease(s))
payable under the applicable Property Lease(s) or alter the payment schedule
for Base Rent thereunder, and ALS Holdings agrees that ALS Holdings' and the
Alterra Lessees' respective obligations to comply with the terms of any such
Facility Mortgage shall not be deemed to be in contravention or conflict with
the terms of this Agreement or the applicable Property Lease(s), even in cases
where the Facility Mortgage imposes obligations that are greater than the
obligations of ALS Holdings under this Agreement or of the Alterra Lessee(s)
under the applicable Property Lease(s).
(b) Subordination. PSLT-ALS Holdings and ALS Holdings hereby acknowledge
and agree that the Alterra Lessees' interests under the Property Leases and
the Alterra Lessees' leasehold interests in and to the Facilities are junior,
inferior, subordinate and subject in right, title, interest, lien,
encumbrance, priority and all other respects to the lien of any one or more
Facility Mortgages now or hereafter in force and effect upon or encumbering
the Provident Lessors' interests in the Facilities, or any portion thereof,
and to all collateral assignments by the Provident Lessors to any third party
or parties of any of the Provident Lessors' rights under the Property Leases
or the rents, issues and profits thereof or therefrom as security for any
liability or indebtedness, direct, indirect or contingent, of the Provident
Lessors to such third party or parties, and to all future modifications,
extensions, renewals, consolidations and replacements of, and all amendments
and supplements to, any such mortgage, mortgages or assignments, provided
that, in connection with any Facility Mortgage (other than the Existing
Facility Mortgages) placed upon the Facilities after the date hereof, PSLT-ALS
Holdings shall (or shall cause the applicable Provident Lessor(s) to) cause
the applicable Facility Mortgagee to enter into, execute and deliver a
subordination, non-disturbance and attornment agreement substantially similar
to the form attached to the Property Leases as Exhibit C, or such other form
as shall be reasonably acceptable to ALS Holdings, PSLT-ALS Holdings and the
applicable Facility Mortgagee (the "SNDA"), which SNDA shall acknowledge the
subordination of the Property Leases described in this Paragraph 12(b) and
shall provide, among other things, that if the Facility Mortgagee or any other
person acquires title to the applicable Facility, so long as the applicable
Alterra Lessee is not in default (beyond the expiration of any applicable
notice and/or grace period) under the applicable Property Lease, the
applicable Alterra Lessee's leasehold estate possession and occupancy of the
applicable Facility shall not be disturbed, provided further that ALS Holdings
shall cause the Alterra Lessees to enter into, execute and deliver promptly to
the requesting party the SNDA in accordance with the terms of this Paragraph
12(b) and the Property Leases.
13. Representations and Warranties.
(a) Representations of ALS Holdings. To induce PSLT-ALS Holdings to enter
into this Agreement, ALS Holdings represents and warrants to PSLT-ALS Holdings
as follows:
(i) Status and Authority of ALS Holdings. ALS Holdings is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. ALS Holdings has all requisite power and
authority to enter into and perform its obligations under this Agreement and
to consummate the transactions contemplated hereby.
23
ALS Holdings is duly qualified to transact business in each jurisdiction in
which the nature of the business conducted by it requires such qualification.
(ii) Action of ALS Holdings. ALS Holdings has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and agreement
of ALS Holdings, enforceable against ALS Holdings in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
the rights and remedies of creditors.
(iii) No Violations of Agreements. Subject to obtaining the required
consents contemplated by the Stock Purchase Agreement, neither the execution,
delivery or performance of this Agreement by ALS Holdings, nor compliance with
the terms and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under,
or result in any breach of the terms, conditions or provisions of, or conflict
with or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any Facility or any property or assets of ALS
Holdings pursuant to the terms of any indenture, mortgage, deed of trust,
note, evidence of indebtedness or any other material agreement or instrument
by which ALS Holdings is bound.
(iv) Litigation. ALS Holdings has received no written notice and, to
ALS Holdings' knowledge, no action or proceeding is pending or threatened
which questions the validity of this Agreement.
(b) Representations of PSLT-ALS Holdings. To induce ALS Holdings to enter
into this Agreement, PSLT-ALS Holdings represents and warrants to ALS Holdings
as follows.
(i) Status and Authority of PSLT-ALS Holdings. PSLT-ALS Holdings is
a duly organized, validly existing limited liability company and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority under the laws of such State to enter into and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. PSLT-ALS Holdings is duly qualified and is in good
standing in each jurisdiction in which the nature of the business conducted by
it requires such qualification.
(ii) Action of PSLT-ALS Holdings. PSLT-ALS Holdings has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement, and upon the execution and delivery of this Agreement by PSLT-ALS
Holdings, it shall constitute the valid and binding obligation and agreement
of PSLT-ALS Holdings, enforceable against PSLT-ALS Holdings in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
the rights and remedies of creditors.
(iii) No Violations of Agreements. Neither the execution, delivery
or performance of this Agreement by PSLT-ALS Holdings, nor compliance with the
terms and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under,
or result in any creation of any lien, charge or encumbrance upon any Facility
or any of the property or assets of PSLT-ALS Holdings pursuant to the terms
24
of any indenture, mortgage, deed of trust, note, evidence of indebtedness or
any other material agreement or instrument by which PSLT-ALS Holdings is
bound.
(iv) Litigation. No investigation, action or proceeding is pending
and, to PSLT-ALS Holdings' knowledge, no action or proceeding is pending or
threatened which questions the validity of this Agreement or any action taken
or to be taken pursuant hereto.
14. Intentionally Deleted.
15. Notices. All notices, approvals, requests, consents and other
communications ("Notices") given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given (i) when actually received
if either (A) hand delivered or (B) sent by facsimile transmission with
evidence of receipt of delivery; (ii) two (2) days after the same was
deposited in a regularly maintained receptacle for the deposit of United
States mail, sent by registered or certified mail, postage and charges
prepaid; or (iii) the next Business Day if sent via a national overnight
delivery service, addressed as follows or at such other address as either
party may specify from time to time by Notice to the other party at least five
(5) days prior Notice of the changed address:
If to ALS Holdings: ALS Properties Holding Company, LLC
c/o Alterra Healthcare Corporation
0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Alterra Healthcare Corporation
00000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to PSLT-ALS Holdings: PSLT-ALS Properties Holdings, LLC
c/o Provident Senior Living Trust
000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
25
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
16. No Waiver. No course of dealing between PSLT-ALS Holdings and ALS
Holdings, or any delay or omission of PSLT-ALS Holdings or ALS Holdings to
insist upon a strict performance of any term or condition of this Agreement
shall be deemed a waiver of any right or remedy that such party may have, and
shall not be deemed a waiver of any subsequent breach of such term or
condition.
17. Invalidity. If any provision of this Agreement shall be declared invalid
or unenforceable, the remainder of this Agreement shall continue in full force
and effect.
18. Counterparts. This Agreement may be executed in two (2) or more
counterparts, which taken together shall be deemed one (1) original.
19. Cumulative. All rights and remedies of PSLT-ALS Holdings and ALS Holdings
herein shall be cumulative and none shall be exclusive of any other or of any
rights and remedies allowed by law.
20. Governing Law. Except as to matters regarding the internal affairs of
PSLT-ALS Holdings and issues of or limitations on any personal liability of
the members or managers of PSLT-ALS Holdings for obligations of PSLT-ALS
Holdings, as to which the laws of the State of Delaware shall govern, this
Agreement shall be interpreted, construed, applied and enforced in accordance
with the laws of the State of New York applicable to contracts between
residents of New York which are to be performed entirely within New York,
regardless of (i) where this Agreement is executed or delivered; or (ii) where
any payment or other performance required by this Agreement is made or
required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where any
action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principle place of business, or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply to the laws of a jurisdiction other
than the State of New York; or (vii) any combination of the foregoing.
Notwithstanding the foregoing, the laws of the applicable Facility State shall
apply to the perfection and priority of liens upon and the disposition of and
the exercise of any remedies by PSLT-ALS Holdings under this Agreement with
respect to any Facility.
21. Successors and Assigns; Relationship. The covenants, terms, conditions,
provisions, and undertakings in this Agreement shall extend to and be binding
upon the permitted successors, and assigns of the respective parties hereto,
and shall be construed as covenants running with the land. This Agreement does
not create a partnership, joint venture, or other type
26
of ownership inconsistent with the Agreement, and neither PSLT-ALS Holdings or
ALS Holdings shall make any representation to the contrary.
