Exhibit 10.3.1
MEZZANINE LOAN AGREEMENT
Dated as of November 1, 2002
Among
THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III,
collectively, as Borrowers
and
VENTAS REALTY, LIMITED PARTNERSHIP,
as Lender
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.......................2
SECTION 1.1. DEFINITIONS................................................2
SECTION 1.2. PRINCIPLES OF CONSTRUCTION................................28
ARTICLE II. THE LOAN.....................................................28
SECTION 2.1. THE LOAN..................................................28
SECTION 2.2. INTEREST RATE.............................................29
SECTION 2.3. LOAN PAYMENTS.............................................29
SECTION 2.4. PREPAYMENTS...............................................30
SECTION 2.5. SUPPLEMENTAL MORTGAGE AFFIDAVITS..........................32
ARTICLE III. REPRESENTATIONS AND WARRANTIES...............................32
SECTION 3.1. BORROWER REPRESENTATIONS..................................32
SECTION 3.2. SURVIVAL OF REPRESENTATIONS...............................45
ARTICLE IV. BORROWER COVENANTS...........................................46
SECTION 4.1. BORROWER AFFIRMATIVE COVENANTS............................46
SECTION 4.2. BORROWER NEGATIVE COVENANTS...............................55
ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION.........................60
SECTION 5.1. INSURANCE.................................................60
SECTION 5.2. CASUALTY AND CONDEMNATION.................................65
SECTION 5.3. DELIVERY OF NET PROCEEDS..................................66
ARTICLE VI. ACCOUNTS.....................................................70
SECTION 6.1. MEZZANINE CASH MANAGEMENT ACCOUNT/
MEZZANINE COLLECTION ACCOUNT...........................70
SECTION 6.2. DISTRIBUTIONS FROM MEZZANINE CASH MANAGEMENT ACCOUNT......71
SECTION 6.3. TAX AND INSURANCE ESCROW ACCOUNT..........................72
SECTION 6.4. DEBT SERVICE ACCOUNT......................................74
SECTION 6.5. OPERATING EXPENSE RESERVE ACCOUNT.........................74
SECTION 6.6. CAPITAL EXPENDITURE RESERVE ACCOUNT.......................75
SECTION 6.7. DEFERRED MAINTENANCE AND ENVIRONMENTAL ESCROW ACCOUNT.....76
SECTION 6.8. NET PROCEEDS ACCOUNT......................................76
SECTION 6.9. INTENTIONALLY DELETED.....................................77
SECTION 6.10. GROUND RENT ESCROW ACCOUNT................................77
SECTION 6.11. ACCOUNT COLLATERAL........................................77
SECTION 6.12. PERMITTED INVESTMENTS.....................................78
SECTION 6.13. BANKRUPTCY................................................78
SECTION 6.14. LETTERS OF CREDIT.........................................79
SECTION 6.15. PROVISIONS REGARDING LETTERS OF CREDIT....................80
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ARTICLE VII. PROPERTY MANAGEMENT..........................................80
SECTION 7.1. THE MANAGEMENT AGREEMENT..................................81
SECTION 7.2. PROHIBITION AGAINST TERMINATION OR MODIFICATION...........81
SECTION 7.3. REPLACEMENT OF MANAGER....................................81
ARTICLE VIII. TRANSFERS....................................................82
SECTION 8.1. TRANSFER OF THE PROPERTIES AND COLLATERAL.................82
SECTION 8.2. TRANSFER OF EQUITY INTERESTS..............................82
SECTION 8.3. LENDER'S CONSENT RIGHTS...................................82
ARTICLE IX. SALE AND SECURITIZATION OF MORTGAGE..........................83
SECTION 9.1. SALE OF MORTGAGES AND SECURITIZATION......................83
SECTION 9.2. SECURITIZATION INDEMNIFICATION............................84
ARTICLE X. DEFAULTS.....................................................86
SECTION 10.1. EVENT OF DEFAULT..........................................86
SECTION 10.2. REMEDIES..................................................90
SECTION 10.3. REMEDIES CUMULATIVE.......................................92
ARTICLE XI. MISCELLANEOUS................................................92
SECTION 11.1. SUCCESSORS AND ASSIGNS....................................92
SECTION 11.2. LENDER'S DISCRETION.......................................92
SECTION 11.3. GOVERNING LAW.............................................93
SECTION 11.4. MODIFICATION, WAIVER IN WRITING...........................94
SECTION 11.5. DELAY NOT A WAIVER........................................94
SECTION 11.6. NOTICES...................................................95
SECTION 11.7. WAIVER OF RIGHT TO TRIAL BY JURY..........................96
SECTION 11.8. HEADINGS..................................................96
SECTION 11.9. SEVERABILITY..............................................96
SECTION 11.10. PREFERENCES...............................................96
SECTION 11.11. WAIVER OF NOTICE..........................................97
SECTION 11.12. REMEDIES OF BORROWER......................................97
SECTION 11.13. EXPENSES; INDEMNITY.......................................97
SECTION 11.14. SCHEDULES INCORPORATED....................................98
SECTION 11.15. OFFSETS, COUNTERCLAIMS AND DEFENSES.......................98
SECTION 11.16. NO JOINT VENTURE OR PARTNERSHIP;
NO THIRD PARTY BENEFICIARIES...........................99
SECTION 11.17. PUBLICITY.................................................99
SECTION 11.18. WAIVER OF MARSHALLING OF ASSETS...........................99
SECTION 11.19. WAIVER OF OFFSETS/DEFENSES/COUNTERCLAIMS.................100
SECTION 11.20. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE............100
SECTION 11.21. BROKERS AND FINANCIAL ADVISORS...........................100
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SECTION 11.22. INTENTIONALLY DELETED....................................101
SECTION 11.23. PRIOR AGREEMENTS.........................................101
SECTION 11.24. SERVICER.................................................101
SECTION 11.25. DUPLICATE ORIGINALS; COUNTERPARTS........................101
SECTION 11.26. CROSS COLLATERALIZATION..................................101
SECTION 11.27. JOINT AND SEVERAL LIABILITY..............................102
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SCHEDULES
Schedule I - Mortgage Borrowers
Schedule II - Intentionally Deleted
Schedule III - Borrowers, Licensed Beds
Schedule IV - Organizational Chart
Schedule V - Allocated Loan Amount
Schedule VI - Amortization
Schedule VII - Intentionally Deleted
Schedule VIII - Guarantors
Schedule IX - Insurance Claims
Schedule X - Waivers of Physical Plant Standards
Schedule XI - Pending Audits
Schedule XII - Waivers in Connection with Licensed Beds
Schedule XIII - Proceedings and Notices
Exhibits
Exhibit A - Intentionally Deleted
Exhibit B - Intentionally Deleted
Exhibit C - Intentionally Deleted
Exhibit D - Material Agreements
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MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT, dated as of November 1, 2002 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "Agreement"), among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware
limited partnership, having an address at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 (together with its successors and assigns "Lender")
and THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III attached hereto, each
a Delaware limited liability company and each having an address at 0000 Xxxxxxx
Xxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxxxx 00000 (each, a "Borrower" and
collectively, the "Borrowers").
All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.
W I T N E S S E T H :
WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, as mortgage lender (together with its successors and assigns, the
"Mortgage Lender"), has made a loan in the maximum principal amount of
$55,000,0000 (the "Mortgage Loan") to those entities listed as a "Mortgage
Borrower" on Schedule I attached hereto, each a Delaware limited liability
company (each, a "Mortgage Borrower" and collectively, the "Mortgage Borrowers")
pursuant to a Loan Agreement of even date herewith (as amended, restated,
replaced, supplemented or otherwise modified from time to time, the "Mortgage
Loan Agreement"), which Mortgage Loan is evidenced by a Promissory Note of even
date herewith (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the "Mortgage Note") made by the Mortgage Borrowers
to Mortgage Lender and secured by, among other things, those certain Mortgages
(as defined in the Mortgage Loan Agreement) made by each of the Mortgage
Borrowers in favor of Mortgage Lender pursuant to which the Mortgage Borrowers
have granted to the Mortgage Lender first priority mortgages and deeds of trust
on the real property and other collateral as more fully described in the
Mortgages (each, a "Mortgage Property" and collectively, the "Mortgage
Properties");
WHEREAS, THI of Ohio ALFs I, LLC (the "Fee Property Borrower") is the
owner of a fee interest in each of the Mezzanine Properties (as defined below)
listed opposite its name on Schedule III attached hereto;
WHEREAS, each of (i) THI of Ohio at Kent, LLC, (ii) THI of Ohio at
Cortland, LLC, (iii) THI of Ohio at Berea, LLC, (iv) THI of Maryland at Franklin
Square, LLC and (v) THI of Maryland at Fort Washington, LLC (each, a "Leasehold
Property Borrower" and collectively, the "Leasehold Property Borrowers") is the
owner of a leasehold interest in the Mezzanine Property (as defined below)
listed opposite its name on Schedule III attached hereto;
WHEREAS, THI of Maryland at Franklin Square, LLC is the owner of a fee
interest in the Mezzanine Property that is a parking lot;
WHEREAS, THI of Ohio SNFs, LLC (the "Ohio Equity Borrower") is the
legal and beneficial owner of all of the membership interests in each Mortgage
Borrower listed under its name on Schedule I attached hereto (such membership
interests, the "Ohio Pledged Company Interests");
WHEREAS, THI of Maryland SNFs I, LLC (the "Maryland I Equity
Borrower") is the legal and beneficial owner of all of the membership interests
in each Mortgage Borrower listed under its name on Schedule I attached hereto
(such membership interests, the "Maryland I Pledged Company Interests");
WHEREAS, THI of Maryland SNFs II, LLC (the "Maryland II Equity
Borrower") is the legal and beneficial owner of all of the membership interests
in each of (i) THI of Maryland at Franklin Square, LLC and (ii) THI of Maryland
at Fort Washington, LLC (such membership interests, the "Maryland II Pledged
Company Interests");
WHEREAS, (i) the Fee Property Borrower and the Leasehold Property
Borrowers are individually referred to herein as, a "Property Borrower" and
collectively as, the "Property Borrowers", (ii) the Ohio Equity Borrower, the
Maryland I Equity Borrower and the Maryland II Equity Borrower are individually
referred to herein, as an "Equity Borrower" and collectively as, the "Equity
Borrowers" and (iii) the Ohio Pledged Company Interests, the Maryland I Pledged
Company Interests and the Maryland II Pledged Company Interests are referred to
herein collectively as, the "Pledged Company Interests";
WHEREAS, the Borrowers have requested that Lender make a loan to the
Borrowers in the initial principal amount of $22,000,000 (the "Loan"); and
WHEREAS, as a condition precedent to the obligation of Lender to make
the Loan to the Borrowers, (i) each Equity Borrower has entered into that
certain Mezzanine Pledge and Security Agreement of even date herewith in favor
of Lender (as amended, restated, replaced, supplemented or otherwise modified
from time to time, the "Pledge Agreement"), pursuant to which such Equity
Borrower has granted to Lender a first priority security interest in the
Collateral (as defined in the Pledge Agreement) as collateral security for the
Debt (as defined below) and (ii) each Property Borrower has entered into a
Mortgage (as defined below) in favor of Lender, pursuant to which such Property
Borrower has granted to Lender a first priority security interest in each
Mezzanine Property (as defined below);
NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:
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ARTICLE DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided:
"Account Collateral" means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities.
"Accreditation" means certification by a generally recognized
independent agency or other organization that a facility fully complies with the
standards set by such agency or organization for operation of such a facility.
"Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls," "controlling" and "controlled" have the meanings correlative
to the foregoing.
"Agreement" means this Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Allocated Loan Amount" means the portion of the Loan Amount allocated
to each Mezzanine Property as set forth on Schedule V, as such amounts shall be
adjusted from time to time as hereinafter set forth. Upon each adjustment in the
amount of Debt due to (A) a regular payment of monthly Debt Service pursuant to
Section 2.3.1, each Allocated Loan Amount shall be decreased by an amount equal
to the product of (i) the amount of such payment and (ii) a fraction, the
numerator of which is the applicable Allocated Loan Amount (prior to the
adjustment in question) and the denominator of which is the total of all
Allocated Loan Amounts (prior to the adjustment in question) or (B) an
adjustment of the Loan Amount as a result of a reallocation of the aggregate
principal balance of the Loan and the Mortgage Loan pursuant to Section 2 of the
Cooperation Agreement, each Allocated Loan Amount shall be decreased or
increased by an amount equal to the product of (i) the amount by which the Loan
Amount is to be decreased or increased in connection with a reallocation
pursuant to Section 2 of the Cooperation Agreement and (ii) a fraction, the
numerator of which is the applicable Allocated Loan Amount (prior to the
adjustment in question) and the denominator of which is the total of all
Allocated Loan Amounts (prior to the adjustment in question). Notwithstanding
the foregoing sentence to the contrary, when the Debt is reduced as the result
of Lender's receipt of proceeds with respect to a Condemnation or Casualty
affecting one hundred percent (100%) of a Mezzanine Property, the Allocated Loan
Amount for such Mezzanine Property with respect to which the insurance proceeds
or Award were received shall, at Lender's sole discretion, be reduced to zero
(such Allocated Loan Amount prior to reduction being referred to as the
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"Withdrawn Allocated Amount"), and each other Allocated Loan Amount shall, if
the Withdrawn Allocated Amount exceeds the proceeds (such excess being referred
to as the "Proceeds Deficiency"), be increased by an amount equal to the product
of (1) the Proceeds Deficiency and (2) a fraction, the numerator of which is the
applicable Allocated Loan Amount (prior to the adjustment in question) and the
denominator of which is the aggregate of all of the Allocated Loan Amounts
(prior to the adjustment in question) other than the Withdrawn Allocated Amount.
"ALTA" means American Land Title Association, or any successor
thereto.
"Alteration Threshold" means (a) with respect to any Mezzanine
Property, the greater of (i) five percent (5%) of the Allocated Loan Amount for
such Mezzanine Property or (ii) $200,000 and (b) with respect to the Mezzanine
Properties, two percent (2%) of the Loan Amount.
"Annual Budget" means the operating and capital budget for the
Mezzanine Properties on a combined basis and for each Mezzanine Property setting
forth, in reasonable detail, (i) Borrowers' good faith estimate of the
anticipated results of operations, including Operating Income, Operating
Expenses, and Capital Expenditures for the applicable Fiscal Year and (ii) a
breakdown of projected Patient Revenues and other revenues of each Borrower and
its Affiliates itemized by payor type.
"Assignment of Leases" means, with respect to each Mezzanine Property,
that certain first priority Assignment of Leases and Rents and Contracts, dated
as of the date hereof, from the applicable Property Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, and "Assignments of Leases
and Rents" means all such instruments collectively.
"Assisted Living Facility" means a residential or facility-based
program that provides housing and supportive services, supervision, personalized
assistance, health-related services or a combination thereof which meets the
needs of individuals who are unable to perform or who need assistance in
performing the activities of daily living, whether licensed as an assisted
living facility, a residential care facility or adult care facility.
"Assignment of Management Agreement" means that certain Assignment of
Management Agreement and Staff Leasing Agreement dated the date hereof among the
Property Borrowers, Manager, each Staff Provider and Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and "Assignments of Management Agreements" means all such instruments
collectively.
"Award" means any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of a Mezzanine
Property.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules
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and regulations from time to time promulgated thereunder, and any comparable
foreign laws relating to bankruptcy, insolvency or creditors' rights.
"Basic Carrying Costs" means, with respect to each Mezzanine Property,
the sum of the following costs associated with such Mezzanine Property: (i)
Taxes, (ii) Insurance Premiums and (iii) ground rents, if any.
"Berea Ground Lease" means that certain Lease Agreement dated January
1, 1991 by and between Xxxxxxxx X. Xxxxxxx, Trustee and Xxxxxx Xxxxx, Trustee
(collectively, the "Berea Ground Lessor") and Northwestern Service Corporation,
a Delaware corporation ("Berea Original Lessee"), as assigned pursuant to the
Assignment and Landlord's Consent and Estoppel Certificate dated May 31, 2000
among the Berea Ground Lessor, Providence Health Care, Inc., a Delaware
corporation (successor to the Berea Original Lessee), and Trans Healthcare of
Ohio, Inc., a Delaware corporation, as further assigned to the applicable
Borrower, as amended, modified and in effect from time to time.
"Borrower" and "Borrowers" each has the meaning set forth in the first
paragraph of this Agreement.
"Borrower Party" means each Borrower, each Mortgage Borrower and each
entity which held any Regulatory Permit (as defined herein and in the Mortgage
Loan Agreement) relating to any Property prior to transferring same to such
Borrower or Mortgage Borrower, as applicable.
"Business Day" means any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in the
State of New York or the State where the Cash Management Bank is located.
"Capital Expenditure Reserve Account" shall have the meaning set forth
in Section 6.6(a).
"Capital Expenditures" means, with respect to each Mezzanine Property,
hard and soft costs incurred by any Property Borrower with respect to
replacements and capital repairs made to the Mezzanine Property (including
repairs to, and replacements of, structural components, roofs, building systems,
parking garages and parking lots), in each case to the extent capitalized in
accordance with GAAP and to the extent not paid by Net Proceeds.
"Casualty" means the occurrence of any casualty, damage or injury, by
fire or otherwise, to a Property or any part thereof.
"Casualty Consultant" has the meaning set forth in Section 5.3.2(c).
"Casualty Retainage" has the meaning set forth in Section 5.3.2(d).
"Closing Date" means the date of funding the Loan.
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"CMS" means the Centers for Medicare and Medicaid Services (formerly
known as the Health Care Financing Administration ("HCFA")).
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral" has the meaning set forth in the recitals of this
Agreement.
"Collateral Accounts" means, collectively, the Mezzanine Cash
Management Account, the Mezzanine Collection Account, the Tax and Insurance
Escrow Account, the Ground Rent Escrow Account, the Debt Service Account, the
Net Proceeds Account, the Capital Expenditure Reserve Account, the Operating
Expense Reserve Account and the Deferred Maintenance and Environmental Escrow
Account.
"CON" means a certificate of need or similar permit or approval (not
including conventional building permits) from a Governmental Authority related
to the construction and/or operation of Improvements at any Property for use for
a specified number of beds in a Nursing Facility, Assisted Living Facility
and/or Specialty Hospital, or alteration of any such Improvements or
modifications of services provided at a Property used as a Nursing Facility,
Assisted Living Facility and/or Specialty Hospital.
"Condemnation" means a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of a
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting the applicable Property or
any part thereof.
"Cooperation Agreement" means that certain Cooperation Agreement of
even date herewith among Lender, Mortgage Borrowers, Borrowers and Guarantors,
as the same may from time to time be modified, amended or replaced.
"Cortland Ground Lease" means that certain Lease Agreement dated
October 22, 1974 by and between Xxxx-Xxx Inc., an Ohio corporation ("Cortland
Ground Lessor") and Northwestern Service Corporation, a Delaware corporation
("Cortland Original Lessee"), as assigned pursuant to the Assignment and
Landlord's Consent and Estoppel Certificate dated May 31, 2000 among Kamalt
Corporation, an Ohio corporation (as successor to the Cortland Ground Lessor),
Providence Health Care, Inc., a Delaware corporation (successor to Cortland
Original Lessee), and Trans Healthcare of Ohio, Inc., a Delaware corporation, as
further assigned to the applicable Borrower, as amended, modified and in effect
from time to time.
"Debt" means the outstanding principal amount of the Loan together
with all interest accrued and unpaid thereon and all other sums (including,
without limitation, any Prepayment Premium payable hereunder and any of Lender's
costs and expenses for which any Borrower is responsible under the terms of any
of the Loan Documents) due to Lender in respect
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of the Loan under the Note, this Agreement, the Pledge Agreement, the Master
Guaranty Pledge, the Mortgages, the Environmental Indemnity or any other Loan
Document.
"Debt Constant" means eleven and thirty-three one hundredths percent
(11.33%).
"Debt Service" means, with respect to any particular period of time,
scheduled principal and interest payments under the Note.
"Debt Service Account" has the meaning set forth in Section 6.4.
"Debt Service Coverage Ratio" shall mean, for any twelve (12) calendar
month period, the ratio of (i) the Pro Forma Net Operating Income for all
Properties for such period immediately preceding the date of calculation to (ii)
Debt Service plus the Mortgage Debt Service for the twelve (12) calendar month
period following the date of calculation assuming, as to the Debt Service, an
interest rate equal to the greater of the Debt Constant and the Interest Rate in
effect on the date of such calculation.
"Default" means the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"Default Rate" means, with respect to the Loan, a rate per annum equal
to the lesser of (i) the Maximum Legal Rate, or (ii) four percent (4%) above the
Interest Rate.
"Deferred Maintenance Amount" means $179,456.25.
"Deferred Maintenance and Environmental Escrow Account" has the
meaning set forth in Section 6.7(a).
"Deferred Maintenance Conditions" means those items described in the
property condition reports delivered to Lender in connection with the Loan.
"Disclosure Document" has the meaning set forth in Section 9.2(a).
"Eligible Account" means a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company is subject to regulations substantially similar to 12 C.F.R.
(s).9.10(b), having in either case a combined capital and surplus of at least
fifty million dollars ($50,000,000) and subject to supervision or examination by
federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
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"Eligible Institution" means a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody's, and F-1+ by Fitch in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least "AA-" by Fitch and S&P and "Aa2" by
Moody's.
"Embargoed Person" has the meaning set forth in Section 3.1.37.
"Environmental Indemnity" means that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrowers and Guarantors in
connection with the Loan for the benefit of Lender.
"Equipment" has the meaning set forth in the Granting Clause of the
Mortgages.
"Equity Borrowers" and "Equity Borrower" each has the meaning set
forth in the recitals of this Agreement.
"ERISA" has the meaning set forth in Section 4.2.11.
"Event of Default" has the meaning set forth in Section 10.1.
"Exchange Act" has the meaning set forth in Section 9.2(a).
"Fee Property Borrower" has the meaning set forth in the recitals of
this Agreement.
"Fiscal Year" means each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"Fitch" means Fitch, Inc.
"Franklin Square Ground Lease" means that certain Lease Agreement
dated May 1, 1993 by and between Ellsea Realty Limited Partnership, as
beneficial owner and Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx, as personal
representatives to the Estate of Xxx X. Xxxxxxx, as record owner (collectively
the "Franklin Square Ground Lessor") and Camden Yards Nursing and Rehabilitation
Center, LLC, a Maryland limited liability company ("Franklin Square Original
Lessee"), as assigned by Franklin Square Original Lessee to Mariner Health of
Maryland, Inc. ("Mariner") pursuant to the Assignment and Assumption Agreement
with Guaranty dated October 1, 1996; as further assigned by Mariner to
Millennium Health and Rehabilitation Center of Franklin Square, LLC, a Maryland
limited liability company, pursuant to the Assignment and Assumption Agreement
dated June 1, 1999, as further assigned to the applicable Borrower, as amended,
modified and in effect from time to time.
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"Fort Washington Ground Lease" means that certain Lease dated December
1, 0000, xxxxxxx Xxxx Xxxxxxxxxx Care Center Limited Partnership, a Maryland
limited partnership ("Fort Washington Ground Lessor") and Millennium Health and
Rehabilitation Center of Fort Washington, LLC ("Original Fort Washington Ground
Lessee"), as assigned to the applicable Borrower, as amended, modified and in
effect from time to time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.
"Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental xxxx (xxxxxxx,
xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter
in existence, including, without limitation, CMS, the United States Department
of Health and Human Services, any state licensing agency and/or any state
Medicaid agency.
"Ground Leases" mean, collectively, the Berea Ground Lease, the
Cortland Ground Lease, the Franklin Square Ground Lease, the Fort Washington
Ground Lease and the Kent Ground Lease, and "Ground Lease" means any of such
ground leases individually.
"Ground Lessor Agreement" means, with respect to each Ground Lease,
the Lessor Recognition and Estoppel Agreement by and among the applicable
Borrower, ground lessor thereunder and fee mortgagee thereunder, if any, as
amended, modified and in effect from time to time.
"Ground Rent" means any rent, additional rent or other charge payable
by the tenant under a Ground Lease.
"Ground Rent Funds" has the meaning set forth in Section 6.10(b).
"Ground Rent Escrow Account" has the meaning set forth in Section
6.10(a).
"Guarantors" means, collectively, Trans Healthcare, Inc., a Delaware
corporation, and each of its subsidiaries shown in the attached Schedule VIII
and "Guarantor" shall mean each such entity.
"Guaranty (Recourse Obligations)" means that certain Guaranty of
Recourse Obligations of even date herewith from Guarantors for the benefit of
Lender.
"Improvements" has the meaning set forth in the Granting Clause of the
Mortgages.
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"Indebtedness" means, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
Indebtedness of others guaranteed by such Person, directly or indirectly, (v)
all obligations under leases that constitute capital leases for which such
Person is liable, and (vi) all obligations of such Person under interest rate
swaps, caps, floors, collars and other interest hedge agreements, in each case
whether such Person is liable contingently or otherwise, as obligor, guarantor
or otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss.
"Indemnified Liabilities" has the meaning set forth in Section
11.13(b).
"Independent Director" means a duly appointed member of the board of
directors (or with respect to a Single Member LLC, its board of managers) of the
relevant entity who shall not have been, at the time of such appointment or at
any time while serving as a director of the relevant entity and may not have
been at any time in the preceding five (5) years, (a) a direct or indirect legal
or beneficial owner in such entity or any of its affiliates, (b) a creditor,
supplier, employee, officer, director, family member, manager, or contractor of
such entity or any of its affiliates, or (c) a person who controls (whether
directly, indirectly, or otherwise) such entity or its affiliates or any
creditor, supplier, employee, officer, director, manager, or contractor of such
entity or its affiliates.
"Insurance Premiums" has the meaning set forth in Section 5.1.1(b).
"Interest Accrual Period" means, subject to the proviso in the
definition of the defined term "Payment Date," each period of time running from
and including the fifteenth (15th) day of a calendar month to and including the
fourteenth (14th) day of the following calendar month during the term of the
Loan. If the Closing Date shall occur prior to the fifteenth (15th) day of a
calendar month, the first Interest Accrual Period shall commence on and include
the Closing Date and end on and include the fourteenth (14th) day of the
calendar month in which the Closing Date occurs. If the Closing Date shall occur
after the fourteenth (14th) day of a calendar month, the first Interest Accrual
Period shall commence on the Closing Date and end on and include the fourteenth
(14th) day of the calendar month following the month in which the Closing Date
occurs. If the Closing Date shall occur on the fourteenth (14th) day of a
calendar month, the first Interest Accrual Period shall consist of a one (1) day
period consisting of the Closing Date.
"Interest Rate" means a rate per annum equal to seventeen percent
(17%).
"Inventory" means all "inventory," as such term is defined in the UCC
and, to the extent not included in such definition, any goods now owned or
hereafter acquired by any Borrower intended for sale or lease, or to be used in
connection with services furnished by any Borrower in connection with any
Mezzanine Property, including without limitation, all
10
inventories held by each Borrower for sale or use at or from any Mezzanine
Property, and all other such goods, wares, merchandise, and materials and
supplies of every nature owned by any Borrower and all such other goods returned
to or repossessed by any Borrower.
"Kent Ground Lease" means that certain Amended and Restated Lease
Agreement dated June 21, 1989 by and between Health Care Reit, Inc., a Delaware
corporation ("Kent Ground Lessor") and Northwestern Service Corporation, a
Delaware corporation ("Kent Original Lessee"), as assigned pursuant to the
Assignment and Landlord's Consent and Estoppel Certificate dated May 31, 2000
among Kent Ground Lessor, Providence Health Care, Inc., a Delaware corporation
(successor to Kent Original Lessee) and Trans Healthcare of Ohio, Inc., a
Delaware corporation, as further assigned to the applicable Borrower, as
amended, modified and in effect from time to time.
"Lease" means any lease, sublease, sub-sublease or other agreement or
arrangement affecting the use or occupancy of all or any portion of any Property
(other than any Ground Lease) now in effect or hereafter entered into
(including, without limitation, any patient admission and resident care
agreement, letting, sublease, license, concession, tenancy or other occupancy
agreement covering or encumbering all or any portion of such Property), together
with any guarantee, supplement, amendment, modification, extension or renewal of
the same, and any additional remainder, reversion, or other right and estate
appurtenant thereto.
"Leasehold Property Borrowers" and "Leasehold Property Borrower" each
has the meaning set forth in the recitals of this Agreement.
"Legal Requirements" means, with respect to each Borrower, each
Mortgage Borrower and each Property, all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, guidelines,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting such Borrower, such Mortgage Borrower or such Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, including, without
limitation, (i) the Americans with Disabilities Act of 1990, (ii) all zoning,
subdivision and land use laws, regulations and ordinances, health, fire,
building codes and parking laws, (iii) skilled nursing facility, residential
care, personal care, adult care, boarding home and/or assisted living facility
laws, rules, regulations and guidelines, including, without limitation, Medicare
Regulations and Medicaid Regulations and (iv) any licensure requirements or
certification requirements under applicable federal and/or state cost
reimbursement programs, including, without limitation, Medicare and Medicaid,
and all permits, licenses and authorizations and regulations relating thereto,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any Borrower or any Mortgage Borrower,
at any time in force affecting such Property or any part thereof, including,
without limitation, any which may (i) require repairs, modifications or
alterations in or to such Property or any part thereof, or (ii) in any way limit
the use and enjoyment thereof.
"Lender" means Ventas Realty, Limited Partnership, a Delaware limited
partnership, together with its successors and assigns.
11
"Lender Indemnities" has the meaning set forth in Section 11.13(b).
"Letter of Credit" means a clean, irrevocable, unconditional,
transferable evergreen letter of credit with respect to which no Borrower has
any reimbursement obligation, payable on sight draft only, in favor of Lender
and entitling Lender to draw thereon in New York, New York, issued by an
Eligible Institution. A Letter of Credit must expressly provide that (i) partial
draws are permitted thereunder, (ii) it is freely transferable to any successor
or assign of Lender without cost, and (iii) Lender is entitled to draw on it
immediately and without further notice (a) upon the occurrence and during the
continuance of a Default or Event of Default, (b) if any Borrower fails to
deliver to Lender, no less than thirty (30) days prior to the termination of a
Letter of Credit (including any renewal or extension thereof), a renewal or
extension of such Letter of Credit or a replacement Letter of Credit, or (c) if
the issuing bank is no longer an Eligible Institution and Borrowers fail to
deliver to Lender a replacement Letter of Credit within ten (10) days of the
date that the issuing bank is no longer an Eligible Institution.
"Liabilities" has the meaning set forth in Section 9.2(b).
"Lien" means, with respect to each Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting such Property or any portion
thereof or any Borrower or Mortgage Borrower or any interest therein, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.
"Liquidation Event" has the meaning set forth in Section 2.4.2(b).
"Loan" means the loan made by Lender to Borrowers pursuant to this
Agreement.
"Loan Amount" shall mean the outstanding principal balance of the
Loan, as the same may be increased or decreased as a result of the Re-sizing,
prepayment or otherwise from time to time.
"Loan Documents" means, collectively, this Agreement, the Note, the
Pledge Agreement, the Master Guaranty Pledge, the Mortgages, the Assignments of
Leases, the Mezzanine Cash Management Agreement, the Mezzanine Collection
Account Agreement, the Master Guaranty, the Environmental Indemnity, the
Assignment of Management Agreement and any other document pertaining to the
Mezzanine Properties as well as all other documents now or hereafter executed
and/or delivered in connection with the Loan as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Lockout Date" means the date that is eighteen (18) months after the
Re-sizing Date.
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"Management Agreement" means the Management Services Agreement, dated
as of the date hereof, between the Property Borrowers, each as owner, and the
Manager, as manager, pursuant to which such manager is to provide management and
other services with respect to all of the Properties.
"Manager" means Trans Health Management, Inc., a Delaware corporation
, in its capacity as manager under the Management Agreement, or its successors
or permitted assigns thereunder.
"Maryland Property Borrowers" means each of the Borrowers that owns a
Property in the State of Maryland.
"Maryland I Equity Borrower" has the meaning set forth in the recitals
of this Agreement.
"Maryland I Pledged Company Interests" has the meaning set forth in
the recitals of this Agreement.
"Maryland II Equity Borrower" has the meaning set forth in the
recitals of this Agreement.
"Maryland II Pledged Company Interests" has the meaning set forth in
the recitals of this Agreement.
"Maryland Staff Leasing Agreement" means the Staff Leasing Agreement,
dated as of the date hereof, between the Maryland Property Borrowers, each as
owner, and the Maryland Staff Provider, as the staff provider, pursuant to which
the Maryland Staff Provider is to provide personnel for all of the Mezzanine
Properties located in the State of Maryland.