22. Entire Agreement. Except for the provisions contained in the Property
Leases, this Agreement, together with any exhibits attached hereto, contains
the entire agreement and understanding between the parties with respect to the
subject matter hereof and of the Property Leases. There are no oral
understandings, terms, or conditions, and neither party has relied upon any
representation, express or implied, with respect to the subject matter hereof
not contained in this Agreement and/or the Property Leases. All prior
understandings, terms, or conditions with respect to the subject matter hereof
are deemed merged in this Agreement. This Agreement cannot be changed or
supplemented orally, but may be modified or amended only by a written
instrument executed by the parties. Any disputes regarding the interpretation
of any portion of this Agreement shall not be presumptively construed against
the drafting party.
23. Survival. ALS Holdings' indemnity obligations herein shall survive
termination of this Agreement for a period of two (2) years.
24. Time. Time is of the essence in every particular of this Agreement,
including, without limitation, obligations for the payment of money.
25. Captions and Headings. The captions and headings in this Agreement have
been inserted herein only as a matter of convenience and for reference and in
no way define, limit or describe the scope or intent of, or otherwise affect,
the provisions of this Agreement.
26. Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW, ALS
HOLDINGS AND PSLT-ALS HOLDINGS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO ALS HOLDINGS'
ENTERING INTO THIS AGREEMENT.
27. Guaranty. At the time of ALS Holdings' execution of this Agreement, ALS
Holdings shall obtain the execution of the Guaranty of Agreement Regarding
Leases in the form of Exhibit D attached hereto ("Guaranty") by Guarantor. As
a condition to ALS Holdings' exercise of either Renewal Term and accompanying
notice of such exercise, ALS Holdings shall deliver to PSLT-ALS Holdings an
affirmation of the Guaranty executed by the Guarantor.
28. Termination of Facility Management Agreements.
(a) Management Termination Event. If any one or more of the following
occurs (each, a "Management Termination Event"), PSLT-ALS Holdings shall have
the right to cause ALS Holdings and the Alterra Lessees to terminate all or
any of the Facility Management Agreements:
27
(i) if the Alterra Lessees shall fail to pay Rent (as defined in the
Property Leases) under their respective Property Leases and ALS Holdings fails
to make the Alterra Rent Payments hereunder and such failure continues for
thirty (30) days after the due date of such payments;
(ii) if, as measured at the end of each calendar quarter during the
Term, the Facilities fail to maintain a Lease Coverage Ratio for the
immediately preceding four (4) calendar quarters, of (A) at least 1.05 to 1.00
on an aggregate basis during any of the first (1st) through third (3rd) Lease
Years, and (B) at least 1.10 to 1.00 on an aggregate basis during any of the
fourth (4th) through fifteenth (15th) Lease Years and during each Renewal
Term; provided, however, that the Lease Coverage Ratio for the initial Lease
Year shall be determined with respect to the following periods: (1) for the
initial calendar quarter of the first Lease Year, on the basis of such
calendar quarter, (2) for the second calendar quarter of the first Lease Year,
on the basis of such first two calendar quarters, and (3) for the third
calendar quarter of the first Lease Year, on the basis of such first three
calendar quarters (in each case, on an annualized basis); and provided,
further, that ALS Holdings or Alterra Management may, at its option, cure such
Management Termination Event by depositing with PSLT-ALS Holdings cash or a
Letter of Credit in an amount sufficient to decrease on a dollar-for-dollar
basis the amount of Current Lease Payments reflected in the denominator in the
calculation of Lease Coverage Ratio, such that ALS Holdings satisfies the
Lease Coverage Ratio requirements set forth in this Paragraph; provided,
further, however, that ALS Holdings and Alterra Management may only exercise
such cure right two (2) times during the first through tenth Lease Years. No
cure right shall exist after the tenth (10th) Lease Year during the Initial
Term or during any Renewal Term;
(iii) subject to the provisions of clause (i) above, if an Event of
Default (as defined in the Property Leases) shall have occurred and remains
uncured under any of the Property Leases or if an Event of Default shall have
occurred and remains uncured under this Agreement;
(iv) Intentionally Deleted; or
(v) if (w) Alterra Management or any Related Party of Alterra
Management which becomes the Manager (as defined in the Property Leases) with
respect to any of the Facilities (as used in this clause (v), an "Alterra
Successor Manager") becomes bankrupt or insolvent, or files any debtor
proceedings, or files pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or files a petition for the appointment of a
receiver or trustee for all or substantially all of its assets, or (x) any of
the foregoing are filed against Alterra Management or against any Alterra
Successor Manager, and such petition or appointment shall not have been set
aside within ninety (90) days from the date of such petition or appointment,
or (y) Alterra Management or any Alterra Successor Manager makes an assignment
for the benefit of creditors or shall admit in writing its inability to pay
its debts generally as they become due, or (z) Alterra Management's or any
Alterra Successor Manager's interest in all or portion of the Total Revenues
is attached, levied upon, seized or made subject to any other judicial seizure
and such seizure or attachment is not discharged within ninety (90) days.
(b) Remedies. In the event of any Management Termination Event, PSLT-ALS
Holdings shall have the right to cause ALS Holdings and the Alterra Lessees to
terminate all or
28
any of the Facility Management Agreements and replace Alterra Management at
such Facility(ies) as are designated by PSLT-ALS Holdings with a manager
selected by PSLT-ALS Holdings, and ALS Holdings shall cause the Alterra
Lessee(s) to enter into new management agreements with such replacement
manager on terms and conditions reasonably satisfactory to PSLT-ALS Holdings.
ALS Holdings shall cause the Alterra Lessees to pay such replacement manager
the management fee pursuant to the applicable management agreement entered
into between such replacement manager and each Alterra Lessee, provided that
the applicable Alterra Lessees shall be entitled to a credit against Base Rent
payable under the applicable Property Lease for any payments (excluding
out-of-pocket reimbursements) payable to such replacement manager in excess of
an amount equal to five percent (5%) of gross revenues.
(c) Alterra Termination Right. If PSLT-ALS Holdings terminates the
Facility Management Agreements and replaces Alterra Management with a manager
other than Alterra Management or any Affiliates of Alterra Management, ALS
Holdings shall have the right to cause the Alterra Lessees to terminate those
Property Leases for Facilities as to which the Facility Management Agreements
have been terminated and with respect to which a replacement manager has been
appointed. In the event of such termination, all references to the
"Facilities" and the "Property Leases" under this Agreement shall be deemed to
exclude those Facilities as to which the Alterra Lessees have terminated the
Property Leases, and the Master Rent payable hereunder shall be adjusted by
excluding from the calculation of Master Rent the amount of Base Rent due
under any such terminated Property Lease. ALS Holdings may exercise such
termination right, if at all, by providing PSLT-ALS Holdings written Notice
thereof not later than thirty (30) days after termination of the applicable
Facility Management Agreement (time being of the essence with respect to such
date). Such termination shall become effective on the date (the "Termination
Date") that is one hundred twenty (120) days following delivery of such
written Notice to PSLT-ALS Holdings, provided that the applicable Property
Leases shall not terminate, and ALS Holdings' exercise of such termination
right shall be deemed to be null and void, if PSLT-ALS Holdings reinstates
Alterra Management or appoints an Affiliate of Alterra Management to manage
the Facilities within such one hundred twenty (120) day period. If any of the
Property Leases are terminated as a result of ALS Holdings' exercise of its
termination right as set forth herein, (i) ALS Holdings shall cause the
applicable Alterra Lessees to comply with the provisions of Paragraph 10 of
the Property Leases pursuant to which the applicable Alterra Lessee shall
cooperate with the applicable Provident Lessor in obtaining all necessary
licensing, operating permits and other governmental authorizations which may
be necessary for the operation of the Facilities, and (ii) ALS Holdings shall
cause the applicable Alterra Lessees to promptly transfer to the applicable
Provident Lessors or their nominees all of the third party residency
agreements with respect to units located at the Facilities and all other
subleases for space at the Facilities.
29. Joinder by Alterra Management. Alterra Management has joined into this
Agreement for the limited purposes of (i) acknowledging that in each of the
Facility Management Agreements, PSLT-ALS Holdings and ALS Holdings are
intended third party beneficiaries of such Facility Management Agreements;
(ii) acknowledging and hereby granting to PSLT-ALS Holdings the right to
terminate any or all of the Facility Management Agreements upon the occurrence
and during the continuation of any Management Termination Event as set forth
in this Agreement (subject to any applicable notice and cure rights as set
forth herein), and (iii) acknowledging and authorizing, to the extent required
by applicable law, that payments due to
29
Alterra Management are hereby subordinated to the Alterra Rent Payments or any
other payments required hereunder, and that any amounts paid to Alterra
Management following and during the continuance of an Event of Default under
this Agreement shall be paid to PSLT-ALS Holdings upon demand therefor,
without offset, abatement, demand or deduction. All payments made by ALS
Holdings or any Alterra Lessee or any of their Affiliates to Alterra
Management shall be deemed to be made in trust, to be retained by Alterra
Management and released from trust for any period in question only upon
payment of all amounts due PSLT-ALS Holdings hereunder for the same period.