"Maryland Staff Provider" means THI Services of Maryland, Inc., a
Delaware corporation.
"Master Guaranty" means that certain Master Guaranty, dated as of the
date hereof, from the Guarantors to Lender, Mortgage Lender and Sale/Leaseback
Lessor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Master Guaranty Pledge" means that certain Guarantor Pledge and
Security Agreement, dated as of the date hereof, from the Guarantors to Lender,
Mortgage Lender and Sale/Leaseback Lessor, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Material Adverse Effect" means a material adverse effect upon (i) the
ability of any Borrower or any Mortgage Borrower to perform, or of Lender or
Mortgage Lender to enforce, any material provision of any Loan Document or
Mortgage Loan Document, (ii) the enforceability of any material provision of any
Loan Document or Mortgage Loan Document, or
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(iii) the value, Net Operating Income (as defined herein and in the Mortgage
Loan Agreement), use or enjoyment of any Property or the operation thereof. In
determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then occurring events and existing conditions
would result in a Material Adverse Effect.
"Material Agreement" means each contract or agreement relating to the
ownership, management, development, use, operation, leasing maintenance, repair
or improvement of a Mezzanine Property, or otherwise imposing obligations on a
Borrower, under which a Borrower would have the obligation to pay more than
$50,000 per annum or which cannot be terminated by a Borrower without cause upon
ninety (90) days notice or less without the payment of a termination fee.
"Maturity Date" means November 15, 2005 or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise. At Lender's option, the Maturity Date may be changed
from November 15, 2005 to the Re-sizing Maturity Date in accordance with the
Cooperation Agreement.
"Maximum Legal Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Medicaid" means that certain program of medical assistance, funded
jointly by the federal government and the states for impoverished individuals
who are aged, blind and/or disabled, and for members of families with dependent
children, which program is more fully described in Title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) and the regulations promulgated
thereunder.
"Medicaid Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicaid Regulations or any similar certification issued by CMS or a state
agency.
"Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act (42 U.S.C. (s)(s)
1396 et seq.) or elsewhere) affecting the medical assistance program established
by Title XIX of the Social Security Act; (ii) all applicable provisions of all
federal rules, regulations, manuals, orders and administrative, reimbursement
and other guidelines of all Governmental Authorities (whether or not having the
force of law) promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes enacted and all state
plans for medical assistance, and state plan
14
amendments filed by the state with CMS in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, and other guidelines of all Governmental Authorities (whether or
not having the force of law) promulgated pursuant to or in connection with any
of the foregoing, in each case as may be amended, supplemented or otherwise
modified from time to time.
"Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, Nursing Facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (s)(s) 1395 et seq.) and the regulations promulgated
thereunder.
"Medicare Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicare Regulations or any similar certification issued by CMS or a state
agency.
"Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act (42 U.S.C. (s)(s)
1395 et seq.) or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act, together
with all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated pursuant to or in connection with any of the foregoing
(whether or not having the force of law), as each may be amended, supplemented
or otherwise modified from time to time.
"Mezzanine Cash Management Account" has the meaning set forth in
Section 6.1(a).
"Mezzanine Cash Management Agreement" means that certain Mezzanine
Cash Management Agreement of even date herewith among Lender, Mortgage Lender,
Borrowers, Mortgage Borrowers and Mezzanine Cash Management Bank, as the same
may from time to time be modified, amended or replaced.
"Mezzanine Cash Management Bank" means The Bank of New York, a New
York State banking institution, and any other Eligible Institution from time to
time selected in accordance with Section 6.1(c).
"Mezzanine Cash Management Event" means at any time the Debt Service
Coverage Ratio falls below 1.20:1.00.
"Mezzanine Cash Management Period" means the period of time commencing
on the occurrence of a Cash Management Event and ending on the Payment Date
following the date that the Debt Service Coverage Ratio is at or above 1.20:1.00
for two (2) consecutive quarters.
15
"Mezzannine Collection Account" has the meaning set forth in Section
6.1.
"Mezzanine Collection Account Agreement" means that certain Mezzanine
Collection Account Agreement of even date herewith among Lender, Borrowers and
Mezzanine Collection Account Bank, as the same may from time to time be
modified, amended or replaced.
"Mezzanine Collection Account Bank" means First Union National Bank,
or any other Eligible Institution from time to time selected in accordance with
Section 6.1(c).
"Mezzanine Property" means each parcel of real property, the
Improvements thereon and all personal property owned by any Property Borrower
and encumbered by a Mortgage, together with all rights pertaining to such
property and Improvements, all as more particularly described in the Granting
Clauses of such Mortgage, and "Mezzanine Properties" means all such parcels and
other properties collectively.
"Monthly Capital Expenditure Reserve Amount" means $14,500.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means, with respect to each Mezzanine Property, a first
priority Open-Ended Fee Mortgage and Security Agreement or a first priority
Open-Ended Leasehold Mortgage and Security Agreement, or similar security
instrument, dated the date hereof, executed and delivered by a Property Borrower
as security for the Loan and encumbering such Mezzanine Property, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, and "Mortgages" means all such instruments collectively.
"Mortgage Borrowers" and "Mortgage Borrower" each has the meaning set
forth in the recitals of this Agreement.
"Mortgage Borrower Company Agreement" means, with respect to each
Mortgage Borrower, the operating agreement of such Mortgage Borrower, dated as
of the date hereof, by the related Borrower.
"Mortgage Cash Management Account" means that certain cash management
account established pursuant to the terms of the Mortgage Loan Agreement.
"Mortgage Cash Management Period" means the "Cash Management Period"
as defined in the Mortgage Loan Agreement.
"Mortgage Debt Service" means, with respect to any particular period
of time, scheduled principal and interest payments under the Mortgage Loan.
"Mortgage Lender " has the meaning set forth in the recitals of this
Agreement.
"Mortgage Loan" has the meaning set forth in the recitals of this
Agreement.
16
"Mortgage Loan Agreement" has the meaning set forth in the recitals of
this Agreement.
"Mortgage Loan Documents" has the meaning set forth in the Mortgage
Loan Agreement under the term, "Loan Documents".
"Mortgage Payment Date" means the "Payment Date" as defined in the
Mortgage Loan Agreement.
"Mortgage Properties" and "Mortgage Property" each has the meaning set
forth in the recitals of this Agreement.
"Net Liquidation Proceeds After Debt Service" means, with respect to
any Liquidation Event, all amounts paid to or received by or on behalf of any
Mortgage Borrower in connection with such Liquidation Event, including, without
limitation, proceeds of any sale, refinancing or other disposition or
liquidation, less (i) Lender's reasonable costs incurred in connection there
recovery thereof, (ii) the costs incurred by any Mortgage Borrower in connection
with a restoration of the Property made in accordance with the Mortgage Loan
Documents, (iii) amounts required or permitted to be deducted therefrom and
amounts paid pursuant to the Mortgage Loan Documents to Mortgage Lender, (iv) in
the case of a foreclosure sale, disposition or transfer of the Property in
connection with realization thereon following an Event of Default under the
Mortgage Loan, such reasonable and customary costs and expenses of sale or other
disposition (including attorneys' fees and brokerage commissions), (v) in the
case of a foreclosure sale, such costs and expenses incurred by Mortgage Lender
under the Mortgage Loan Documents as Mortgage Lender shall be entitled to
receive reimbursement for under the terms of the Mortgage Loan Documents and
(vi) in the case of a refinancing of the Mortgage Loan, such costs and expenses
(including attorneys' fees) of such refinancing as shall be reasonably approved
by Lender.
"Net Operating Income" means, for any period, the amount by which
Operating Income exceed Operating Expenses.
"Net Proceeds" means: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to a Property, after deduction of reasonable
costs and expenses (including, but not limited to, reasonable attorneys' fees),
if any, in collecting such insurance proceeds and taxes, if any, payable by a
Borrower with respect to such proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award and taxes, if any,
payable by a Borrower with respect to such proceeds.
"Net Proceeds Account" has the meaning set forth in Section 6.8(a).
"Net Proceeds Deficiency" has the meaning set forth in Section
5.3.2(f).
"Note" has the meaning set forth in Section 2.1.3.
17
"Notice" has the meaning set forth in Section 11.6.
"Nursing Facility" means a facility (including any Alzheimer's or
dementia care unit of sub acute unit), which offers nonacute inpatient care to
patients who suffer from a disease, chronic illness, or disability requiring
nursing care without continuous hospital services, and who require medical
services and nursing services rendered by or under the supervision of a licensed
medical professional, together with convalescent or restorative services now or
hereafter located on a Property.
"Officer's Certificate" means a certificate delivered to Lender by a
Borrower which is signed by an authorized senior officer of such Borrower.
"Ohio Equity Borrower" has the meaning set forth in the recitals of
this Agreement.
"Ohio Property Borrowers" means, collectively, THI of Ohio ALFs I,
LLC, THI of Ohio at Berea, LLC, THI of Ohio at Cortland, LLC and THI of Ohio at
Kent, LLC.
"Ohio Pledged Company Interests" has the meaning set forth in the
recitals of this Agreement.
"Ohio Staff Leasing Agreement" means the Staff Leasing Agreement,
dated as of the date hereof, between the Ohio Property Borrowers, each as owner,
and the Ohio Staff Provider, as the staff provider, pursuant to which the Ohio
Staff Provider is to provide personnel for all of the Mezzanine Properties
located in the State of Maryland.
"Ohio Staff Provider" means THI Services Corp., a Delaware
corporation.
"Operating Expense Reserve Account" shall have the meaning set forth
in Section 6.5(a).
"Operating Expenses" means, with respect to a Property (or the
Properties) and without duplication, all costs and expenses incurred by a
Borrower or Mortgage Borrower determined on an accrual basis, relating to the
operation, maintenance, repair, use and management of such Property (or the
Properties), including, without limitation, utilities, repairs and maintenance,
insurance, property taxes and assessments, advertising expenses, payroll and
related taxes, equipment lease payments, actual management fees but excluding
(i) rent payments made by any Borrower under a Ground Lease and principal,
interest and other payments made by a Borrower or Mortgage Borrower under the
Loan Documents or the Mortgage Loan Documents, (ii) depreciation, amortization
and other non-cash expenses of the Properties; provided, however, such costs and
expenses shall be subject to reasonable adjustment by Lender to normalize such
costs and expenses and (iii) capital expenditures.
"Operating Income" means, without duplication, all revenue derived
from the ownership and/or operation of a Property (or Properties) by any
Borrower or Mortgage Borrower
18
from whatever source determined on an accrual basis, including, but not limited
to, (i) Rents, including, but not limited to, Patient Revenues (as defined
herein and in the Mortgage Loan Agreement) received by any Borrower or Mortgage
Borrower or by any subtenant or licensee which is an Affiliate of any Borrower
or Mortgage Borrower (but excluding any revenues received by any subtenant or
licensee which is not an Affiliate of any Borrower or Mortgage Borrower) and
(ii) Rents received by any Borrower or Mortgage Borrower from any subtenant or
licensee which is not an Affiliate of any Borrower or Mortgage Borrower (but
excluding any rents received from any subtenant or licensee which is an
Affiliate of any Borrower or Mortgage Borrower); but excluding (a) sales, use
and occupancy or other taxes on receipts required to be accounted for by any
Borrower or Mortgage Borrower to any governmental authority, (b) non-recurring
revenues as reasonably determined by Lender (e.g. proceeds from a sale of assets
or refinancing), (c) security deposits (except to the extent determined by
Lender to be properly utilized to offset a loss of rent received by any Borrower
or Mortgage Borrower), (d) proceeds of casualty insurance and condemnation
awards (other than business interruption or other loss of income insurance
related to business interruption or loss of income for the period in question)
and (e) any proceeds from the sale or refinancing of any Property or
recapitalization of any Borrower or Mortgage Borrower. In addition, if required
by Lender, income accrued but not paid in cash during an accounting period shall
be adjusted for an allowance for doubtful accounts in a manner consistent with
historical net realizable value.
"Organizational Documents" means, as to any Person, the certificate of
incorporation and by-laws with respect to a corporation; the certificate of
organization and operating agreement with respect to a limited liability
company; the certificate of limited partnership and partnership agreement with
respect to a limited partnership, or any other organizational or governing
documents of such Person.
"Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Mezzanine Properties, now or hereafter levied or
assessed or imposed against the Mezzanine Properties or any part thereof.
"Parent" means Trans Healthcare, Inc., a Delaware corporation.
"Patient Revenues" means revenues generated from the sale of goods or
services at or through the Properties, whether by a Borrower or any subtenant or
licensee of such Borrower, or any other party, which revenues are primarily
derived from services provided to patients (including, without limitation,
revenues received or receivable for the use of or otherwise by reason of all
rooms, beds and other facilities provided, meals served, services performed or
goods sold at the Mezzanine Properties), including but not limited to, Self-Pay
Receivables and all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the ownership, possession, use or operation
of such Mezzanine Property, including, without limitation, all rights to payment
from the Medicare and Medicaid programs or similar state or federal programs,
boards, bureaus or agencies (to the extent legally assignable under applicable
law) and rights to payment from patients or private insurers, arising from the
19
operation of such Mezzanine Property and all revenues, receipts, income,
receivables and accounts relating to or arising from rentals, rent equivalent
income, income and profits from guest rooms, meeting rooms, food and beverage
facilities, vending machines, telephone and television systems, guest laundry,
and the provision or sale of other goods and services.
"Payment Date" means the fifteenth (15th) day of every calendar month
occurring during the term of the Loan; provided, however, in connection with a
Securitization of the Loan, Lender may change the Payment Date. Each Borrower
shall promptly execute an amendment to this Agreement to evidence any such
change.
"Payor Notice" has the meaning set forth in Section 6.1(b).
"Permitted Debt" means as to a Mezzanine Property (x) (i) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of such Mezzanine Property which are paid within ninety
(90) days of the date incurred and (ii) financing of Equipment or vehicles used
in the ordinary course of operating and owning a Mezzanine Property (including
capitalized leases of such Equipment and vehicles) and (y) which unsecured trade
payables and financing do not exceed at any one time an aggregate amount as to
all Borrowers and their Properties on an aggregate basis of any AR Financing, if
any, entered into in accordance with Section 4.2.12 hereof.
"Permitted Encumbrances" means, with respect to each Mezzanine
Property, collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Mezzanine Property or any part thereof,
(iii) Liens, if any, for Taxes with respect to such Mezzanine Property imposed
by any Governmental Authority not yet due or delinquent, (iv) such other title
and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion, none of which adversely affect the use, value or
operation of such Mezzanine Property, (v) Liens on the Equipment or vehicles
used in the ordinary course of business of operating and owning such Mezzanine
Property which are the subject of a financing of such Equipment or vehicles
(including capitalized leases of such Equipment or vehicles) which financing
complies with the terms of the definition of the term "Permitted Debt," and (vi)
the Leases consisting of Borrower's standard form patient admission and resident
care agreements.
"Permitted Investments" has the meaning set forth in the Cash
Management Agreement.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Physical Plant Standards" has the meaning set forth in Section
3.1.40(g).
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"Pledge Agreement" has the meaning set forth in the recitals of this
Agreement.
"Pledged Company Interests" has the meaning set forth in the recitals
of this Agreement.
"Policies" has the meaning specified in Section 5.1.1(b).
"Prepayment Notice" has the meaning set forth in Section 2.4.1.
"Prepayment Premium" means an amount equal to the sum of (a) the
present value of the interest payments which would have accrued on the principal
balance of the Loan (outstanding as of the date of such prepayment) at the
Interest Rate from the date of such prepayment up to and including the day on
which any prepayment of the loan is, discounted at a rate equal to the Treasury
Rate plus (b) fifty (50) basis points.
"Pro Forma Net Operating Income" means with respect to a Property, Net
Operating Income for any period for such Property adjusted as follows: (i) if
the actual occupancy percentage of such Property is greater than ninety-five
percent (95%), Operating Income for such Property shall be reduced by the
product of (1) the difference between the actual occupancy percentage of such
Property and ninety-five percent (95%) times (2) the Operating Income for such
Property, (ii) Operating Income for such Property shall be reduced by (x) a bad
debt expense for such Property equal to the greater of (A) the actual bad debt
expense and (B) six-tenths of one percent (0.6%) of Operating Income for such
Property for such period (after deducting the vacancy factor as calculated
above, if any); (y) a management fee for such Property equal to the greater of
(A) the actual management fee and (B) five percent (5%) of Operating Income for
such Property for such period (after deducting any vacancy factor and for bad
debt expenses as calculated above, as applicable); (z) a reserve for Capital
Expenditures (as defined herein and in the Mortgage Loan Agreement) equal to
$300 per annum per licensed bed at each Property consisting of a Nursing
Facility or Assisted Living Facility and for each Property which does not
constitute a Nursing Facility or Assisted Living Facility such per bed per annum
amount as reasonably determined by the Lender; provided, however, that Lender
may further adjust Pro Forma Net Operating Income as Lender deems reasonably
necessary based upon the occurrence of tangible events that Lender reasonably
determines may have a material effect on any Borrower or Property.
"Property" means, any Mortgage Property or any Mezzanine Property and
"Properties" means, collectively, the Mortgage Properties and the Mezzanine
Properties.
"Property Borrowers" and "Property Borrower" each has the meaning set
forth in the recitals of this Agreement.
"Rating Agencies" means, prior to the final Securitization of the
Loan, each of S&P, Xxxxx'x and Fitch or any other nationally-recognized
statistical rating agency which has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated any of the Securities.
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"Rating Agency Confirmation" means a written affirmation from each of
the Rating Agencies that the credit rating of the Securities rated by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.
"Re-sizing" has the meaning set forth in the Cooperation Agreement.
"Re-sizing Date" means the earlier of (i) the Payment Date upon which
the Re-sizing shall occur or (ii) February 15, 2003.
"Re-sizing Maturity Date" means the date that is the third anniversary
of the Re-sizing Date.
"Registration Statement" has the meaning set forth in Section 9.2(b).
"Regulatory Permits" has the meaning set forth in Section 3.1.40(b).
"Reimbursement Contracts" means all third party reimbursement
contracts for the Properties which are now or hereafter in effect with respect
to residents or patients qualifying for coverage under the same, including,
without limitation, Medicare, Medicaid and private insurance agreements, and any
successor program or other similar reimbursement program and/or private
insurance agreements.
"Rents" means, with respect to each Property, (x) all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues (including, without
limitation, Patient Revenues (as defined herein and in the Mortgage Loan
Agreement) and Self-Pay Receivables (as defined herein and in the Mortgage Loan
Agreement)), proceeds, bonuses, deposits (whether denoted as security deposits,
utility deposits or otherwise), lease termination fees or payments, rejection
damages, buy-out fees and any other fees made or to be made in lieu of rent, any
award made hereafter to any Borrower or any Mortgage Borrower in any court
proceeding involving any tenant, lessee, licensee or concessionaire under any of
the Leases in any bankruptcy, insolvency or reorganization proceedings in any
state or federal court, and all other payments, rights and benefits of whatever
nature from time to time due under any of the Leases, including, without
limitation, rights to payment earned under the Leases for space in the
Improvements for the operation of ongoing businesses, such as restaurants, news
stands, xxxxxx shops, beauty shops and pharmacies; provided, however, "Rents"
shall not include "patient trust accounts" or "patient needs funds."
"Restoration" has the meaning set forth in Section 5.2.1.
"Restoration Threshold" means (a) with respect to any Mezzanine
Property, the greater of (i) five percent (5%) of the Allocated Loan Amount for
such Mezzanine Property or
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(ii) $200,000 and (b) with respect to the Mezzanine Properties, two percent (2%)
of the Loan Amount.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"Sale/Leaseback Lessor" means Ventas Realty, Limited Partnership, a
Delaware limited partnership, in its capacity as lessor under the Lease
Documents (as defined in the Master Guaranty).
"SAP Completion Date" has the meaning set forth in the Cooperation
Agreement.
"Secondary Market Transaction" has the meaning set forth in Section
9.1(a).
"Securities" has the meaning set forth in Section 9.1(a).
"Securities Act" has the meaning set forth in Section 9.2(a).
"Securitization" has the meaning set forth in Section 9.1(a).
"Self-Pay Receivables" means those receivables whereby an individual
or resident of a Mezzanine Property is the payor of such receivables.
"Servicer" has the meaning set forth in Section 11.24.
"Servicing Agreement" has the meaning set forth in Section 11.24.
"Severed Loan Documents" has the meaning set forth in Section 10.2(c).
"Single Member LLC" means a limited liability company that (i) is
either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least 1% of the equity interests in such limited liability company as its
managing member, and (ii) is organized under the laws of the State of Delaware.
"Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning or operating
the applicable Property or Pledged Company Interests or (y) acting as the
managing member of the limited liability company which owns or operates a
Property or (z) acting as the general partner of a limited partnership which
owns or operates a Property, (ii) has not and will not engage in any business
unrelated to (x) the ownership or operation of the applicable Property or
Pledged Company Interests or (y) acting as a member of a limited liability
company which owns or operates such Property or (z) acting as a general partner
of a limited partnership which owns or operates such Property, (iii) has not and
will not have any assets other than (x) those related to the applicable Property
or Pledged Company Interests or (y) its membership interest in the limited
liability company which owns or
23
operates such Property or (z) its general partnership interest in the limited
partnership which owns or operates such Property, as applicable, (iv) has not
and will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise expressly
permitted by this Agreement, has not and will not engage in, seek or consent to
any asset sale, transfer of partnership or membership or shareholder interests,
or amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation or operating agreement (as
applicable), (v) if such entity is a limited partnership, has and will have as
its only general partners, general partners which are and will be Single-Purpose
Entities which are corporations, (vi) if such entity is a corporation, at all
relevant times, has and will have at least one Independent Director, (vii) the
board of directors of such entity has not taken and will not take any action
requiring the unanimous affirmative vote of one hundred percent (100%) of the
members of the board of directors unless all of the directors, including without
limitation the Independent Director, shall have participated in such vote,
(viii) has not and will not fail to correct any known misunderstanding regarding
the separate identity of such entity, (ix) if such entity is a limited liability
company, is either a Single Member LLC or has and will have at least one member
that is and will be a Single-Purpose Entity which is and will be a corporation,
and such corporation is and will be the managing member of such limited
liability company, (x) without the unanimous consent of all of the partners,
directors or managers (including without limitation the Independent Director) or
members, as applicable, has not and will not with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership
interest (w) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (x) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (y) make any
assignment for the benefit of such entity's creditors; or (z) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity (except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP provided that such financials will contain
detailed notes stating that such entity is a separate legal entity that owns its
own assets and has creditors that have a security interest in such assets and
that the applicable Property has been sold to such Borrower), (xii) has
maintained and will maintain its books, records, resolutions and agreements as
official records, (xiii) has not commingled and will not commingle its funds or
assets with those of any other entity, (xiv) has held and will hold its assets
in its own name, (xv) has conducted and will conduct its business in its name,
(xvi) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other person or entity
(except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP), (xvii) has paid and will pay its own
liabilities out of its own funds and assets, (xviii) has observed and will
observe all partnership, corporate or limited liability company formalities as
applicable, (xix) has maintained and will maintain an arms-length relationship
with its affiliates, (xx) if (x) such entity owns or operates a Property, has
and will have no Indebtedness other than (A) the Debt and (B) Permitted Debt, or
(y) such entity acts as
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the general partner of a limited partnership which owns or operates such
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns or operates such Property which (1) do not
exceed, at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within
ninety (90) days of the date incurred, or (z) such entity acts as a managing
member of a limited liability company which owns or operates such Property, has
and will have no indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as a member of the limited
liability company which owns or operates such Property which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2) are paid within ninety
(90) days of the date incurred, (xxi) has not and will not assume or guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for the
Debt, (xxii) has not acquired and will not acquire obligations or securities of
its partners, members or shareholders, (xxiii) has allocated and will allocate
fairly and reasonably shared expenses, including, without limitation, shared
office space and use separate stationery, invoices and checks and has and will
maintain office space separate from any other entity (which may be a separately
identified area in office space shared with one or more entity) and maintain a
separate sign in the office directory, (xxiv) except for the Liens granted
pursuant to the Loan Documents, has not and will not pledge its assets for the
benefit of any other person or entity, (xxv) has held and identified itself and
will hold itself out and identify itself as a separate and distinct legal entity
under its own name and not as a division or part of any other person or entity
so as not to mislead others with whom it is dealing (except that, for accounting
and reporting purposes, each Borrower may be included in the consolidated
financial statements of any equity owner of such Borrower in accordance with
GAAP provided that such financials will contain detailed notes stating that such
entity is a separate legal entity that owns its own assets and has creditors
that have a security interest in such assets and that the applicable Property
has been sold to such Borrower), (xxvi) has not made and will not make loans to
any person or entity, (xxvii) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a division or part
of it, (xxviii) if such entity is a limited liability company (other than a
Single Member LLC), such entity shall dissolve only upon the bankruptcy of the
managing member, and such entity's articles of organization, certificate of
formation and/or operating agreement, as applicable, shall contain such
provision, (xxiv) has not entered and will not enter into or be a party to, any
transaction with its partners, members, shareholders or its affiliates except in
the ordinary course of its business and on terms which are intrinsically fair
and are no less favorable to it than would be obtained in a comparable
arms-length transaction and on a commercially reasonably basis with an unrelated
third party, (xxx) has paid and will pay the salaries of its own employees from
its own funds and has and will maintain a sufficient number of employees in
light of its contemplated business operations, (xxxi) has maintained and will
maintain adequate capital in light of its contemplated business operations
(xxxii) if such entity is a limited liability company (other than a Single
Member LLC) or limited partnership, and such entity has one or more managing
members or general partners, as applicable, then such entity shall continue (and
not dissolve) for so long as a solvent managing member or general partner, as
applicable, exists and such entity's organizational documents shall contain such
provision; (xxxiii) if such entity is a Single Member LLC, its organizational
documents shall provide that, as long as any portion of the Debt remains
outstanding, upon the
25
occurrence of any event that causes the sole member of such Single Member LLC to
cease to be a member of such Single Member LLC (other than (y) upon an
assignment by such member of all of its limited liability company interest in
such Single Member LLC and the admission of the transferee, if permitted
pursuant to the organizational documents of such Single Member LLC and the Loan
Documents, or (z) the resignation of such member and the admission of an
additional member of such Single Member LLC, if permitted pursuant to the
organizational documents of such Single Member LLC and the Loan Documents) at
least one individual acting as an Independent Director of such Single Member LLC
shall, without any action of any Person and simultaneously with the sole member
of the Single Member LLC ceasing to be a member of the Single Member LLC,
automatically be admitted as the sole member of the Single Member LLC (the
"Special Member") and shall preserve and continue the existence of the Single
Member LLC without dissolution; (xxxiv) if such entity is a Single Member LLC,
its organizational documents shall provide that for so long as any Obligation is
outstanding, no Special Member may resign or transfer its rights as Special
Member unless (y) a successor Special Member has been admitted to such Single
Member LLC as a Special Member, and (z) such successor Special Member has also
accepted its appointment as an Independent Director and (xxxv) has and shall
maintain its assets in a manner that will not be costly or difficult to
segregate, ascertain or identify its individual assets for those of any other
entity.
"Special Member" has the meaning set forth in the definition of
Single-Purpose Entity.
"Specialty Hospital" means a facility that is operated as a special
hospital for providing specialized services, including but not limited to
rehabilitation services, on a in-patient basis. For purposes of this Agreement,
the term "Specialty Hospital" shall include "rehabilitation hospital" and
"long-term acute care hospital" as those terms are defined under applicable
Medicare Regulations.
"Staff Leasing Agreement" means the Ohio Staff Leasing Agreement or
the Maryland Staff Leasing Agreement, as the case may be.
"Staff Provider" means the Ohio Staff Provider or the Maryland Staff
Provider, as the case may be.
"State" means, with respect to a Property, the State or Commonwealth
in which such Property or any part thereof is located.
"Tax and Insurance Escrow Account" has the meaning set forth in
Section 6.3(a).
"Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Mezzanine Properties or part thereof, together with
all interest and penalties thereon.
"Third Party Payor" means any state, federal or municipal boards,
bureaus, corporations or agencies and any private commercial insurers remitting
payments to any
26
Borrower pursuant to Medicare, Medicaid, Blue Cross and/or Blue Shield or other
insurance, health plan, managed care or employee assistance programs.
"Third Party Payor Programs" has the meaning set forth in Section
3.1.40(e).
"Title Insurance Policy" means, with respect to each Property, an ALTA
mortgagee title insurance policy in the form reasonably acceptable to Lender
issued with respect to such Property and insuring the lien of the Mortgage
encumbering such Property.
"Transfer" means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a)
all or any part of a Property or the Properties or the Collateral or any estate
or interest therein including, but not be limited to, (i) an installment sales
agreement wherein any Borrower or Mortgage Borrower agrees to sell a Property or
the Properties or the Collateral or any part thereof for a price to be paid in
installments, (ii) an agreement by any Borrower or Mortgage Borrower leasing all
or a substantial part of a Property or the Properties, for other than actual
occupancy by a tenant thereunder and its affiliates or (iii) a sale, assignment
or other transfer of, or the grant of a security interest in, any Borrower's or
Mortgage Borrower's right, title and interest in and to any Leases or any Rents;
or (b) any ownership interest in (i) any Borrower, Mortgage Borrower or any
Guarantor or (ii) any corporation, partnership, limited liability company, trust
or other Person owning, directly or indirectly, any interest in any Borrower,
Mortgage Borrower or any Guarantor.
"Treasury Rate" means the yield calculated by the linear interpolation
of yields, as reported in Federal Reserve Statistical Release H.15 - Selected
Interest Rates under the heading U.S. Government Securities/Treasury constant
maturities for the week ending prior to the date on which any prepayment of the
Loan occurs, of U.S. Treasury constant maturities with maturity dates (one
longer, one shorter) most nearly approximating the Maturity Date (and in the
event H.15 is no longer published, Lender shall in its reasonable discretion
select a comparable publication to determine the Treasury Rate).
"Trustee" means any trustee holding the Loan in a Securitization.
"UCC" or "Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State.
"Underwriter Group" has the meaning set forth in Section 9.2(b).
"Updated Information" has the meaning set forth in Section 9.1(b)(i).
"U.S. Obligations" means direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.
"Ventas Group" has the meaning set forth in Section 9.2(b).
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Section 1.2. Principles of Construction.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
ARTICLE II. THE LOAN
Section 2.1. The Loan.
2.1.1. Agreement to Lend and Borrow. Subject to and upon the
terms and conditions set forth herein, Lender shall make the Loan to Borrowers
and Borrowers shall accept the Loan from Lender on the Closing Date.
2.1.2. Single Disbursement to Borrowers. Borrowers shall receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Notwithstanding
the foregoing, the parties acknowledge that the Loan Amount may be increased or
decreased as a result of the Re-sizing.
2.1.3. The Note. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the original principal amount of
Twenty-Two Million and No/100 Dollars ($22,000,000) executed by Borrowers and
payable to the order of Lender in evidence of the Loan (as the same may
hereafter be amended, supplemented, restated, componitized, split, increased,
extended or consolidated, the "Note") and shall be repaid in accordance with the
terms of this Agreement and the Note.
2.1.4. Use of Proceeds. Borrowers shall use proceeds of the Loan
to (i) make equity contributions to the Mortgage Borrowers in order to cause the
Mortgage Borrowers to use such amounts for any use permitted pursuant to Section
2.1.4 of the Mortgage Loan Agreement, (ii) pay all past-due Basic Carrying
Costs, if any, in respect of the Mezzanine Properties, (iii) deposit the initial
required amounts into the Collateral Accounts, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, including, but not limited
to, Lender's costs and expenses, all as approved by Lender, (v) fund any working
capital requirements of the Mezzanine Properties, as approved by Lender and (vi)
pay any recoupment of deposits or expenses in connection with the acquisition of
any of the Mezzanine Properties or in any failed financing in the past nine (9)
months.
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Section 2.2. Interest Rate.
2.2.1. Interest Rate. Interest on the outstanding principal
balance of the Loan shall accrue from the Closing Date up to but excluding the
Maturity Date at the Interest Rate.
2.2.2. Default Rate. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, overdue
interest in respect of the Loan, shall accrue interest at the Default Rate,
calculated from the date on which the default which gave rise to the Event of
Default occurred without regard to any grace or cure periods contained herein.
2.2.3. Interest Calculation. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the applicable Interest Accrual Period by (b) a daily
rate based on a three hundred sixty (360) day year (that is, the Interest Rate
or the Default Rate, as the case may be, divided by three hundred sixty (360))
by (c) the outstanding principal balance.