30. Joinder by Alterra Lessees. Each of the Alterra Lessees has joined into
this Agreement for the limited purposes of (i) acknowledging that if an Event
of Default (as defined in the applicable Property Lease) has occurred and is
continuing, PSLT-ALS Holdings shall have the right to exercise its remedies as
set forth herein; (ii) acknowledging and hereby granting to PSLT-ALS Holdings
the right to terminate any or all of the Facility Management Agreements upon
the occurrence and during the continuation of any Management Termination Event
as set forth in this Agreement (subject to any applicable notice and cure
rights as set forth herein), (iii) acknowledging and authorizing, to the
extent required by applicable law, that payments due to Alterra Management are
hereby subordinated to the Alterra Rent Payments or any other payments
required hereunder, and that any amounts paid to Alterra Management following
and during the continuance of an Event of Default under this Agreement shall
be paid to PSLT-ALS Holdings upon demand therefor, without offset, abatement,
demand or deduction, (iv) acknowledging the provisions of Paragraph 3(b)
hereof with respect to the right of ALS Holdings to exercise the Renewal Terms
and agreeing that any exercise of the applicable Renewal Tern(s) by ALS
Holdings in accordance with the terms of Paragraph 3(b) hereof shall be
binding upon the Alterra Lessees and shall constitute an exercise of such
Renewal Term(s) in accordance with the terms of Paragraph 4(b) of each of the
Property Leases, and (v) acknowledging the provisions of Paragraph 10(c) and
Paragraph 10(d) hereof and agreeing that the Alterra Lessees shall fund the
amounts required thereunder and otherwise comply with the terms thereof. All
payments made by any Alterra Lessee or any of their Affiliates to Alterra
Management shall be deemed made in trust, to be retained by Alterra Management
and released from trust for any period in question only upon payment of all
amounts due PSLT-ALS Holdings hereunder for the same period.
31. Joinder by Provident Lessors. Each of the Provident Lessors has joined
into this Agreement for the limited purpose of acknowledging the provisions of
Paragraph 3(b) hereof with respect to the right of ALS Holdings to exercise of
the Renewal Terms and agreeing that any exercise of the applicable Renewal
Term(s) by ALS Holdings in accordance with the terms of Paragraph 3(b) hereof
shall constitute an exercise by the Alterra Lessees of such Renewal Term(s) in
accordance with the terms of Paragraph 4(b) of the Property Leases.
32. Intentionally Deleted.
33. Security Deposit.
(a) Security Deposit/Letter of Credit. Commencing on the thirty-first
(31st) day of the first month after the first calendar quarter which occurs
after the Commencement Date (taking into account periods prior to the
commencement of such quarter with respect to the first
30
determination hereunder), and on the thirty-first (31st) day of the first
month after each calendar quarter (or with respect to the first calendar
quarter, on May 1 of each year) thereafter, ALS Holdings shall either: (i)
deposit with PSLT-ALS Holdings or a bank designated by PSLT-ALS Holdings' cash
(the "Security Deposit"), or (ii) deliver to PSLT-ALS Holdings a letter of
credit (the "Letter of Credit") issued in favor of PSLT-ALS Holdings, in each
case in an amount equal to fifty percent (50%) of Excess Cash Flow for the
prior calendar quarter, until such time as the amount held as the Security
Deposit or the aggregate face amount of all Letters of Credit previously
delivered to PSLT-ALS Holdings under this Paragraph 33, as the case may be,
shall equal Ten Million Dollars ($10,000,000). The Security Deposit or the
Letters of Credit, as the case may be, shall be held as security for the
performance and observance by ALS Holdings of the terms, conditions and
provisions of this Agreement and as security for the performance and the
observance by each of the Alterra Lessees of the terms, conditions and
provisions of the Property Leases, including, without limitation, the
surrender of possession of the Facilities by the Alterra Lessees as provided
in the Property Leases, and shall be released to ALS Holdings at such time as
ALS Holdings satisfies the requirements set forth in Paragraph 33(c) below.
Upon the occurrence and during the continuance of an Event of Default,
PSLT-ALS Holdings may draw upon any Letter of Credit or apply any portion of
the Security Deposit to the extent required for the payment of any sum as to
which ALS Holdings or the Alterra Lessee(s) under the Property Lease(s) to
which the applicable Event of Default relates is in default or for any sum
which PSLT-ALS Holdings may have expended or may be required to expend by
reason of the occurrence of such Event of Default, including any damages or
deficiency accrued before or after summary proceedings or other re-entry by
any Provident Lessor pursuant to any Property Lease. The Security Deposit
shall be held in a segregated bank account and shall be invested in Permitted
Investments. ALS Holdings shall be responsible for payment of any federal,
state or local income or other tax applicable to income earned from Permitted
Investments. All interest accruing on the Security Deposit shall be held by
PSLT-ALS Holdings for the account of ALS Holdings, and shall be distributed to
ALS Holdings on the fifteenth (15th) day after the end of each Lease Year.
(b) Letter of Credit Requirements. The Letter of Credit shall be an
irrevocable, unconditional letter of credit with an initial term of not less
than one year from the Commencement Date of this Agreement. Without further
act or instrument required by PSLT-ALS Holdings, the Letter of Credit shall be
automatically renewed for successive one year periods throughout the remainder
of the Term unless, not less than 30 days prior to the then current expiration
date of the Letter of Credit, the issuing bank notifies PSLT-ALS Holdings of
its intention not to renew the Letter of Credit. The Letter of Credit (or any
renewal, extension or replacement thereof) shall continue in full force and
effect and shall be maintained in its full face amount for two full calendar
months beyond the expiration of the Term of this Agreement (including any
extension of the Term hereof). The Letter of Credit shall (i) be negotiable
and freely transferable in connection with a sale or transfer of the
Facilities or the interests in the Provident Lessors; (ii) be issued by a
national banking association reasonably acceptable to PSLT-ALS Holdings; (iii)
provide for payment of all or any portion of the face amount of the Letter of
Credit to PSLT-ALS Holdings upon the receipt by the issuing bank of a
statement signed by a representative of PSLT-ALS Holdings that PSLT-ALS
Holdings is entitled to such amount pursuant to the terms of this Agreement,
and (iv) be otherwise in form and substance reasonably satisfactory to
PSLT-ALS Holdings. PSLT-ALS Holdings' receipt of notice from the issuing bank
of its intention not to renew the Letter of Credit or ALS Holdings' failure to
deliver
31
a renewal or replacement Letter of Credit shall entitle PSLT-ALS Holdings to
draw the full face amount of the Letter of Credit and retain such sum as
security hereunder in lieu of the Letter of Credit. ALS Holdings' failure to
maintain the Letter of Credit or to substitute a cash security deposit as a
replacement therefor shall constitute a default under this Agreement.
(c) Return of Security Deposit. If the Facilities maintain a Lease
Coverage Ratio at least equal to 1.15 to 1.00 on an aggregate basis for two
(2) consecutive six (6) month periods, assuming payment of a 5% management fee
and creation of an annual capital reserve for the Facilities equal to $400 per
residential unit, any remaining portion of the Security Deposit or the
Letter(s) of Credit, as the case may be, shall be returned to ALS Holdings. If
the Security Deposit or the Letter(s) of Credit, as the case may be, shall not
be returned to ALS Holdings in accordance with the foregoing sentence, but ALS
Holdings shall fully and faithfully comply with all of the terms of this
Agreement and all of the Alterra Lessees shall have paid and performed all of
the terms of their respective Property Leases, the remaining portions of the
Security Deposit or the Letter(s) of Credit, as the case may be, shall be
returned to ALS Holdings promptly after the expiration of the Term or sooner
termination of this Agreement (other than a termination which results from ALS
Holdings' default hereunder).