2.2.4. Usury Savings. This Agreement and the other Loan Documents
are subject to the express condition that at no time shall Borrowers be required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If by the terms of this Agreement or the other
Loan Documents, any Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
Section 2.3. Loan Payments.
2.3.1. Payment Before Maturity Date. Borrowers shall make a
payment to Lender of interest only on the Closing Date for the period from the
Closing Date through the last day of the Interest Accrual Period in which the
Closing Date occurs (unless the Closing Date is the fifteenth (15th) day of a
calendar month, in which case no such separate payment of interest shall be due)
(the "Stub Interest Payment"). Notwithstanding the foregoing, Lender will waive
the requirement of payment of the Stub Interest Payment on the Closing Date and
the Borrowers hereby agree and covenant to pay the Stub Interest Payment on
November 15, 2002. Borrowers shall make a payment to Lender of monthly Debt
Service on the Payment Date occurring in December, 2002 and on each Payment Date
thereafter to and including the Maturity
29
Date. Each payment shall be applied first to accrued and unpaid interest and the
balance to principal. The monthly Debt Service required hereunder is based upon
a twenty-five (25) year amortization schedule attached hereto as Schedule VI.
Notwithstanding the foregoing, if any Re-sizing or adjustment in the Loan Amount
shall have occurred pursuant to the Cooperation Agreement, Borrowers shall make
a payment of principal to Lender in the amount set forth on any replacement
amortization schedule hereafter delivered in connection with such Re-sizing or
adjustment. All payments to Lender by Borrowers under this Loan Agreement shall
be made by wire transfer of funds to an account designated by Lender.
2.3.2. Payment on Maturity Date. Borrowers shall pay to Lender on
the Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.
2.3.3. Late Payment Charge. If any principal, interest or any
other sum due under the Loan Documents (excluding the principal payment due on
the Maturity Date) is not paid by any Borrower on the date on which it is due,
Borrowers shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgages and the
other Loan Documents.
2.3.4. Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made to
Lender or Lender's designee not later than 11:00 A.M., New York City time, on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds at Lender's office or such other place as
Lender shall direct, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.
(b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be the preceding Business Day.
(c) All payments required to be made by Borrowers hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without deduction for, any setoff, claim or counterclaim and shall be made
irrespective of any defense thereto.
Section 2.4. Prepayments.
2.4.1. Voluntary Prepayments. Except as otherwise provided
herein, no Borrower shall have the right to prepay the Loan in whole or in part
prior to the Lockout Date.
30
Beginning on the Lockout Date or on any Business Day thereafter, any Borrower
may, at its option, prepay the Debt in whole, but not in part. Any prepayment
made on or after the Lockout Date shall be accompanied by the Prepayment
Premium. In addition, if any Borrower prepays the Loan on any date other than a
Payment Date, Borrowers shall pay to Lender on the date of such prepayment an
amount equal to the interest that would have accrued on the Loan through the
next Payment Date. As a condition to any voluntary prepayment, (i) each Borrower
shall give Lender written notice (a "Prepayment Notice") of its intent to
prepay, which notice must be given not later than thirty (30) days prior to the
date on which such prepayment is to be made and must specify the Business Day on
which such prepayment is to be made and (ii) if Lender shall hold any interest
in the Mortgage Loan at the time of such voluntary prepayment, each Borrower
shall simultaneously prepay the Mortgage Loan, together with any Prepayment
Premium or other fees in connection therewith.
2.4.2. Mandatory Prepayments/Liquidation Events.
(a) On each date on which Lender actually receives a distribution
of Net Proceeds, and if Lender does not make such Net Proceeds available to any
Property Borrower for a Restoration of the applicable Mezzanine Property,
Borrowers shall, at Lender's option, prepay the outstanding principal balance of
the Note in an amount equal to one hundred percent (100%) of such Net Proceeds
together with interest that would have accrued on such amounts through the next
Payment Date. The Allocated Loan Amount with respect to such Mezzanine Property
will be reduced in an amount equal to such prepayment. No Prepayment Premium
shall be due in connection with any prepayment made pursuant to this Section
2.4.2(a). Any prepayment received by Lender pursuant to this Section 2.4.2(a) on
a date other than a Payment Date shall be held by Lender as collateral security
for the Loan in the Net Proceeds Account, and shall be applied by Lender on the
next Payment Date.
(b) In the event, prior to a Securitization, the equity holders
of the Parent propose a Change of Control (as defined in the Master Guaranty) to
the Parent, as a condition to such Change of Control, in connection with the
mandatory prepayment of the Loan as set forth in Section 2.4.2(d) of the Loan,
Borrowers shall prepay the entire outstanding principal balance of the Loan
together with interest that would have accrued on the principal balance of the
Mortgage Loan through the next Payment Date (in the event the prepayment occurs
on a date other than a Payment Date plus the Prepayment Fee.
(c) Borrowers shall notify Lender of any Liquidation Event not
later than one (1) Business Day following the first date on which any Borrower
has knowledge of such event. Borrowers shall be deemed to have knowledge of (i)
a sale (other than a foreclosure sale) of any Mortgage Property on the date on
which a contract of sale for such sale is entered into, and a foreclosure sale,
on the date notice of such foreclosure sale is given, and (ii) a refinancing of
any Mortgage Property, on the date on which a commitment for such refinancing
has been entered into. The provisions of this Section 2.4.2(c) shall not be
construed to contravene in any manner the restrictions and other provisions
regarding refinancing of the
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Mortgage Loan or transfer of any Property set forth in this Agreement and the
other Loan Documents.
(d) In the event there is a proposed Change of Control (as
defined in the Master Guaranty) to the Parent which the equity owners of the
Parent desire to effect, as a condition to such Change of Control, (i) Borrowers
shall prepay the entire outstanding principal balance of the Loan as a condition
to such Change of Control together with interest that would have accrued on the
principal balance of the Loan through the next Payment Date (in the event the
prepayment occurs on a date other than a Payment Date) plus the Prepayment
Premium and (ii) (a) prior to a Securitization of the Mortgage Loan, the
Mortgage Borrowers shall prepay the entire outstanding principal balance of the
Mortgage Loan together with interest that would have accrued on the principal
balance of the Mortgage Loan through the next Payment Date (as defined in the
Mortgage Loan Agreement) (in the event the prepayment occurs on a date other
than a Payment Date (as defined in the Mortgage Loan Agreement)) plus the
Prepayment Fee (as defined in the Mortgage Loan Agreement) and (b) after a
Securitization, the terms of 8.2(b) of the Mortgage Loan shall be satisfied.
2.4.3. Prepayments After Default. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by any
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall
pay the Prepayment Premium, in addition to the outstanding principal balance,
all accrued and unpaid interest and other amounts payable under the Loan
Documents.
Section 2.5 Supplemental Mortgage Affidavits. The Liens created by
each Mortgage are intended to encumber the Mezzanine Property described therein
to the full extent of Borrowers' obligations under the Loan Documents. As of the
Closing Date, Borrowers shall have paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Mortgages. Notwithstanding anything contained herein to the contrary, if at any
time Lender determines, based on Lender's estimation of market value and
applicable law, that Lender is not being afforded the maximum amount of security
available from any Mezzanine Property as a direct, or indirect, result of
applicable taxes not having been paid with respect to the related Mortgage,
Lender may request, and each Borrower agrees that it (i) will execute,
acknowledge and deliver to Lender, within a reasonable period of time after
Lender's request, supplemental affidavits increasing the amount of Indebtedness
for which all applicable taxes have been or are required to be paid under the
related Mortgage to an amount determined by Lender, in its reasonable
discretion, to be appropriate and (ii) will pay any and all applicable
recording, intangible or similar taxes.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Borrower Representations.
Each Borrower represents and warrants that:
3.1.1. Organization. Each Borrower is duly organized, validly
existing and in good standing with full power and authority to own its assets
and conduct its business, and is duly qualified in all jurisdictions in which
the ownership or lease of its property or the conduct of its business requires
such qualification. Each Borrower has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the full power and authority to execute, deliver and
perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby. Each Borrower's exact and correct legal name as it appears
on file with the Secretary of State of Delaware is as set forth in Schedule III
attached hereto. Each Borrower is a limited liability company organized under
the laws of the State of Delaware. Each Borrower's organization identification
number assigned by the state of its organization is as set forth opposite such
Borrower's name on Schedule III. Borrower's federal tax identification number is
as set forth opposite such Borrower's name on Schedule III.
3.1.2. Proceedings. This Agreement and the other Loan Documents
have been duly authorized, executed and delivered by each Borrower and, as
applicable, each Guarantor and constitute a legal, valid and binding obligation
of each Borrower and, as applicable, each Guarantor, enforceable against each
Borrower and, as applicable, each Guarantor in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3.1.3. No Conflicts. The execution and delivery of this Agreement
and the other Loan Documents by each Borrower and, as applicable, each
Guarantor, and the performance of its obligations hereunder and thereunder will
not conflict with or violate any provision of any law, or regulation to which
any Borrower or each Guarantor is subject, or conflict with, result in a breach
of, or constitute a default, including due notice or lapse of time or both,
under, any of the terms, conditions or provisions of any of any Borrower's or
any Guarantor's organizational documents or any agreement or instrument to which
any Borrower or any Guarantor is a party or by which it is bound, or any order
or decree applicable to any Borrower or any Guarantor, or result in the creation
or imposition of any lien on any of any Borrower's or any Guarantor's assets or
property (other than pursuant to the Loan Documents) or otherwise materially and
adversely affect performance of its respective duties.
3.1.4. Litigation. There is no action, suit, proceeding
arbitration or investigation pending or, to such Borrower's knowledge,
threatened against any Borrower, any Mortgage Borrower, any Borrower Party, any
Guarantor, Manager or any of the Properties in
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any court or by or before any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.
3.1.5. Agreements. No Borrower Party is in default with respect
to any order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of any Borrower or any Mortgage Borrower or any of the Mezzanine Properties or
any of the Mortgage Properties or might have consequences that would adversely
affect their respective performance hereunder or thereunder.
3.1.6. Consents. No consent, approval, authorization, order or
filings of or with any court or Governmental Authority is required for the
execution, delivery and performance by any Borrower of, or compliance by any
Borrower with, this Agreement or the consummation of the transactions
contemplated hereby except those the absence of which would not have a Material
Adverse Effect, other than those which have been obtained by such Borrower;
provided, however, Borrowers will obtain within sixty (60) days (or, in the case
of Medicare provided agreements only, one hundred and eighty (180) days) of the
Closing Date the state licenses for the operation of each Mezzanine Property as
a Nursing Facility or Assisted Living Facility, as applicable, and the Medicare
and Medicaid provider agreements in the names of each applicable Borrower which
have not been obtained as of the Closing Date.
3.1.7. Title.
(a) (i) The Fee Property Borrower has good, marketable and
insurable fee title to the real property comprising the applicable Mezzanine
Property and good title to the balance of such Mezzanine Property and (ii) each
Leasehold Property Borrower has a valid leasehold interest in the real property
comprising the applicable Mezzanine Property and good title to the balance of
such Mezzanine Property, in each case, free and clear of all Liens whatsoever
except the Permitted Encumbrances. Each Mortgage, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, and enforceable first priority, perfected Lien on the applicable
Mezzanine Property, subject only to Permitted Encumbrances and (ii) valid and
enforceable perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases), all in accordance with
the terms thereof, in each case subject only to any Permitted Encumbrances.
There are no mechanics', materialman's or other similar Liens or claims which
have been filed for work, labor or materials affecting any Mezzanine Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
related Mortgage or for which Borrower has not provided title insurance over
such Lien. None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgages and this Agreement, materially and adversely affect the value
of the Mezzanine Properties, impair the intended use or operations of the
Mezzanine Properties or impair any Borrower's ability to pay its obligations in
a timely manner.
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(b) The Equity Borrowers are the record and beneficial owners of,
and have good and marketable title to, the Collateral, free and clear of all
Liens whatsoever. The Pledge Agreement, together with any Certificates required
to be delivered in connection therewith and Uniform Commercial Code financing
statements required to be filed in connection therewith, will create valid,
perfected first priority security interests in and to the Collateral, all in
accordance with the terms thereof.
3.1.8. No Plan Assets. As of the date hereof and throughout the
term of the Loan (a) no Borrower is and will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a "plan," as
defined in Section 4975(e)(1) of the Code, subject to Code Section 4975, (b) no
Borrower is and will be a "governmental plan" within the meaning of Section
3(32) of ERISA, (c) none of the assets of any Borrower constitutes or will
constitute "plan assets" of one or more of any such plans within the meaning of
29 C.F.R. Section 2510.3-101, and (d) transactions by or with any Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.
3.1.9. Compliance. Each Borrower Party and each of the Properties
and the use thereof is in substantial compliance with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. No Borrower Party is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Borrower. No Borrower Party has committed any act which may
give any Governmental Authority the right to cause any Borrower or any Mortgage
Borrower to forfeit any of the Properties or any part thereof or any monies paid
in performance of any Borrower's obligations under any of the Loan Documents.
3.1.10. Financial Information. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of the Properties and
each Borrower Party (i) are true, complete and correct in all material respects,
(ii) accurately represent the financial condition of the Properties as of the
date of such reports, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. No Borrower Party
has any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to any Borrower and reasonably likely to have a
materially adverse effect on the Properties or the operation thereof, except as
referred to or reflected in said financial statements. Since the date of the
financial statements, there has been no material adverse change in the financial
condition, operations or business of a Borrower Party or the Properties from
that set forth in said financial statements.
3.1.11. Condemnation. No Condemnation or other proceeding is
pending or, to such Borrower's knowledge, is threatened with respect to all or
any portion of any of the Properties or for the relocation of roadways providing
access to any of the Properties.
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3.1.12. Utilities and Public Access. Except as denoted on the
application Survey or Title Policy, each Property has adequate rights of access
to public ways and is served by utilities, including, without limitation,
adequate water, sewer, electricity, gas, telephone, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of each Property as presently used and enjoyed are located in the
public right-of-way abutting such Property, and all such utilities are connected
so as to serve such Property without passing over other property. All roads
necessary for the full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of such
Property.
3.1.13. Separate Lots. Except as denoted by the applicable Title
Policy, each Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the applicable Property.
3.1.14. Assessments. There are no pending or, to Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any of the Properties, nor are there any contemplated
improvements to any of the Properties that may result in such special or other
assessments.
3.1.15. Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by any Borrower or, as
applicable, any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither any
Borrower nor any Guarantor has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
3.1.16. Assignment of Leases. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to the applicable Property
Borrower to exercise certain rights and to perform certain obligations of the
lessor under such Leases, including the right to operate the related Mezzanine
Property. No Person other than Lender has any interest in or assignment of the
Leases relating to the Mezzanine Properties or any portion of the Rents relating
to the Mezzanine Properties due and payable or to become due and payable
thereunder.
3.1.17. Insurance. Each Borrower has obtained and has delivered
to Lender original or certified copies of all of the Policies (as defined herein
and in the Mortgage Loan Agreement) for each Property, with all premiums prepaid
thereunder, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement and the Mortgage Loan Agreement. Except as set forth
in Schedule IX attached hereto and to the Mortgage Loan Agreement, no claims
have been made by any Borrower under any of the Policies (as defined herein and
in the Mortgage Loan Agreement) which remain unresolved, and no Person,
including each Borrower and each Mortgage Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies (as
defined herein and in the Mortgage Loan Agreement).
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3.1.18. Licenses. All permits, authorizations, licenses and
approvals (including, without limitation, CONs, Accreditations, Medicaid
Provider Agreements and Certifications, Medicare Participation Agreements and
Certifications and certificates of occupancy) required by any Governmental
Authority for the use, occupancy and operation of each Property in the manner in
which such Property is currently being used, occupied and operated have been
obtained, except those the absence of which would not mean a Material Adverse
Effect and are valid and in full force and effect; provided, however, Borrowers
and Mortgage Borrowers will obtain within sixty (60) days (or in the case of
Medicare provider agreements only, one hundred eighty (180) days) of the Closing
Date the state licenses for operation of the related Property as a Nursing
Facility or Assisted Living Facility, as applicable, and the Medicare and
Medicaid provider agreements in the names of the applicable Borrowers and
Mortgage Borrowers which have not been obtained as of the Closing Date.
3.1.19. Flood Zone. None of the Improvements on any of the
Properties are located in an area identified by the Federal Emergency Management
Agency as a special flood hazard area.