34. Public Offering Information. ALS Holdings specifically agrees that
PSLT-ALS Holdings may include financial information and information concerning
ALS Holdings, the Alterra Lessees, Guarantor and the operation of the
Facilities that does not violate the confidentiality of the facility-resident
relationship and the physician-resident privilege under applicable laws, in
offering memoranda or prospectuses, or similar publications in connection with
syndications, private placements or public offerings of PSLT-ALS Holdings' (or
PSLT-ALS Holdings' Parent's) securities or interests, and any other reporting
requirements under applicable federal and state laws, including those of any
successor to PSLT-ALS Holdings. ALS Holdings agrees to provide such other
reasonable information necessary with respect to ALS Holdings, the Alterra
Lessees and the Facilities to facilitate a private placement or public
offering or to satisfy the SEC or regulatory disclosure requirements. ALS
Holdings agrees to cause its independent accountants, at PSLT-ALS Holdings'
cost, to consent to the inclusion of their audit report issued with respect to
such financial statements in any registration statement or other filing under
federal and state laws and to provide the underwriters participating in any
offering of securities or interests of PSLT-ALS Holdings (or PSLT-ALS
Holdings' Parent) with a standard accountant's "comfort" letter with regard to
the financial information of ALS Holdings included or incorporated by
reference into any prospectus or other offering document. ALS Holdings also
agrees to make available to any underwriter participating in an offering of
PSLT-ALS Holdings' (or PSLT-ALS Holdings' Parent's) securities or interests,
and any attorney, accountant or other agent or representative retained by an
underwriter (an "Inspector"), all financial and other records and pertinent
corporate documents of ALS Holdings as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause ALS Holdings'
directors, officers and employees to supply all information requested by any
such Inspector in connection with such offering. Prior to submission or
circulation of any such offering memoranda, prospectuses or similar
publications, PSLT-ALS Holdings shall provide to ALS Holdings copies of such
documents for the purpose of reviewing same. Upon request of PSLT-ALS
Holdings, ALS Holdings shall notify PSLT-ALS Holdings of any necessary
corrections to information PSLT-ALS Holdings proposes to publish within a
reasonable period
32
of time (not to exceed three (3) Business Days) after being informed thereof
by PSLT-ALS Holdings.
35. Special Purpose Entity Covenants of ALS Holdings.
(a) Until (i) this Agreement and all of the Property Leases have expired
or otherwise have terminated and (ii) all amounts due and owing to PSLT-ALS
Holdings under this Agreement and to the Provident Lessors under the Property
Leases have been paid in full, ALS Holdings hereby represents, warrants and
covenants that ALS Holdings is, shall be and shall continue to be a Special
Purpose Entity.
(b) As used in this Agreement, "Special Purpose Entity" shall mean a
limited liability company which at all times on and after the date hereof:
(i) is organized solely for the purpose of owning 100% of the
limited liability company interests in each of the Alterra Lessees and
transacting lawful business that is incident, necessary and appropriate to
accomplish the foregoing;
(ii) is not engaged and will not engage in any business unrelated to
the ownership of 100% of the limited liability company interests in each of
the Alterra Lessees and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; (iii) does not have and
will not have any assets other than those related to its limited liability
company interest in the Alterra Lessees;
(iv) 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 membership
interests or amendment of its certificate of formation and operating agreement
with respect to the matters set forth in this definition;
(v) has at least two Independent Directors (or if an Independent
Director resigns, dies, is removed or is otherwise unable to serve, the other
directors or such entity's members shall promptly act to fill the vacancy
thereby created with another Independent Director) 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 board of directors unless two Independent Directors
shall have participated in such vote, and, if the Special Purpose Entity is a
limited liability company with only one member, has at least one springing
member that will become the member of such entity upon the dissolution of the
existing member;
(vi) has a certificate of formation and/or an operating agreement
that provides that it will not: (A) dissolve, merge, liquidate, consolidate;
(B) sell all or substantially all of its assets or the assets of the Alterra
Lessees; (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 PSLT-ALS Holdings; or (D) without the
affirmative vote of two Independent Directors and of all its other directors,
file a bankruptcy or insolvency petition or otherwise
33
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;
(vii) is solvent and will 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;
(viii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(ix) 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;
(x) has maintained and will maintain its own records, books,
resolutions and agreements;
(xi) Intentionally Deleted;
(xii) has held and will hold its assets in its own name;
(xiii) has conducted and will conduct its business in its name or in
a name franchised or licensed to it by an entity other than its Affiliate,
except for services rendered under a management agreement with an Affiliate
that complies with the terms contained in subsection (xxvii) below, so long as
the manager, or equivalent thereof, under such management agreement holds
itself out as an agent of ALS Holdings;
(xiv) 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 to be listed as assets 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;
(xv) 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 in its reasonable business judgment a
sufficient number of employees in light of its contemplated business
operations;
(xvi) has observed and will observe all partnership, corporate or
limited liability company formalities, as applicable;
(xvii) has and will have no indebtedness other than its obligations
under this Agreement;
(xviii) has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other
34
Person except for those certain Lease Guaranties executed in connection with
the Property Leases;
(xix) has not and will not acquire obligations or securities of its
partners, members or shareholders or any other Affiliate except the Alterra
Lessees;
(xx) has allocated and will allocate fairly and reasonably any
overhead 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;
(xxi) maintains and uses and will maintain and use separate
stationery, invoices and checks bearing its name. The stationery, invoices,
and checks utilized by ALS Holdings 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 ALS Holdings' agent;
(xxii) has not pledged and will not pledge its assets for the
benefit of any other Person;
(xxiii) 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 ALS Holdings and not as a division or part of any other Person,
except for services rendered under a management agreement with an Affiliate
that complies with the terms contained in subsection (xxvii) below, so long as
the manager, or equivalent thereof, under such management agreement holds
itself out as an agent of ALS Holdings;
(xxiv) 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;
(xxv) 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);
(xxvi) 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;
(xxvii) 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 in the ordinary course of its business and
on terms which are intrinsically fair, commercially reasonable and are no less
favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party;
(xxviii) Intentionally Deleted;
35
(xxix) does not and will not have any of its obligations guaranteed
by any Affiliate other than the Guaranty; and
(xxx) 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement the
day and year first above written.
PSLT-ALS HOLDINGS:
PSLT-ALS PROPERTIES HOLDINGS, LLC,
a Delaware limited liability company
By: PSLT OP, L.P., a Delaware limited
partnership, its sole member
By: PSLT GP, LLC, a Delaware limited
liability company, its sole general partner
By: Provident Senior Living Trust, a
Maryland real estate investment trust,
its sole member
By:/s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Senior Vice President
ALS HOLDINGS:
ALS PROPERTIES HOLDING COMPANY, LLC,
a Delaware limited liability company
By:/s/ Xxxx Xxxxx-Xxxxxx
-----------------------------------------
Name: Xxxx Xxxxx-Xxxxxx
Title: Vice President
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
Alterra Management joins into this Agreement Regarding Leases for the purposes
set forth in Paragraph 29 hereof:
ALTERRA MANAGEMENT:
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By:/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Chief Financial Officer
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
Each of the Alterra Lessees joins into this Agreement Regarding Leases for the
purposes set forth in Paragraph 30 hereof:
ALTERRA LESSEES:
ALS PROPERTIES TENANT I, LLC,
a Delaware limited liability company
By: ALS Properties Holding Company, LLC,
a Delaware limited liability company,
its sole member
By:/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
Each of the Provident Lessors joins into this Agreement Regarding Leases for
the purposes set forth in Paragraph 31 hereof:
PROVIDENT LESSORS:
PSLT-ALS PROPERTIES I, LLC,
a Delaware limited liability company
By: Provident Senior Living Trust, a
Maryland real estate investment trust,
its sole member
By:/s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Senior Vice President
EXHIBIT A
Provident Lessors
1. PSLT-ALS Properties I, LLC
2. PSLT-ALS Properties II, LLC
EXHIBIT B
Alterra Lessees
1. ALS Properties Tenant I, LLC
2. ALS Properties Tenant II, LLC
EXHIBIT C
Facilities
----------------------------------------------------------------------------------------------------
Property Name State City County
------------- ----- ---- ------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
1. Sterling House of Mesa Arizona Mesa Maricopa
----------------------------------------------------------------------------------------------------
2. Clare Bridge of Oro Valley Arizona Oro Valley Pima
----------------------------------------------------------------------------------------------------
3. Sterling House of Peoria Arizona Peoria Maricopa
----------------------------------------------------------------------------------------------------
4. Clare Bridge of Tempe Arizona Tempe Maricopa
----------------------------------------------------------------------------------------------------
5. Sterling House on East Speedway Arizona Tucson Pima
----------------------------------------------------------------------------------------------------
6. Wynwood of Colorado Springs Colorado Colorado Springs El Paso
----------------------------------------------------------------------------------------------------
7. Wynwood of Pueblo Colorado Pueblo Pueblo
----------------------------------------------------------------------------------------------------
8. Sterling House of Pensacola Florida Pensacola Escambia
----------------------------------------------------------------------------------------------------
9. Clare Bridge of Tallahassee Florida Tallahassee Xxxx
----------------------------------------------------------------------------------------------------
10. Clare Bridge of West Melbourne Florida West Melbourne Brevard
----------------------------------------------------------------------------------------------------
11. Clare Bridge Cottage of Winter Haven Florida Winter Haven Polk
----------------------------------------------------------------------------------------------------
12. Sterling House of Winter Haven Florida Winter Haven Polk
----------------------------------------------------------------------------------------------------
13. Wynwood at Twin Falls Idaho Twin Falls Twin Falls
----------------------------------------------------------------------------------------------------
14. Sterling House of Evansville Indiana Evansville Vanderburgh
----------------------------------------------------------------------------------------------------
15. Sterling House of Marion Indiana Xxxxxx Xxxxx
----------------------------------------------------------------------------------------------------
16. Sterling House of Portage Indiana Portage Xxxxxx
----------------------------------------------------------------------------------------------------
17. Sterling House of Richmond Indiana Xxxxxxxx Xxxxx
----------------------------------------------------------------------------------------------------
18. Clare Bridge of Leawood Kansas Leawood Xxxxxxx
----------------------------------------------------------------------------------------------------
19. Clare Bridge Cottage of Topeka Kansas Topeka Shawnee
----------------------------------------------------------------------------------------------------
20. Wynwood of Northville* Michigan Northville Xxxxx
----------------------------------------------------------------------------------------------------
21. Wynwood of Utica* Michigan Utica Macomb
----------------------------------------------------------------------------------------------------
22. Sterling House of Blaine Minnesota Blaine Anoka
----------------------------------------------------------------------------------------------------
23. Clare Bridge of Eden Prairie Minnesota Eden Prairie Hennepin
----------------------------------------------------------------------------------------------------
24. Sterling House of Inver Grove Heights Minnesota Inver Grove Hts. Dakota
----------------------------------------------------------------------------------------------------
25. Clare Bridge of North Oaks Minnesota North Oaks Xxxxxx
----------------------------------------------------------------------------------------------------
26. Clare Bridge of Plymouth Minnesota Plymouth Hennepin
----------------------------------------------------------------------------------------------------
27. Clare Bridge of Westhampton* New Jersey Westhampton Burlington
----------------------------------------------------------------------------------------------------
28. Clare Bridge of Williamsville* New York Amherst Erie
----------------------------------------------------------------------------------------------------
29. Villas of Xxxxxxx Xxxxx New York Xxxxxxx Xxxxxx
----------------------------------------------------------------------------------------------------
30. Wynwood Commons of Kenmore* New York Kenwood Erie
----------------------------------------------------------------------------------------------------
31. Clare Bridge of Niskayuna* New York Niskayuna Schenectady
----------------------------------------------------------------------------------------------------
32. Wynwood Commons of Niskayuna* New York Niskayuna Schenectady
----------------------------------------------------------------------------------------------------
---------
* These properties will be deemed added as "Facilities" upon the execution and
delivery of the Property Lease between ALS Properties Tenant II, LLC and
PSLT-ALS Properties II, LLC relating to such Facilities.
----------------------------------------------------------------------------------------------------
Property Name State City County
------------- ----- ---- ------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
33. Clare Bridge of Perinton* New York Pittsford Monroe
----------------------------------------------------------------------------------------------------
34. Villas of Summerfield New York Syracuse Onondaga
----------------------------------------------------------------------------------------------------
35. Clare Bridge of Cary* North Carolina Cary Wake
----------------------------------------------------------------------------------------------------
36. Clare Bridge of Winston-Salem North Carolina Winston-Salem Forsyth
----------------------------------------------------------------------------------------------------
37. Sterling House of Alliance Ohio Alliance Xxxxx
----------------------------------------------------------------------------------------------------
38. Clare Bridge Cottage of Austintown Ohio Austintown Mahoning
----------------------------------------------------------------------------------------------------
39. Sterling House of Beaver Creek Ohio Beaver Creek
----------------------------------------------------------------------------------------------------
40. Sterling House of Westerville Ohio Columbus
----------------------------------------------------------------------------------------------------
41. Sterling House of Salem Ohio Salem
----------------------------------------------------------------------------------------------------
42. Clare Bridge of Lynnwood Washington Lynnwood Snohomish
----------------------------------------------------------------------------------------------------
43. Clare Bridge of Puyallup Washington Puyallup Xxxxxx
----------------------------------------------------------------------------------------------------
44. Sterling House of Fond du Lac Wisconsin Fond du Lac Fond du Lac
----------------------------------------------------------------------------------------------------
45. Clare Bridge of Kenosha Wisconsin Kenosha Kenosha
----------------------------------------------------------------------------------------------------
46. Clare Bridge Cottage of LaCrosse Wisconsin LaCrosse Lacrosse
----------------------------------------------------------------------------------------------------
47. Sterling House of LaCrosse Wisconsin LaCrosse Lacrosse
----------------------------------------------------------------------------------------------------
EXHIBIT D
FORM OF GUARANTY OF AGREEMENT REGARDING LEASES
----------------------------------------------
THIS GUARANTY OF AGREEMENT REGARDING LEASES (this "Guaranty") is made and
entered into to be effective as of October __, 2004 (the "Effective Date"), by
ALTERRA HEALTHCARE CORPORATION, a Delaware corporation ("Guarantor"), in favor
of PSLT-ALS PROPERTIES HOLDINGS, LLC, a Delaware limited liability company
("PSLT-ALS Holdings").
RECITALS:
WHEREAS, as of the Effective Date, PSLT-ALS Holdings and ALS Properties
Holding Company, LLC, a Delaware limited liability company, as tenant ("ALS
Holdings"), have executed and entered into (i) that certain Agreement
Regarding Leases, and (ii) a certain Agreement Regarding ARL (the Agreement
Regarding Leases, as so modified, and as the same may be renewed, extended, or
further amended or modified from time to time, the "Agreement Regarding
Leases"), pertaining to the Facilities. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Agreement Regarding Leases;
WHEREAS, Guarantor is a direct or indirect owner of 100% of the
beneficial ownership interest in ALS Holdings, and Guarantor will derive
substantial direct and indirect benefits from the transactions contemplated by
the Agreement Regarding Leases; and
WHEREAS, it is a condition to the entering into of the Agreement
Regarding Leases by PSLT-ALS Holdings that Guarantor shall have executed and
delivered this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Guarantor, and in order to induce PSLT-ALS Holdings to enter
into the Agreement Regarding Leases, Guarantor hereby agrees as follows:
1. GUARANTY. Guarantor hereby unconditionally and irrevocably guarantees (i)
the full and prompt payment of all Alterra Rent Payments and other sums
required to be paid by ALS Holdings under the Agreement Regarding Leases, (ii)
the full and timely performance of all other terms, conditions, covenants and
obligations of ALS Holdings under the Agreement Regarding Leases (as same may
be amended, renewed, extended or modified), and (iii) any and all expenses
(including reasonable attorneys' fees and expenses) incurred by PSLT-ALS
Holdings in enforcing any rights under the Agreement Regarding Leases or this
Guaranty (such obligations, collectively, are referred to as the "Guaranteed
Obligations"). Guarantor agrees that this Guaranty is a guarantee of payment
and performance, not collection, and that Guarantor is primarily liable and
responsible for the payment and performance of the Guaranteed Obligations. It
is not necessary for PSLT-ALS Holdings, in order to enforce payment and
performance by Guarantor under this Guaranty, first or contemporaneously to
institute suit or exhaust remedies against ALS Holdings or others liable for
any of the Guaranteed Obligations or to enforce rights against any collateral
securing any of it. With the exception of the defense of prior payment,
performance, or compliance by ALS Holdings or Guarantor of the Guaranteed
Obligations which Guarantor is called upon to pay, or the defense that
PSLT-ALS Holdings' claim against
Guarantor hereunder is barred by the applicable statute of limitations, all
defenses of the law of guaranty or suretyship, including, without limitation,
substantive defenses and procedural defenses, are waived and released by
Guarantor to the extent permitted by law. Except as provided in the preceding
sentence, under no circumstances will the liability of Guarantor under this
Guaranty be terminated either with respect to any period of time when the
liability of ALS Holdings under the Agreement Regarding Leases continues, or
with respect to any circumstances as to which the Guaranteed Obligations have
not been fully discharged by payment, performance or compliance.