3.1.20. Physical Condition. Except as set forth on the applicable
Property Condition Report, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Properties, whether latent or
otherwise, and no Borrower has received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.
3.1.21. Boundaries. Except as denoted on the applicable Survey,
all of the improvements which were included in determining the appraised value
of each Property lie wholly within the boundaries and building restriction lines
of such Property, and no improvements on adjoining properties encroach upon such
Property, and no easements or other encumbrances affecting the applicable
Property encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Property except those which are insured against
by title insurance.
3.1.22. Leases. Each Property Borrower represents and warrants to
Lender with respect to the Leases at the Mezzanine Properties that: (a) the
copies of the Ground Leases that have been delivered to Lender in connection
with the Loan are true, complete and correct and none of the Properties are
subject to any Leases other than (i) such Ground Leases and (ii) the resident
care agreements entered into by the Property Borrowers and the residents of the
Mezzanine Properties, (b) the Ground Leases are in full force and effect and
there are no defaults thereunder by any party thereto, (c) there are no oral
agreements with respect to the
37
Ground Leases, (d) no Rent (including security deposits) has been paid more than
one (1) month in advance of its due date, (e) all work to be performed by any
Property Borrower under each Lease has been performed as required and has been
accepted by the applicable tenant, and (f) any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or abatements
required to be given by any Borrower to any tenant has already been received by
such tenant.
3.1.23. Filing and Recording Taxes. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid under applicable Legal Requirements in connection with the
transfer of the Mezzanine Properties to any Property Borrower have been paid or
will be paid at closing. All mortgage, mortgage recording, stamp, intangible or
other similar tax required to be paid under applicable Legal Requirements in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgages, have been paid or are being paid simultaneously
herewith. All taxes and governmental assessments due and owing in respect of the
Mezzanine Properties have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been established hereunder or are insured
against by the title insurance policy to be issued in connection with the
Mortgages.
3.1.24. Single Purpose. Each Borrower hereby represents and
warrants to, and covenants with, Lender that each Borrower and each Mortgage
Borrower has been at all times since its formation, and will continue to be a
Single-Purpose Entity (as defined herein and, as to each Mortgage Borrower, in
the Mortgage Loan Agreement).
3.1.25. Tax Filings; Payroll Taxes. Each Borrower and each
Guarantor has filed (or have obtained effective extensions for filing) all
federal, state and local tax returns required to be filed and have paid or made
adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by any Borrower and any Guarantor. Each Borrower
believes that its tax returns and those of each Guarantor properly reflect the
income and taxes of each Borrower and each Guarantor for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit. Each of each Borrower and
each Guarantor have paid all payroll taxes required to be paid by any such party
by any Governmental Authorities.
3.1.26. Solvency. Each Borrower (a) has not entered into the
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of each Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than such
Borrower's probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Each
38
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Each Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by such Borrower and the amounts to be payable on
or in respect of obligations of such Borrower).
3.1.27. Federal Reserve Regulations. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or by the terms and conditions of
this Agreement or the other Loan Documents.
3.1.28. Organizational Chart. The organizational chart attached
as Schedule IV hereto, relating to Borrowers and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.
3.1.29. Bank Holding Company. No Borrower is a "bank holding
company" or a direct or indirect subsidiary of a "bank holding company" as
defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y
thereunder of the Board of Governors of the Federal Reserve System.
3.1.30. No Other Debt. No Borrower or Mortgage Borrower has
borrowed or received debt financing (other than permitted pursuant to this
Agreement and the Mortgage Loan Agreement) that has not been heretofore repaid
in full.
3.1.31. Investment Company Act. No Borrower is (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrower money.
3.1.32. No Bankruptcy Filing. No Borrower or Mortgage Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of its assets or property, and
no Borrower has any knowledge of any Person contemplating the filing of any such
petition against it, any Mortgage Borrower or any Guarantor and no Property is
the subject of, and no Borrower, Mortgage Borrower or Guarantor is a debtor in,
any state or federal bankruptcy, insolvency or similar proceeding.
3.1.33. Full and Accurate Disclosure. No information contained in
this Agreement, the other Loan Documents, or any written statement furnished by
or on behalf of any
39
Borrower pursuant to the terms of this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no fact or circumstance
presently known to any Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, any of the Properties, any Borrower or its business, operations or
condition (financial or otherwise).
3.1.34. Foreign Person. No Borrower is a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
3.1.35. No Change in Facts or Circumstances; Disclosure. There
has been no material adverse change in any condition, fact, circumstance or
event that would make the financial statements, rent rolls, reports,
certificates or other documents submitted in connection with the Loan
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects the business operations or the
financial condition of any Borrower, Mortgage Borrower or any of the Properties.
3.1.36. Security Deposits. Each Borrower Party is and each
Borrower will continue to be in substantial compliance in all material respects
with all Legal Requirements relating to security deposits and resident trust
funds. Each Borrower is and will continue to hold all related security deposits
and resident trust funds collected in connection with each of the Mezzanine
Properties in segregated Eligible Accounts.
3.1.37. Embargoed Person. (a) None of the funds or other assets
of any Borrower or any Guarantor constitute property of, or are beneficially
owned, directly or indirectly, by any person, entity or government subject to
trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C.(S)(S) 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Orders
or regulations promulgated thereunder with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law
("Embargoed Person"); (b) no Embargoed Person has any interest of any nature
whatsoever in any Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Borrower or any Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
3.1.38. Ground Lease Representations and Warranties.
(a) Intentionally Deleted.
(b) Recording. Each Ground Lease or a memorandum thereof has been
duly recorded, each such Ground Lease permits the interest of the lessee
thereunder to be encumbered by the related Mortgage, and there has not been a
material change in the terms of such Ground Lease since its recordation.
40
(c) No Senior Liens. Except for the Permitted Encumbrances, each
applicable Leasehold Property Borrower's interest in each Ground Lease is not
subject to any liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than the related ground lessor's related fee interest.
(d) Ground Lease Assignable. Each applicable Leasehold Property
Borrower's interest in each Ground Lease is assignable to Lender upon notice to,
but without the consent of, the ground lessor thereunder or, in the event that
it is so assigned, it is further assignable to the trustee in a Securitization
upon notice to, but without a need to obtain the consent of, such ground lessor.
(e) Default. Each Ground Lease is in full force and effect and no
default has occurred under such Ground Lease and there is no existing condition
which, but for the passage of time or the giving of notice, would result in a
default under the terms of such Ground Lease.
(f) Notice. Each Ground Lease, as amended by the applicable
Ground Lessor Agreement, requires the ground lessor thereunder to give notice of
any default by any applicable Leasehold Property Borrower to any mortgagee and
provides that notice of termination given under such Ground Lease is not
effective against such mortgagee unless a copy of the notice has been delivered
to the mortgagee in the manner described in such Ground Lease.
(g) Cure. Lender is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the interest
of the applicable Leasehold Property Borrower under each Ground Lease) to cure
any default under each Ground Lease, which is curable after the receipt of
notice of the default before the ground lessor thereunder may terminate such
Ground Lease.
(h) Intentionally Deleted.
(i) New Lease. Each Ground Lease, as amended by the applicable
Ground Lessor Agreement, requires the ground lessor thereunder to enter into a
new lease upon termination of such Ground Lease for any reason, including
rejection of such Ground Lease in a bankruptcy proceeding, provided that Lender
cures any defaults which are susceptible of being cured.
(j) Subleasing. No Ground Lease imposes commercially unreasonable
restrictions on subletting.
(k) Amendments. Each applicable Leasehold Property Borrower shall
not (i) enter into any amendments, changes, cancellations, alterations,
surrender or modifications of any Ground Lease without the prior written consent
of Lender, (ii) consent to any matter requiring the consent of any applicable
Leasehold Property Borrower under any Ground Lease without the prior written
consent of Lender, (iii) cancel or terminate any Ground Lease.
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3.1.39. Management Agreement/Staff Leasing Agreement. Each
Management Agreement and Staff Leasing Agreement is in full force and effect and
there is no default, breach or violation existing thereunder by any party
thereto and no event has occurred that, with the passage of time or the giving
of notice, or both, would constitute a default, breach or violation by any party
thereunder.
3.1.40. Use-Specific Representations.
(a) Compliance with Laws. Each Borrower Party and each Property
are in substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including any government payment program
requirements and disclosure of ownership and related information requirements),
quality and safety standards, accepted professional standards and principles
that apply to professionals providing services to Nursing Facilities and/or
Assisted Living Facilities, in each case, as applicable, accreditation
standards, and requirements of the applicable state licensing agency, CMS and
all other Governmental Authorities including, without limitation, those
requirements relating to the physical structure and environment of each
Property, licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting except for any
non-compliance with any of the foregoing that could have a Material Adverse
Effect. No Borrower Party has committed any act which may give any Governmental
Authority the right to cause any Borrower or Mortgage Borrower to lose any
applicable Regulatory Permits (as defined herein and in the Mortgage Loan
Agreement) the loss of which could have a Material Adverse Effect.
(b) Regulatory Permits. All governmental licenses, permits,
regulatory agreements or other approvals or agreements necessary or desirable
for the use or operation of each Property as intended are held by the applicable
Borrower or Mortgage Borrower and are in full force and effect, including,
without limitation, approved provider participation status in any provider
payment program (including, but not limited to, Medicare and Medicaid), and a
valid CON or similar certificate, license, or approval issued by the applicable
state and/or federal agency for the requisite number and type of beds
(collectively, the "Regulatory Permits") except for any Regulatory Permits the
failure to hold or maintain in full force or effect could have a Material
Adverse Effect; provided, however, Borrowers and Mortgage Borrowers will obtain
within sixty (60) days or, in the case of Medicare provider agreements only, one
hundred and eighty (180) days of the Closing Date the state licenses for the
operation of each Property as a Nursing Facility or Assisted Living Facility, as
applicable, and the Medicare and Medicaid provider agreements in the names of
the applicable Borrowers and Mortgage Borrowers which have not been obtained as
of the Closing Date.
(c) Ownership of Regulatory Permits. Except for certain
Regulatory Permits pledged to HUD for THI of Maryland at Fort Washington, LLC,
the Regulatory Permits, including without limitation, each CON:
(i) are not and have not been, transferred to any location
other than the Property to which such Regulatory Permits relate;
42
(ii) are not and have not been, pledged as collateral
security for any loan or indebtedness other than the Loan; and
(iii) are held free from restrictions or known conflicts
which would materially impair the use or operation of each Property as
intended, and are not provisional, probationary or restricted in any way.
(d) Medicare and Medicaid Compliance. To the extent applicable,
each Borrower Party and each Property is in substantial compliance with all
requirements for participation in Medicare and Medicaid, including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987. To the extent applicable, each Borrower Party and each Property is in
conformance in all material respects with all conditions of participation,
reimbursement and cost reporting requirements, and each applicable Borrower has
a current provider agreement which is in full force and effect under Medicare
and Medicaid for the number and type of beds.
(e) Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Borrower Party
or any Property in respect of any participation or provider agreement with any
third-party payor, including, without limitation, Medicare, Medicaid, Blue Cross
and/or Blue Shield, and any other private commercial insurance managed care and
employee assistance program (collectively, the "Third Party Payor Programs") to
which any Borrower or Mortgage Borrower presently is subject. All Medicaid,
Medicare, and private insurance cost reports and financial reports submitted by
any Borrower Party are and will be materially accurate and complete and have not
been and will not be misleading in any material respects. No cost reports or
financial reports for any Property remain "open" or unsettled except for those
reports that remain open for the current period.
(f) Governmental Proceedings and Notices. Except as described on
the Schedule XIII attached hereto or attached to the Mortgage Loan Agreement, no
Borrower Party and no Property is currently the subject of any proceeding by any
Governmental Authority, and no notice of any violation or subpoena or inquiry of
any nature has been received from a Governmental Authority that would, directly
or indirectly, or with the passage of time:
(i) have a material adverse impact on any Borrower's or
Mortgage Borrower's ability to accept and/or retain patients or result in
the imposition of a fine, a sanction, an administrative or criminal action,
a lower rate certification or a lower reimbursement rate for services
rendered to eligible patients;
(ii) modify, limit or annul or result in the transfer,
suspension, revocation or imposition of probationary use on any Regulatory
Permit the absence of which would have a Material Adverse Effect;
43
(iii) affect any Borrower's or Mortgage Borrower's continued
participation in Medicare, Medicaid or other Third Party Payor Programs, as
applicable, or any successor programs thereto, at current rate
certifications.
(g) Physical Plant Standards. Each Property and the use thereof
complies in all material respects with all applicable local, state and federal
building codes, fire codes, life safety codes, health care, nursing facility and
other similar regulatory requirements, including, without limitation,
participation requirements in Medicare and Medicaid (collectively, the "Physical
Plant Standards") and, except as described on the Schedule X attached hereto and
attached to the Mortgage Loan Agreement, no waivers of the Physical Plant
Standards exist at such Property.
(h) Past Violations. Except as set forth on the attached Schedule
XIV, there have been no penalty enforcement actions undertaken by any
Governmental Authority during the last three (3) calendar years or during the
last survey cycle against any Property, against any Borrower Party, or against
any partner, member, officer, director, stockholder or Affiliate of any Borrower
Party which enforcement action could have a Material Adverse Effect. There have
been no violations over the past three (3) years that have threatened any
Property's or any Borrower's or Mortgage Borrower's certification for
participation in any Medicare, Medicaid or other Third Party Payor Programs. No
Borrower Party has been the subject of a "double G" determination for the last
three (3) calendar years or since January 14, 2000, whichever date is later.
(i) Audits. Except as set forth on the Schedule XI attached
hereto and attached to the Mortgage Loan Agreement, there are no current,
pending or outstanding reimbursement audits regarding Medicaid, Medicare or
other Third Party Payor Programs nor any appeals pending at any Property that
(x) are not applicable in the ordinary course to Nursing Facilities or Assisted
Living Facilities, as applicable, comparable to the Properties and (y) cold have
a Material Adverse Effect.
(j) Recoupment. There are no current or pending recoupment
efforts regarding Medicaid, Medicare or other Third Party Payor Programs (or
with respect to) any Property that (x) are not applicable in the ordinary course
to Nursing Facilities or Assisted Living Facilities, as applicable, comparable
to any Property and (y) could have a Material Adverse Effect. No Borrower Party
or Property is a participant in any federal program whereby any Governmental
Authority may have the right to recover funds by reason of the advance of
federal funds, including, without limitation, those authorized under the Xxxx
Xxxxxx Act.
(k) Pledges of Receivables. No Borrower Party has pledged its
receivables or any Rents as collateral security for any outstanding loan or
indebtedness other than the Loan, or the Mortgage Loan.
(l) Patient Care Agreements. There are no patient or resident
care agreements with patients or residents or with any other persons that
deviate in any material adverse respect from the standard form customarily used
at each Property.
44
(m) Patient Records. All patient and resident records at each
Property, and all patient and resident trust fund accounts, are maintained in
substantial compliance with all regulatory requirements and are true and correct
in all respects.
(n) Reimbursement Contracts. All Reimbursement Contracts
applicable to any Borrower Party or any Property are in good standing with all
applicable Governmental Authorities, Regulatory Permits, Medicare Certifications
and/or Medicaid Certifications. Each Borrower Party is current in the payment of
all so-called provider specific taxes, bed taxes or other assessments with
respect to any Reimbursement Contracts.
(o)Licensed Beds. The number and category of licensed beds at
each Property is as set forth on Schedule III attached hereto and to the
Mortgage Loan Agreement. Except as set forth in Schedule XII attached hereto and
to the Mortgage Agreement, no waivers of any laws, rules, regulations or
requirements (including, without limitation minimum square foot requirements per
bed) are required for each Property to operate at the licensed bed capacities
listed on Schedule III attached hereto and to the Mortgage Loan Agreement and to
operate in substantial compliance with applicable Legal Requirements. No
Borrower Party has been granted nor has any Borrower Party requested the right,
to reduce the number of licensed beds at any Property. No Borrower Party has
applied for approval to move any and all of the licensed beds at any Property to
any other location.
(p) Intentionally Deleted.
3.1.41. Material Agreements. There are no Material Agreements (as
defined herein and in the Mortgage Loan Agreement) except as described in
Exhibit D attached hereto and to the Mortgage Loan Agreement. Each Borrower has
made available to Lender true and complete copies of all Material Agreements (as
defined herein and in the Mortgage Loan Agreement). Each Material Agreement (as
defined herein and in the Mortgage Loan Agreement) has been entered into at
arm's length in the ordinary course of business by or on behalf of a Borrower or
Mortgage Borrower, as applicable.