2. GUARANTY ABSOLUTE. Guarantor guarantees that the Guaranteed Obligations
will be paid and performed strictly in accordance with the terms of the
Agreement Regarding Leases. The liability and responsibilities of Guarantor
under this Guaranty shall be absolute and unconditional, shall not be subject
to any counterclaim, setoff, or deduction and shall not be released,
discharged, affected or impaired by (i) any change in the time, manner, or
place of payment or performance of any of the Guaranteed Obligations, or any
other amendment or waiver of, or any consent to or departure from, or
termination of, the Agreement Regarding Leases or any of the Property Leases,
(ii) any release or discharge of ALS Holdings or any Alterra Lessee in any
bankruptcy, receivership or other similar proceedings, (iii) the impairment,
limitation or modification of the liability of ALS Holdings or the estate of
ALS Holdings in bankruptcy or any Alterra Lessee or the estate of any Alterra
Lessee in bankruptcy, or of any remedy for the enforcement of ALS Holdings'
liability under the Agreement Regarding Leases, resulting from the operation
of any present or future provisions of any bankruptcy code or other statute or
from the decision in any court, the rejection or disaffirmance of the
Agreement Regarding Leases in any such proceedings, or the assignment or
transfer of the Agreement Regarding Leases by ALS Holdings, (iv) any failure,
omission or delay on the part of PSLT-ALS Holdings to enforce, assert or
exercise any right, power or remedy conferred on or available to PSLT-ALS
Holdings in or by the Agreement Regarding Leases or this Guaranty, or any
action on the part of PSLT-ALS Holdings granting indulgence or extension in
any form whatsoever or any invalidity, irregularity or unenforceability as to
ALS Holdings of all or any part of the Guaranteed Obligations or any security
therefor, (v) the waiver by PSLT-ALS Holdings of the performance or observance
by ALS Holdings or Guarantor of any of the agreements, covenants, terms or
conditions contained in the Agreement Regarding Leases or this Guaranty, (vi)
any merger, consolidation, reorganization or similar transaction involving ALS
Holdings even if ALS Holdings ceases to exist as a result of (and is not the
surviving party in) such transaction, (vii) the inability of PSLT-ALS Holdings
or ALS Holdings to enforce any provision of the Agreement Regarding Leases for
any reason, (viii) any change in the corporate relationship between ALS
Holdings and Guarantor or any termination of such relationship, (ix) any
change in the ownership of all or any part of the membership interests in ALS
Holdings, (x) the inability of ALS Holdings to perform, or the release of ALS
Holdings or Guarantor from the performance of, any obligation, agreement,
covenant, term or condition under the Agreement Regarding Leases or this
Guaranty by reason of any law, regulation or decree, now or hereafter in
effect, or (xi) any disability or other defense of ALS Holdings. PSLT-ALS
Holdings and ALS Holdings, without notice to or consent by Guarantor, may at
any time or times enter into such modifications, extensions, amendments, or
other covenants with respect to the Agreement Regarding Leases as they may
deem appropriate and Guarantor shall not be released thereby, but shall
continue to be fully liable for the payment and performance of all
liabilities, obligations and duties of ALS Holdings under the Agreement
Regarding Leases as so modified, extended or amended.
3. REINSTATEMENT. Guarantor further agrees that, if at any time all or any
part of any payment applied to any of the Guaranteed Obligations is or must be
rescinded or returned for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Guarantor), such
Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application, and this Guaranty
shall continue to be effective or be reinstated, as the case may be, as to
such Guaranteed Obligations, all as though such application had not been made.
4. CERTAIN ACTIONS. PSLT-ALS Holdings may, from time to time, at its
discretion and without notice to Guarantor, take any or all of the following
actions: (a) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to Guarantor, with respect to any of the
Guaranteed Obligations; (b) extend or renew for one or more periods
(regardless of whether longer than the original period), or release or
compromise any obligation of Guarantor hereunder or any obligation of any
nature of any other obligor (including, without limitation, ALS Holdings) with
respect to any of the Guaranteed Obligations; or (c) release or fail to
perfect any lien upon or security interest in, or impair, surrender, release
or permit any substitution or exchange for, all or any part of any property
securing any of the Guaranteed Obligations or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release or compromise any obligations of any nature of any
obligor with respect to any such property.
5. WAIVER. To the extent permitted by applicable law, Guarantor hereby
expressly waives: (i) notice of the acceptance of this Guaranty, (ii) except
as otherwise provided in the Agreement Regarding Leases or this Guaranty,
notice of the existence or creation or non-payment of all or any of the
Guaranteed Obligations, (iii) presentment, demand, notice of dishonor, protest
and all other notices whatsoever except as otherwise provided in the Agreement
Regarding Leases or this Guaranty, and (iv) all diligence in collection or
protection of or realization upon the Guaranteed Obligations or any part
thereof, any obligation hereunder, or any security for or guaranty of any of
the foregoing.
6. WAIVER OF SUBROGATION. Guarantor hereby waives all rights of subrogation
which it may at any time otherwise have as a result of this Guaranty to the
claims of PSLT-ALS Holdings against ALS Holdings and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity
from ALS Holdings which it may at any time otherwise have as a result of this
Guaranty prior to final payment and satisfaction of the Guaranteed
Obligations.
7. MISCELLANEOUS.
(a) Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be
effective unless the same shall be in writing and signed by PSLT-ALS Holdings.
(b) Addresses for Notices. All notices hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certified
mail, return receipt requested, addressed as follows,
or to such other address as shall be designated by Guarantor or PSLT-ALS
Holdings in written notice to the other party:
If to ALS Holdings: ALS Properties Holding Company, LLC
c/o Alterra Healthcare Corporation
0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Alterra Healthcare Corporation
c/o Alterra Healthcare Corporation
0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Guarantor: Alterra Healthcare Corporation
c/o Alterra Healthcare Corporation
0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to PSLT-ALS Holdings: PSLT-ALS Properties Holdings, LLC
c/o Provident Senior Living Trust
000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) No Waiver; Remedies. No failure on the part of PSLT-ALS Holdings to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any other remedies available at law or equity.
(d) Continuing Guaranty; Transfer of Interest. This Guaranty shall create
a continuing guaranty and will (i) remain in full force and effect until
payment and performance in full and satisfaction of the Guaranteed
Obligations, (ii) be binding upon Guarantor and its successors and assigns,
and (iii) inure, together with the rights and remedies of PSLT-ALS Holdings
hereunder, to the benefit of PSLT-ALS Holdings and its successors, as
permitted under the Agreement Regarding Leases. Without limiting the
generality of the foregoing clause, if and when PSLT-ALS Holdings assigns or
otherwise transfers any interest held by it under the Agreement Regarding
Leases to any other person, that other person shall thereupon become vested
with all the benefits held by PSLT-ALS Holdings under this Guaranty.
8. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9. INDUCEMENT TO LANDLORD. Guarantor acknowledges and agrees that the
execution and delivery of this Guaranty by Guarantor to PSLT-ALS Holdings has
served as a material inducement to PSLT-ALS Holdings to execute and deliver
the Agreement Regarding Leases, and Guarantor further acknowledges and agrees
that but for the execution and delivery of this Guaranty by Guarantor,
PSLT-ALS Holdings would not have executed and delivered the Agreement
Regarding Leases.
10. INTENTIONALLY DELETED.
11. INTENTIONALLY DELETED.
12. SUBMISSION TO JURISDICTION. Guarantor hereby irrevocably submits to the
non-exclusive jurisdiction of any State or Federal court located in New York
County, New York State over any action, suit or proceeding to enforce or
defend any right under this Guaranty or
otherwise arising from or relating to this Guaranty, and Guarantor irrevocably
agrees that all claims in respect of any such action, suit or proceeding may
be heard and determined in such court. Guarantor hereby irrevocably waives, to
the fullest extent that it may effectively do so, the defense of an
inconvenient forum or venue to the maintenance of any such action, suit or
proceeding. Guarantor hereby agrees that a final, non-appealable judgment in
any such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
13. WAIVER OF JURY TRIAL. Guarantor hereby waives, to the fullest extent
permitted by applicable law, any right to a trial by jury in any action, suit
or proceeding to enforce or defend any rights under this Guaranty or any other
transaction document or any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection herewith or
arising from or relating to any relationship existing in connection with this
guaranty, and agrees, to the fullest extent permitted by applicable law, that
any such action, suit or proceeding shall be tried before a court and not
before a jury.
14. COOPERATION, FURTHER ASSURANCES. Guarantor covenants, and agrees to sign,
execute and deliver or cause to be signed, executed and delivered and to do or
make, or to cause to be done or make, upon the written request of PSLT-ALS
Holdings, any and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirming or otherwise, as may be reasonably required by
PSLT-ALS Holdings for the purpose of, or in connection with, the transaction
contemplated hereby. Upon full and final payment and performance of the
Guaranteed Obligations, PSLT-ALS Holdings agrees to execute a release for the
benefit of Guarantor, in form and content reasonably satisfactory to PSLT-ALS
Holdings. Notwithstanding anything to the contrary contained herein, this
Guaranty shall survive for a period of twenty four (24) months after the
expiration or earlier termination of the Agreement Regarding Leases, and
Guarantor shall be liable to PSLT-ALS Holdings hereunder for any Guaranteed
Obligations which arise during such period and relate to matters which (i)
occurred during the term of the Agreement Regarding Leases or (ii) ALS
Holdings is otherwise required to indemnify PSLT-ALS Holdings against pursuant
to the terms of the Agreement Regarding Leases.
15. INTENTIONALLY DELETED.
16. Delivery of Financial Information. Guarantor hereby agrees to cause ALS
Holdings to deliver the financial information of Guarantor required to be
delivered to PSLT-ALS Holdings pursuant to Paragraph 9(d) of the Agreement
Regarding Leases and further agrees that any such financial information of
Guarantor so delivered may, without the prior consent of, or notice to,
Guarantor, be disclosed in offering memoranda or prospectuses, or similar
publications in connection with syndications, private placements or public
offerings of PSLT-ALS Holdings' (or PSLT-ALS Holdings' direct or indirect
Parent's) securities or interests, and any other reporting requirements under
applicable federal and state laws, including those of any successor to
PSLT-ALS Holdings. Guarantor agrees to provide such other reasonable
information necessary to facilitate a private placement or a public offering
or to satisfy the SEC or regulatory disclosure requirements. Guarantor agrees
to cause its independent accountants, at PSLT-ALS Holdings' cost, to consent
to the inclusion of their audit report issued with respect to such financial
statements in any registration statement or other filing under federal and
state laws and
to provide the underwriters participating in any offering of securities or
interests of PSLT-ALS Holdings (or PSLT-ALS Holdings' direct or indirect
Parent) with a standard accountant's "comfort" letter with regard to the
financial information of Guarantor included or incorporated by reference into
any prospectus or other offering document. Guarantor also agrees to make
available to any underwriter participating in an offering of PSLT-ALS
Holdings' (or PSLT-ALS Holdings' direct or indirect Parent's) securities or
interests, and any attorney, accountant or other agent or representative
retained by an underwriter (an "Inspector"), all financial and other records
and pertinent corporate documents of Guarantor as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause Guarantor's directors, officers and employees to supply all information
requested by any such Inspector in connection with such offering. Upon request
of PSLT-ALS Holdings, Guarantor shall notify PSLT-ALS Holdings of any
necessary corrections to information PSLT-ALS Holdings proposes to publish
within a reasonable period of time (not to exceed three (3) Business Days)
after being informed thereof by PSLT-ALS Holdings.
17. INDEMNITY.
(a) Indemnity. Guarantor shall indemnify, defend, protect and hold
harmless PSLT-ALS Holdings, its Affiliates, its direct and indirect Parent,
directors, employees, agents and each Person, if any, who controls PSLT-ALS
Holdings or any such Affiliate within the meaning of Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934,
and any placement agent or underwriter with respect to any syndication,
private placement or public offering, from and against all Losses (defined
below) that any Indemnified Party (defined below) may at any time suffer or
incur in connection with or relating to any Third Party Claim (defined below)
that arises out of or is based upon any untrue statement of any material fact
contained in any information or documents furnished by Guarantor, ALS
Holdings, the Alterra Lessees or their respective Affiliates pursuant to
Section 16 hereof or the Agreement Regarding Leases or any Property Lease, as
applicable, or arising out of, or which are based upon, the omission or
alleged omission to state therein a material fact required to be stated in
such information or necessary in order to make the statements in such
information not materially misleading. Any and all of such Losses shall become
part of the Guaranteed Obligations for which Guarantor is liable hereunder.
Any claim for indemnification under this Section 17 shall be subject to the
provisions and procedures set forth in this Section 17. Guarantor shall not
have any indemnification obligations under this Section 17 with respect to
financial statements delivered to PSLT-ALS Holdings following the date that
PSLT-ALS Holdings or PSLT-ALS Holdings' direct or indirect Parent no longer
separately includes, or incorporates by reference, Guarantor's financial
information in its public filings. PSLT-ALS Holdings and/or its direct or
indirect Parent will continue to separately include, or incorporate by
reference, Guarantor's financial statements in its public filings until such
time as PSLT-ALS Holdings' and/or its direct or indirect Parent's attorneys
and accountants reasonably determine that such separate inclusion or
incorporation by reference of Guarantor's financial information in its public
filings is no longer necessary.
(b) Notification of Third Party Claims. (i) A Person that may be entitled
to be indemnified under this Section 17 (the "Indemnified Party"), shall
promptly notify the party or parties liable for such indemnification (the
"Indemnifying Party") in writing of any pending or threatened claim or demand
by a third party, including any Governmental Authority, that the
Indemnified Party has determined has given or could reasonably give rise to a
right of indemnification under this Section 17 (including a pending or
threatened claim or demand asserted by a third party, including any
Governmental Authority, against the Indemnified Party, such claim being a
"Third Party Claim"), describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or demand;
provided, however, that the failure to provide such notice shall not release
the Indemnifying Party from any of its obligations under this Section 17
except to the extent the Indemnifying Party is actually prejudiced by such
failure.
(ii) Upon receipt of a notice of a claim for indemnity from an
Indemnified Party pursuant to Section 17.2(a), and subject to Section 17.2(d),
the Indemnifying Party may, by notice to the Indemnified Party delivered
within ten (10) Business Days of the receipt of notice of such claim, assume
the defense and control of any Third Party Claim but shall allow the
Indemnified Party a reasonable opportunity to participate in the defense of
such Third Party Claim with its own counsel and at its own expense. The
Indemnified Party may take any actions reasonably necessary to defend such
Third Party Claim prior to the time that it receives a notice from the
Indemnifying Party as contemplated by the preceding sentence. The Indemnifying
Party shall select counsel, contractors and consultants of recognized standing
and competence. To the extent the principal remedy sought in any Third Party
Claim is equitable relief, the Indemnifying Party shall consult with the
Indemnified Party as to the selection of counsel to defend such Third Party
Claim. Each Indemnified Party, shall, and shall cause each of its Affiliates
and Representatives to, cooperate in good faith with the Indemnifying Party in
the defense of any Third Party Claim. The Indemnifying Party shall not be
authorized to consent to a settlement of, or the entry of any judgment arising
from, any Third Party Claim, without the consent of any Indemnified Party,
provided that the Indemnified Party shall not withhold its consent if such
settlement or judgment involves solely the payment of money without any
finding or admission of any violation of any Law (defined below) or admission
of any wrongdoing and the Indemnifying Party shall (i) pay or cause to be paid
all amounts arising out of such settlement or judgment concurrently with the
effectiveness of such settlement and (ii) obtain, as a condition of any
settlement or judgment, a complete and unconditional release of each relevant
Indemnified Party from any and all liability in respect of such Third Party
Claim.
(iii) If an Indemnified Party determines in good faith that it is
reasonably likely that a Third Party Claim would materially adversely affect
it other than as a result of monetary damages for which it would be entitled
to indemnification under this Agreement (including with respect to remediation
of any environmental matters), the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend, compromise or settle
such Third Party Claim with its own counsel and at its own expense; provided,
however, that the Indemnifying Party will not be bound by any determination of
a Third Party Claim so defended or any compromise or settlement effected
without its written consent.
(iv) Notwithstanding the foregoing, no Indemnifying Party shall have
any liability under this Section 17 for any Losses arising out of or relating
to any Third Party Claim that is settled or compromised by an Indemnified
Party without the consent of such Indemnifying Party (which consent shall not
be unreasonably withheld or delayed).