Section 3.2 Survival of Representations.
The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.
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ARTICLE IV. BORROWER COVENANTS
Section 4.1. Borrower Affirmative Covenants.
Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayments), each Borrower hereby
covenants and agrees with Lender that:
4.1.1. Existence; Compliance with Legal Requirements. Each
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises except to the extent such preservation, renewal and effectiveness
could not have a Material Adverse Effect, and substantially comply with all
Legal Requirements applicable to it, the Mortgage Borrowers and the Properties.
4.1.2.Taxes and Other Charges. Each Property Borrower shall pay
all Taxes and Other Charges and payroll taxes now or hereafter levied or
assessed or imposed against the Mezzanine Properties or any part thereof or any
Borrower as the same become due and payable; provided, however, each Property
Borrower's obligation to directly pay Taxes shall be suspended for so long as
such Property Borrower complies with the terms and provisions of Section 6.3
hereof and there are adequate funds in the Tax and Insurance Escrow Account.
Each Property Borrower shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent;
provided, however, that each Property Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 6.3 hereof. Each Property Borrower shall not permit
or suffer, and shall promptly discharge any liens or charges against the
Mezzanine Properties, except Permitted Encumbrances. After prior notice to
Lender, each Property Borrower, at its own expense, may contest by appropriate
legal proceeding, conducted in good faith and with due diligence, the amount or
validity of any Taxes or Other Charges, provided that (i) no Default or Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) none of the Mezzanine Properties nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) each Property Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the applicable Mezzanine Property; and (vi) upon request
of Lender, each Property Borrower shall deposit with Lender cash, or other
security as may be approved by Lender, in an amount equal to one hundred
twenty-five percent (125%) of the contested amount, to insure the payment of any
such Taxes or Other Charges, together with all interest and penalties thereon.
Lender may pay over any such cash or other security held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.
4.1.3. Litigation. Each Borrower shall give prompt notice to
Lender of any litigation or governmental proceedings pending or threatened
against any Borrower or Mortgage Borrower which might materially adversely
affect any of the Properties or any
46
Borrower's or Mortgage Borrower's ability to perform its obligations hereunder
or under the other Loan Documents or the Mortgage Loan Documents.
4.1.4. Access to Properties. Each Property Borrower shall, and
each Equity Borrower shall cause the related Mortgage Borrowers to, permit
agents, representatives and employees of Lender to inspect each Property or any
part thereof at reasonable hours upon reasonable advance written notice. Lender
shall not unreasonably interfere with any Borrowers' business operations during
such inspection.
4.1.5. Further Assurances Each Borrower shall, at such Borrower's
sole cost and expense, from time to time as reasonably requested by Lender,
execute, acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including UCC financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the liens securing or
intended to secure the obligations of any Borrower under the Loan Documents or
to facilitate a replacement of the Mezzanine Cash Management Bank or Mezzanine
Collection Account Bank if requested by Lender, and do and execute all such
further lawful and reasonable acts, conveyances and assurances for the better
and more effective carrying out of the intents and purposes of this Agreement
and the other Loan Documents as Lender shall reasonably require from time to
time. Each Borrower hereby authorizes and appoints Lender as its
attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should any Borrower fail to do so itself in
violation of this Agreement following written request from Lender, in each case
without the signature of any Borrower. The foregoing grant of authority is a
power of attorney coupled with an interest and such appointment shall be
irrevocable for the term of this Agreement. Each Borrower hereby ratifies all
actions that such attorney shall lawfully take or cause to be taken in
accordance with this Section.
4.1.6. Financial Reporting.
(a) Each Borrower shall keep and maintain or will cause to be
kept and maintained proper and accurate books and records, in accordance with
GAAP in all material respects, reflecting the financial affairs of each
Borrower. Lender shall have the right from time to time during normal business
hours upon reasonable notice to the applicable Borrower to examine such books
and records at the office of such Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.
(b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall
furnish to Lender, in hard copy and electronic format and presented on a
consolidated as well as a property-by-property basis, financial statements
prepared for such year with respect to Borrowers and the Mortgage Borrowers,
including a balance sheet and operating statement as of the end of such year,
together with related statements of income and members' or partners' capital for
such Fiscal Year, audited by a "Big Four" accounting firm or a nationally
recognized, independent certified public accounting firm reasonably satisfactory
to Lender whose opinion shall be to the effect that such
47
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 or as
to the status of each Borrower and Mortgage Borrower as a going concern.
Together with each Borrower's and Mortgage Borrower's annual financial
statements, such Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof whether to the best of such Borrower's
knowledge there exists an event or circumstance which constitutes a Default (as
defined herein and in the Mortgage Loan Agreement) or Event of Default (as
defined herein and in the Mortgage Loan Agreement) by any Borrower or Mortgage
Borrower under the Loan Documents or Mortgage Loan Documents, as applicable, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same. Together
with each Borrower's and Mortgage Borrower's annual financial statements, such
Borrower shall furnish to Lender, in hard copy and electronic format:
(i) a statement of cash flows for each Property; and
(ii) such other information as Lender shall reasonably
request.
(c) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter (based on Borrrower's Fiscal Year),
each Borrower shall furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrowers and Mortgage Borrowers, including a balance sheet and
operating statement as of the end of such fiscal quarter, together with related
statements of income, members' or partners' capital and cash flows for such
fiscal quarter and for the portion of the Fiscal Year ending with such fiscal
quarter,which statements shall be accompanied by (i) an Officer's Certificate
certifying that the same are true and correct and were prepared in accordance
with GAAP applied on a consistent basis, subject to changes resulting from audit
and normal year-end audit adjustments and (ii) an Officer's Certificate
certifying as of the date thereof whether to the best of such Borrower's
knowledge there exists an event or circumstance which constitutes a Default (as
defined herein and in the Mortgage Loan Agreement) or Event of Default (as
defined herein and in the Mortgage Loan Agreement) by any Borrower or Mortgage
Borrower under the Loan Documents or Mortgage Loan Documents, as applicable and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same. Each
such quarterly statement shall show the separate operations of each Property,
including, without limitation, (1) a breakdown of Patient Revenues (as defined
herein and in the Mortgage Loan Agreement) and other revenues itemized by payor
type and a reasonably detailed breakdown of operating expenses and (2) patient
census by payor type. Each such quarterly report shall be accompanied by the
following, in hard copy and electronic format:
(i) a statement in reasonable detail which calculates Net
Operating Income for each Property for the trailing four fiscal quarters,
in each case, ending at the end of such fiscal quarter;
(ii) then current occupancy report for each Property; and
48
(iii) such other information as Lender shall reasonably
request.
(d) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, each Borrower shall furnish (x) a
report describing in reasonable detail the occurrence during such calendar month
of any of the following: the termination, cancellation or entry into, or default
by any party under, any Ground Lease at any of the Properties or any event which
is reasonably likely to result in a Material Adverse Effect on the the ability
of any Borrower to perform any material provision of any Loan Document,or the
value, use or enjoyment of any of the Properties or the operation thereof and
(y) such Borrower's calculation of Debt Service Coverage Ratio and adequate
back-up to support such calculation.
(e) Until the occurrence of a Securitization or series of
Securitizations, which, in the aggregate, shall have securitized the entire
Loan, each Borrower shall, simultaneously with delivering the report described
in the foregoing clause (d), furnish, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, monthly and
year-to-date unaudited financial statements prepared for the applicable month
with respect to Borrowers and Mortgage Borrowers, including a balance sheet and
operating statement as of the end of such month, together with related
statements of income, members' or partners' capital and cash flows for such
month and for the portion of the Fiscal Year ending with such month, which
statements shall be accompanied by (i) an Officer's Certificate certifying that
the same are true and correct and were prepared in accordance with GAAP applied
on a consistent basis, subject to changes resulting from audit and normal
year-end audit adjustments and (ii) an Officer's Certificate certifying as to
any material variances from the approved Annual Budget (as defined herein and in
the Mortgage Loan Agreement) on a line-item basis. Each monthly report shall
show the separate operations of each Property, including, without limitation,
(1) a breakdown of Patient Revenues (as defined herein and in the Mortgage Loan
Agreement) and other revenues itemized by payor type and a reasonably detailed
breakdown of operating expenses and (2) patient census by payor type. Each such
monthly report shall be accompanied by the following in hard copy and electronic
format:
(i) a statement in reasonable detail which calculates Net
Operating Income for each Property for the trailing twelve (12) months, in
each case, ending at the end of that month;
(ii) then current occupancy report for each Property; and
(iii) such other information as Lender shall reasonably
request.
(f) As soon as available, and in any event within ninety (90)
days after the end of each calendar year, each Borrower shall furnish to Lender
true and complete copies of a report regarding the compliance of the Properties
with all Regulatory Permits (as defined herein and in the Mortgage Loan
Agreement).
(g) Upon Lender's written request, as soon as available, and in
any event within five (5) days after preparation thereof, each Borrower shall
furnish to Lender the
49
weekly and monthly consolidated cash flow reports of each Borrower and Mortgage
Borrower and consolidated patient census reports for each Borrower and Mortgage
Borrower.
(h) As soon as available, and in any event no later than thirty
(30) days after the end of each fiscal quarter, each Borrower shall furnish to
Lender (i) the quarterly consolidated survey deficiency summary report,
indicating for each Property whether any survey, citation or report alleging any
deficiency with respect to such Property has been issued during the prior month
and, if so, setting forth, the identity of the Governmental Authority that
issued such survey, citation or report, a description of the alleged deficiency
and the timetable or deadline for same and the applicable Borrower's plan for
curing such deficiency and (ii) to the extent existing, all actuarial reports
relating to all professional liability claims. Each Borrower shall also deliver
to Lender promptly after request therefor by Lender any other Property specific
survey reports reasonably requested by Lender.
(i) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, each Borrower shall deliver to
Lender copies of the Officer's Certificates, setting forth whether any event(s)
of default has occurred and is continuing with respect to the reduction of the
number of licensed beds at any Property or the revocation of certification for
reimbursement under Medicare or Medicaid with respect to any Property.
(j) As soon as available, and in any event within ten (10) days
of receipt, each Borrower shall deliver to Lender any and all notices
(regardless of form) from any licensing and/or certifying agency (i) that any
Regulatory Permit (as defined herein and in the Mortgage Loan Agreement) for any
Property or the Medicare Certification or Medicaid Certification of any Property
is the subject of any enforcement action, revocation or suspension, or is
subject to assessment for civil monetary penalties or is the subject of any
overpayment claim or recoupment claim or (ii) that action is pending or being
considered to revoke or suspend any Regulatory Permit (as defined herein and in
the Mortgage Loan Agreement) or to institute enforcement actions of any kind.
(k) Upon the request of Lender, within five (5) days of the
earlier of (i) the date of the required filing of cost reports for any Property
with the Medicaid agency or (ii) the date of actual filing of such cost report
for any Property with such agency, each Borrower shall furnish to Lender a
complete and accurate copy of the annual Medicaid cost report for each Property,
which will be prepared by an independent certified public accountant or by an
experienced cost report preparer acceptable to Lender in its sole discretion,
and promptly furnish to Lender any amendments filed with respect to such reports
and all responses, audit reports or inquiries with respect to such reports.
(l) As soon as available, and in any event within five (5) days
of receipt by any Borrower or Mortgage Borrower, each Borrower shall deliver to
Lender a copy of any Medicare, Medicaid or other licensing agency survey or
report and any statement of deficiencies, and within the time period required by
the particular agency for furnishing a plan of correction, shall also furnish or
cause to be furnished to Lender, a copy of the plan of correction
50
generated from such survey or report for a Property,and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in Medicare or Medicaid for existing
patients or for new patients to be admitted with Medicare or Medicaid coverage,
by the date required for cure by such agency (plus any extensions of time
granted by such agency).
(m) Borrowers have previously delivered to Lender the Annual
Budget (as defined herein and in the Mortgage Loan Agreement) for each Property
for the 2002 Fiscal Year. At least thirty (30) days prior to the commencement of
each subsequent Fiscal Year during the term of the Loan, Borrowers shall deliver
to Lender for approval an Annual Budget (as defined herein and in the Mortgage
Loan Agreement) presented on a consolidated as well as a property-by-property
basis for the ensuing Fiscal Year and, promptly after preparation thereof, any
subsequent revisions to the Annual Budget (as defined herein and in the Mortgage
Loan Agreement). Without the prior written consent of Lender, no Borrower shall
approve or consent to any Mortgage Borrower entering into any contracts or other
agreements nor expending any funds not provided for in the Annual Budget (as
defined in the Mortgage Loan Agreement), other than expenditures required to be
made by reason of the occurrence of any emergency. At the request of Lender,
each Equity Borrower agrees to cause the related Mortgage Borrowers to deliver
evidence in a form satisfactory to Lender that amounts allocated to budgeted
expenses have been paid in accordance with the approved Annual Budget (as
defined in the Mortgage Loan Agreement).
(n) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall cause
each Guarantor to furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, financial
statements prepared for such year with respect to Guarantors, including a
balance sheet and operating statement as of the end of such year, together with
related statements of income and members' or partners' capital for such Fiscal
Year, audited by a "Big Four" accounting firm or a nationally recognized,
independent certified public accounting firm reasonably satisfactory to Lender
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 or as to the status of each Guarantor as
a going concern. Together with each Guarantor's annual financial statements,
each Borrower shall cause each Guarantor to furnish to Lender an Officer's
Certificate certifying as of the date thereof whether to the best of such
Guarantor's knowledge there exists an event or circumstance which constitutes a
Default (as defined herein and in the Mortgage Loan Agreement) or Event of
Default (as defined herein and in the Mortgage Loan Agreement) by any Guarantor
under any guaranty and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.
(o) Notwithstanding the foregoing, in the event the Parent makes
a public offering of its stock and become subject to public record disclosure,
Mortgage Borrowers shall provide Lender with copies of all financial statements,
filed by Parent with the Securities and Exchange Commission within two (2) days
of such filing.
51
4.1.7. Title to the Properties and Collateral. Each Property
Borrower will warrant and defend the valtidity and priority of the Liens of the
Mortgages and the Assignments of Leases on the Mezzanine Properties against the
claims of all Persons whomsoever, subject only to Permitted Encumbrances. Each
Equity Borrower will warrant and defend the validity and priority of Lender's
security interest in the Collateral.
4.1.8. Estoppel Statement.
(a) After request by Lender, each Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of
the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.
(b) Each Borrower shall deliver to Lender, upon request, an
estoppel certificate from each tenant under any Lease (other than tenants under
patient admission and resident care agreements) at any of the Properties;
provided that such certificate may be in the form required under such Lease;
provided further that each Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.
4.1.9. Intentionally Deleted.
4.1.10. Alterations. Lender's prior approval shall be required in
connection with any alterations to any Improvements (as defined herein and in
the Mortgage Loan Agreement) on any Property (a) that may have a Material
Adverse Effect on any Borrower's or Mortgage Borrower's financial condition, the
value of the related Property or the Net Operating Income or (b) the cost of
which (including any related alteration, improvement or replacement) is
reasonably anticipated to exceed the Alteration Threshold (as defined herein and
in the Mortgage Loan Agreement). If the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements to any Mezzanine
Property shall at any time exceed the Alteration Threshold, Borrowers shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for each Borrowers' obligations under the Loan Documents any
of the following: (i) cash, (ii) U.S. Obligations, (iii) other securities
acceptable to Lender, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same, or (iv) a completion bond,
provided that Lender shall have received a Rating Agency Confirmation as to the
form and issuer of same. Such security shall be in an amount equal to the excess
of the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements on the applicable Mezzanine Property (other than
such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.
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4.1.11. Use-Specific Covenants.