(c) Payment; Interest on Payment. If any Third Party Claim shall have
been finally determined (including if any Action (defined below) for
indemnification under this Section 17 shall have been finally determined), the
amount of such final determination shall be paid to the Indemnified Party, on
demand in immediately available funds. A Third Party Claim or Action and the
liability for and amount of Losses, shall be deemed to be "finally determined"
for purposes of this Section 17 when the parties to such Third Party Claim or
Action have so determined by mutual agreement or, if disputed, when a final
non-appealable Governmental Order (defined below) with respect thereto shall
have been entered. Any amounts not paid when due pursuant to this Section 17
shall bear interest from the date thereof until the date paid at a rate equal
to the rate publicly announced from time to time by Citibank, N.A. as its
prime or base rate. Nothing in this Section 17 shall operate to bar an
Indemnified Party from seeking and (where appropriate) obtaining interest on
any claim to the extent ordered by a court adjudicating any Action brought by
the Indemnified Party against an Indemnifying Party.
(d) Additional Indemnification Provisions. (i) The parties hereto agree,
for themselves and on behalf of any of their respective Related Parties and
Representatives, that, with respect to each indemnification obligation in this
Section 17, (i) all Losses shall be net of any Eligible Insurance Proceeds (as
defined below) and (ii) in no event shall the Indemnifying Party have
liability to the Indemnified Party for any punitive, incidental, special,
indirect or consequential damages, except to the extent that the Indemnified
Party pays punitive, incidental, special, indirect or consequential damages to
a third party in respect of a Third Party Claim.
(ii) Any amount payable by an Indemnifying Party pursuant to this
Section 17 shall be paid promptly and payment shall not be delayed pending any
determination of Eligible Insurance Proceeds or Retained Insurance Proceeds
(as defined below). In any case where an Indemnified Party recovers from a
third Person, any amount in respect of any Loss for which such Indemnified
Party has actually been reimbursed by an Indemnifying Party pursuant to this
Section 17 (other than Retained Insurance Proceeds), such Indemnified Party
shall promptly pay over to the Indemnifying Party the amount so recovered
(after deducting therefrom the amount of expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously paid
by the Indemnifying Party to or on behalf of the Indemnified Party in respect
of such Loss and (ii) any amount expended by the Indemnifying Party in
pursuing or defending any claim arising out of such matter.
(iii) All payments required to be made by an Indemnifying Party
under this Section 17 to any Indemnified Party shall be without set-off,
counterclaim or deduction of any kind.
(iv) If any portion of Losses to be reimbursed by the Indemnifying
Party may be covered, in whole or in part, by third-party insurance coverage
(each, an "Insurance Policy"), the Indemnified Party shall promptly give
notice thereof to the Indemnifying Party (a "Notice of Insurance"). If the
Indemnifying Party so requests within 30 days after receipt of a Notice of
Insurance, the Indemnified Party shall use its commercially reasonable efforts
to collect the maximum amount of insurance proceeds thereunder, in which event
(i) all such proceeds actually received, net of costs reasonably incurred by
the Indemnified Party in seeking such collection, shall be considered
"Eligible Insurance Proceeds" and (ii) the Indemnifying Party shall reimburse
the Indemnified Party for all reasonable costs incurred in connection with
such
collection and the amount of any prospective or retroactive increase in
premiums actually paid by the Indemnified Party under the Insurance Policy (as
such increased premiums are incurred) directly related to the payment of
Eligible Insurance Proceeds for such Loss for three years following the next
renewal of such Insurance Policy. If the Indemnifying Party does not request
that the Indemnified Party seek coverage of any portion of such Loss under the
Insurance Policy within 30 days after receipt of a Notice of Insurance, (i)
any proceeds that the Indemnified Party may receive thereunder shall be
considered "Retained Insurance Proceeds" and (ii) the Indemnifying Party shall
have no liability for any premium increases thereunder relating to the
collection of such Retained Insurance Proceeds. (v) If the indemnification
provided for in this Section 17 is unavailable or insufficient to hold
harmless an Indemnified Party, then each Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
Losses in such proportion as is appropriate to reflect the relative fault of
Guarantor, on the one hand, and PSLT-ALS Holdings, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by PSLT-ALS Holdings, on the one hand, or by
Guarantor, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
(vi) Notwithstanding anything to the contrary in this Section 17, to
the extent that the Indemnified Party or an Affiliate realizes an actual Tax
(as defined below) benefit as a result of the event giving rise to the
indemnity payment hereunder (such as, by way of example but not limitation, a
Tax savings resulting from the payment of an indemnified amount that is
deductible by the Indemnified Party, in a case in which the indemnity payment
itself does not give rise to gross income for Tax purposes), the Indemnified
Party shall promptly rebate to the Indemnifying Party the amount of such Tax
benefit.
(e) Mitigation of Losses. Each of the parties agrees to take all
reasonable steps to mitigate their respective Losses upon and after becoming
aware of any event or condition which would reasonably be expected to give
rise to any Losses that are indemnifiable hereunder. The Indemnifying Party
shall not be liable for Losses hereunder to the extent that such Losses
resulted solely from the Indemnified Party's failure to mitigate its Losses in
accordance with the preceding sentence.
(f) No Recourse to Parent Entities. PSLT-ALS Holdings and its existing
and future Affiliates (collectively, the "Releasing Parties") do hereby
absolutely release and discharge each of (i) FEBC-ALT Investors LLC, Emeritus
Corporation, NW Select LLC, their respective existing and future Affiliates
(other than Guarantor and its Subsidiaries) and their respective existing and
future officers and directors and (ii) the existing and future officers and
directors of Guarantor and its Subsidiaries (collectively, the "Releasees")
from any and all Losses which any of the Releasing Parties ever had or now has
or have or hereafter can, shall or may have, for, upon or by reason of any
matter, cause or thing whatsoever to the extent arising from, in connection
with, related to or as a result of (a) the matters addressed in this Section
17, and (b) any action or inaction of any of the Releasees relating to or
associated with the foregoing, in each case, relating to any period from the
beginning of the world to the end of time, regardless of
when brought; provided, however, such release and discharge shall not release
or discharge (i) any Releasee from any Losses to the extent arising from, in
connection with, related to or as a result of any fraud, gross negligence or
willful misconduct by or on behalf of such Releasee, or (ii) Guarantor, ALS
Holdings, the Alterra Lessees or any of their respective successors and
assigns from their respective obligations under this Guaranty, the Agreement
Regarding Leases, the Property Leases, the Lease Guaranties (as defined in the
Property Leases) and any and all of the other documents or agreements entered
into with respect to any of the foregoing documents.
(g) Definitions. For purposes of this Section 17, the following terms
shall have the meanings set forth below:
"Action" means any civil, criminal or administrative action, suit,
demand, claim, arbitration, hearing, litigation, dispute or other proceeding
or investigation by or before any Governmental Authority or arbitrator.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Governmental Authority" means any United States federal, state or
local or any supra-national or non-U.S. government, political subdivision,
governmental, regulatory or administrative authority, instrumentality, agency,
body or commission, self-regulatory organization or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Law" means any U.S. federal, state, local or non-U.S. statute, law,
ordinance, regulation, rule, code, order or other requirement or rule of law.
"Losses" means, without duplication, all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including any
Action brought by any Governmental Authority or Person), including reasonable
attorneys' fees and costs of investigation.
"Representative" of a Person means the directors, officers,
stockholders, partners, members, employees, trustees, counsel, controlling
persons (if any), representatives and agents of such Person, and each of the
heirs, executors, successors and permitted assigns of any of the foregoing.
"Tax" or "Taxes" means (i) any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer
(including real estate transfer taxes), stamp, or environmental tax (including
taxes under Code Section 59A), or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or penalty, addition to tax or additional amount imposed by any
Governmental Authority; and (ii) any liability of PSLT-ALS Holdings or any
Provident Lessor for the payment of amounts with respect to payments of a type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation of
PSLT-ALS Holdings or any Provident Lessor under any Tax sharing arrangement or
Tax indemnity arrangement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
Guarantor has caused this Guaranty to be effective as of the Effective
Date.
GUARANTOR:
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By:_________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _____________ )
) SS
COUNTY OF ___________ )
On this ___ day of October, 2004, before me, the undersigned
officer, personally appeared ____________________________, personally known to
me, or proved to me on the basis of satisfactory evidence, and who
acknowledged that he/she is the _________________ of ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation, and that as such officer, being duly
authorized to do so pursuant to the company's bylaws or a resolution of its
board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
company by himself in his authorized capacity as such officer, as his free and
voluntary act and deed and the free and voluntary act and deed of the company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
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[NOTARIAL SEAL] Notary Public
My Commission Expires:
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