(a) Each Property Borrower shall:
(i) operate each Mezzanine Property or cause each Mezzanine
Property to be operated in substantial compliance with the laws and
requirements referred to in Section 3.1.40 hereof;
(ii) operate each Mezzanine Property or cause each Mezzanine
Property to be operated in a manner such that the Regulatory Permits shall
remain in full force and effect;
(iii) maintain or cause to be maintained the number and type
of licensed beds at each Mezzanine Property at the licensure/certification
levels set forth in Schedule III; provided, however, a Property Borrower
may remove from service a number of licensed beds at its Property by not
more than the greater of ten (10) beds and ten percent (10%) of the number
of licensed beds at such Property immediately prior to the proposed
reduction provided such removal from service is on a temporary basis and
Borrower delivers to Lender from each applicable Governmental Authority
written evidence that such removal from service is on a temporary, and not
permanent, basis and that such beds may be placed back into service without
approval from any Governmental Authority. Nothing shall permit the Property
Borrower to adjust the number of Licensed Beds at the facility; and
(iv) to the extent applicable, substantially comply with all
requirements for participation in Medicare, Medicaid and any other Third
Party Payor Programs, and shall keep in full force and effect a current
provider agreement under Medicare, Medicaid and any other Third Party Payor
Programs as are financially prudent.
(b) Each Property Borrower shall cause the operation of each
Mezzanine Property to be conducted at all times in a manner consistent with the
following:
(i) to maintain or cause to be maintained the standard of
operations at each Mezzanine Property at all times at a level necessary to
insure a level of quality for each Mezzanine Property consistent with
similar facilities in the same competitive market;
(ii) to maintain or cause to be maintained a standard of
care in the storage, use, transportation and disposal of all medical
equipment, medical supplies, medical products and medical waste, of any
kind and in any form, that is in accordance at least, with that of the
highest prudent industry standard and in substantial conformity with all
applicable Legal Requirements;
(iii) to operate or cause each Mezzanine Property to be
operated in a prudent manner in substantial compliance in all respects with
applicable Legal
53
Requirements and requirements of the Policies relating thereto and, except
where the failure to maintain their effectiveness could not have a Material
Adverse Effect, cause all licenses, Regulatory Permits, and any other
agreements necessary for the continued use and operation of such Mezzanine
Property or for participation in the Medicare, Medicaid or other Third
Party Payor Programs to remain in full force and effect;
(iv) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at each Mezzanine Property
to enable the applicable Property Borrower to operate such Mezzanine
Property.
4.1.12. Material Agreements. No Borrower shall amend, modify,
surrender or waive any material rights or remedies under, or enter into or
terminate, any Material Agreement unless any such amendment, modification,
surrender, waiver, entry or termination would not have a Material Adverse
Effect.
4.1.13. Notices. Each Borrower shall give notice, or cause notice
to be given, to Lender promptly upon the occurrence of:
(a) any Event of Default under the Mortgage Loan;
(b) to the knowledge of Borrower, any default or event of default
under any contractual obligation of any Mortgage Borrower or any Guarantor that
could reasonably be expected to have a Material Adverse Effect on Borrower, the
ability of Borrower to perform under the Loan Documents or the rights and
remedies of Lender under the Loan Documents;
(c) to the knowledge of Borrower, any litigation or proceeding
affecting any Mortgage Borrower or any Guarantor, in which the amount involved
in each case is $100,000 or more and not fully covered by insurance, or in which
injunctive or similar relief is sought;
(d) to the knowledge of Borrower, any change in the business,
operations, property or financial or other condition or prospects of any
Mortgage Borrower or any Guarantor which could reasonably be expected to have a
Material Adverse Effect on Borrower, the ability of Borrower to perform under
the Loan Documents or the rights and remedies of Lender under the Loan
Documents.
4.1.14. Special Distributions. On each date on which amounts are
required to be disbursed to the Debt Service Account pursuant to the terms of
the Mezzanine Cash Management Agreement or are required to be paid to Lender
under any of the Loan Documents, each Equity Borrower shall exercise its rights
under the related Mortgage Borrower Company Agreement to cause the related
Mortgage Borrowers to make to such Equity Borrower a distribution in an
aggregate amount such that Lender shall receive the amount required to be
disbursed to the Debt Service Account or otherwise paid to Lender on such date.
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4.1.15. Curing. Lender shall have the right, but shall not have
the obligation, to exercise each Equity Borrower's rights under the related
Mortgage Borrower Company Agreement (a) to cure an Event of Default under the
Mortgage Loan and (b) to satisfy any Liens, claims or judgments against any
Mortgage Property (except for Liens permitted by the Mortgage Loan Documents),
in the case of either (a) or (b), unless such Equity Borrower or the related
Mortgage Borrower shall be diligently pursuing remedies to cure to Lender's sole
satisfaction. Each Equity Borrower shall reimburse Lender on demand for any and
all costs incurred by Lender in connection with curing any such Event of Default
under the Mortgage Loan or satisfying any Liens, claims or judgments against any
Mortgage Property.
4.1.16. Mortgage Loan Documents. Each Equity Borrower agrees to
cause each related Mortgage Borrower to comply with the terms and provisions of
the Mortgage Loan Documents.
4.1.17. Options to Extend. With respect to any Ground Lease with
an option to extend the term of such Ground Lease, Borrower shall exercise such
extension upon the request of the Lender.
Section 4.2. Borrower Negative Covenants.
Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower
covenants and agrees with Lender that:
4.2.1. Due on Sale and Encumbrance; Transfers of Interests.
Without the prior written consent of Lender, neither any Borrower, any Mortgage
Borrower nor any Person having a direct or indirect interest ownership or
beneficial interest in any Borrower, any Mortgage Borrower or any Guarantor
shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or
otherwise Transfer any interest, direct or indirect in any Borrower, any
Mortgage Borrower, any Guarantor, any of the Properties or Collateral or any
part thereof, whether voluntarily or involuntarily, in violation of the
covenants and conditions set forth in the Mortgages, this Agreement or the
Master Guaranty; provided, that this Section shall not prohibit transfers of
equity interest in the Parent permitted under Section 8.2.
4.2.2. Liens. Each Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of any of the Collateral or any of the
Properties except for Permitted Encumbrances (as defined herein and, as to the
Mortgage Properties, as defined in the Mortgage Loan Agreement).
4.2.3. Issuance of Equity Interests. Each Borrower shall not
issue or allow to be created any stocks or shares or shareholder, partnership or
membership interests in any Borrower or Mortgage Borrower, or other ownership
interests other than the stocks, shares, shareholder, partnership or membership
interests and other ownership interests which are outstanding or exist on the
Closing Date or any security or other instrument which by its terms is
55
convertible into or exercisable or exchangeable for stock, shares, shareholder,
partnership or membership interests or other ownership interests in any Borrower
or Mortgage Borrower.
4.2.4. Change in Business. Each Borrower shall not cease to be a
Single-Purpose Entity, each Equity Borrower shall cause each Mortgage Borrower
to not cease to be a Single-Purpose Entity (as defined in the Mortgage Loan
Agreement), or make any material change in the scope or nature of any such
entity's business objectives, purposes or operations, or undertake or
participate in activities other than the continuance of its present business
provided, however, with the prior written consent of the Lender, not to be
unreasonably withheld, and, after a Securitization of the Loan, a Rating Agency
Confirmation, a Borrower may amend its business operations at a Property to
include a Specialty Hospital (in which event Schedule III hereto shall be
amended to reflect such amendment).
4.2.5. Debt Cancellation. Each Borrower shall not, and shall not
permit any Mortgage Borrower to, cancel or otherwise forgive or release any
claim or debt (other than termination of Leases in accordance herewith) owed to
any Borrower or any Mortgage Borrower by any Person, except for adequate
consideration and in the ordinary course of any Borrower's or Mortgage
Borrower's business.
4.2.6. Affiliate Transactions. Each Borrower shall not, and shall
not permit any Mortgage Borrower to, enter into, or be a party to, any
transaction with an Affiliate of any Borrower or Mortgage Borrower or any of the
partners of any Borrower or Mortgage Borrower except in the ordinary course of
business and on terms which are fully disclosed to Lender in advance and are no
less favorable to such Borrower or Mortgage Borrower or such Affiliate than
would be obtained in a comparable arm's-length transaction with an unrelated
third party.
4.2.7. Zoning. Each Borrower shall not, and shall not permit any
Mortgage Borrower to, initiate or consent to any zoning reclassification of any
portion of any of the Properties or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of any of the Properties in
any manner that could result in such use becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation,
without the prior consent of Lender.
4.2.8. Assets. Each Borrower shall not, and shall not permit any
Mortgage Borrower to, purchase or own any properties other than the Properties
and any other property necessary or incidental for the operation of the
Properties. Each Borrower shall not purchase or own any property other than the
Collateral.
4.2.9. No Joint Assessment. Each Borrower shall not, and shall
not permit any Mortgage Borrower to, suffer, permit or initiate the joint
assessment of any Property (i) with any other real property constituting a tax
lot separate from such Property, and (ii) with any portion of such Property
which may be deemed to constitute personal property, or any other procedure
whereby the lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to such Property.
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4.2.10. Principal Place of Business. Each Borrower shall not, and
shall not permit any Mortgage Borrower to change its jurisdiction of
organization or its name without first obtaining the written consent of Lender.
4.2.11. ERISA.
(a) Each Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) Each Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Lender in its sole discretion, that (A) such Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) such Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in such Borrower are publicly offered
securities, within the meaning of 29 C.F.R.(S)2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in such Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R.(S)2510.3-101(f)(2); or
(iii) Such Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29
C.F.R.(S)2510.3-101(c) or (e).
4.2.12. Other Indebtedness. Each Borrower shall not incur,
create, assume or become liable in any manner with respect to any Indebtedness,
except the Debt and the Permitted Debt and each Borrower shall not permit each
Mortgage Borrower to incur, create, assume or become liable in any manner with
respect to any Indebtedness, except the Debt (as defined in the Mortgage Loan
Agreement) and the Permitted Debt (as defined in the Mortgage Loan Agreement).
Each Borrower may obtain so-called "accounts receivable" financing with respect
to any Property (or its operations therein) ("AR Financing") provided (i) the
terms and conditions of this Section 4.2.12 have been satisfied; (ii) such
Borrower obtains Lender's consent to the terms thereof; and (ii) no Event of
Default exists hereunder. Lender shall not unreasonably withhold its consent to
any AR Financing provided that the amount of such AR Financing is reasonable
given the financial condition of Borrower and the applicable Property and Lender
is presented with an intercreditor agreement on terms acceptable to it in its
reasonable discretion.
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4.2.13. Use-Specific Negative Covenants: Each Property Borrower
shall not and shall not allow the Manager, if any, to:
(a) transfer any Regulatory Permits to any location other than
the related Mezzanine Property nor pledge any Regulatory Permits (except certain
Regulatory Permits pledged to HUD for THI of Maryland at Fort Washington, LLC)
as collateral security for any loan or indebtedness other than the Loan;
(b) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of (i) any Regulatory Permit for any
Mezzanine Property or (ii) any applicable provider payment program participation
for any Mezzanine Property;
(c) except as permitted by the proviso to Section 4.1.11(a)(iii),
amend or otherwise change any Mezzanine Property's authorized bed capacity
and/or the number or type of beds, and/or licensing category or type and/or the
number of beds participating in governmental payment programs approved by the
applicable state licensing agency, CMS or other Governmental Authority without
Lender's prior written consent which may be given or denied in Lender's sole
discretion;
(d) replace or transfer all or any part of any Mezzanine
Property's licensed beds to another site or location, change the type of
licensed beds at any Mezzanine Property or reduce the number of licensed beds at
any Mezzanine Property;
(e) apply for approval to (i) move any licensed beds to another
site or location, (ii) change the type of licensed beds at any Mezzanine
Property or (iii) reduce the number of licensed beds at any Mezzanine Property;
(f) jeopardize in any manner any Borrower's participation in any
Third Party Payor Programs to which any Borrower is subject as of the Closing
Date; provided, to the extent financially prudent and consistent with the terms
of the Loan Agreement, each Property Borrower may terminate participation in any
Third Party Payor Program with any private commercial insurance to the extent
such termination could not have a Material Adverse Effect;
(g) pledge any receivables as collateral security for any loan or
indebtedness other than the Loan;
(h) enter into any patient or resident care agreements with
patients or residents or with any other persons which deviate in any material
respect from the standard form customarily used by any Property Borrower at any
Mezzanine Property;
(i) change the terms of any of the Third Party Payors' Programs
or its normal billing payment or reimbursement policies and procedures with
respect thereto (including
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without limitation the amount and timing of finance charges, fees and
write-offs); provided a Property Borrower may enter into changes which do not
have a Material Adverse Effect; or
(j) assign or transfer any of its interest in any Regulatory
Permit or Reimbursement Contract (including any right to payment thereunder) or
assign, transfer or remove or permit any other person to assign, transfer or
remove any records pertaining to any Mezzanine Property including, without
limitation, patient records, medical and clinical records (except for removal of
such patient records as directed by the patients owning such records).
4.2.14. Limitations on Distributions. Subject to the terms of the
Master Guaranty, following the occurrence and during the continuance of an Event
of Default, no Borrower shall make any distributions to its members.
4.2.15. Other Limitations. Prior to the payment in full of the
Debt, no Borrower shall, and no Borrower shall permit any Mortgage Borrower to,
without the prior written consent of Lender (which may be furnished or withheld
at its sole and absolute discretion), give its consent or approval to any of the
following actions or items:
(a) except as permitted by Lender herein, (i) any refinance of
the Mortgage Loan, (ii) any prepayment in full of the Mortgage Loan, (iii) any
Transfer of any Mortgage Property or any portion thereof, or (iv) any action in
connection with or in furtherance of the foregoing;
(b) creating, incurring, assuming or suffering to exist any
additional Liens on any portion of any Mortgage Property except for Permitted
Encumbrances (as defined in the Mortgage Loan Agreement).
(c) any modification, amendment, consolidation, spread,
restatement, waiver or termination of any of the Mortgage Loan Documents;
(d) approve the terms of any Annual Budget (as defined in the
Mortgage Loan Agreement);
(e) the distribution to the partners, members or shareholders of
any Mortgage Borrower of property other than cash;
(f) except as set forth in the Annual Budget (as defined in the
Mortgage Loan Agreement) or as permitted under the Mortgage Loan Documents, any
(i) improvement, renovation or refurbishment of all or any part of any Mortgage
Property to a materially higher standard or level than that of comparable
properties in the same market segment and in the same geographical area as such
Mortgage Property, (ii) removal, demolition or material alteration of the
improvements or equipment on any Mortgage Property or (iii) material increase in
the square footage or gross leasable area of the improvements on any Mortgage
Property if a material portion of any of the expenses in connection therewith
are paid or incurred by any Mortgage Borrower;
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(g) any material change in the method of conduct of the business
of any Borrower or any Mortgage Borrower, such consent to be given in the sole
discretion of the Lender;
(h) the settlement of any claim against any Borrower or any
Mortgage Borrower, other than a fully insured third party claim, in any amount
greater than $10,000 (in the case of any Borrower) or $10,000 (in the case of
any Mortgage Borrower), such consent to be given in the sole discretion of the
Lender; or
(i) except as required by the Mortgage Loan Documents, any
determination to restore any Mortgage Property after a casualty or condemnation.
ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1. Insurance.
5.1.1. Insurance Policies.
(a) The Borrowers shall obtain and maintain, or cause to be
maintained, insurance for such Borrower and the Mezzanine Properties providing
at least the following coverages:
(i) coverage for loss or damage by fire, lightning, wind and
such other perils as are included in a standard "all risk" or "special
causes of loss" endorsement and against loss or damage by other risks and
hazards covered by a standard property insurance policy including, without
limitation, riot, civil commotion, vandalism, malicious mischief, burglary
and theft on the Improvements and the personal property at each Mezzanine
Property, including contingent liability from Operation of Building Laws,
Demolition Costs and Increased Cost of Construction Endorsements, in each
case (A) in an amount equal to one hundred percent (100%) of the "Full
Replacement Cost," which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation, but the
amount shall in no event be less than the Loan Amount; (B) containing an
agreed amount endorsement with respect to the Improvements and personal
property at the Mezzanine Properties waiving all co-insurance provisions;
(C) providing for no deductible in excess of Ten Thousand and No/100
Dollars ($10,000) for all such insurance coverage; and (D) containing (a)
an "Ordinance or Law Coverage" or "Enforcement" endorsement and (b)
"demolition" insurance (in an amount equal to ten percent (10%) of the
value of the Improvements) and "increased cost of construction" insurance
(equal to twenty-five percent (25%) of the value of the Improvements at any
Mezzanine Property, if any of the Improvements or the use of such Mezzanine
Property shall at any time constitute legal non-conforming structures or
uses. In addition, each Property Borrower shall obtain: (y) if any portion
of the Improvements at any Mezzanine Property is currently or at any time
in the future located in a federally designated "special flood hazard
area", flood hazard insurance in an amount equal to the lesser of (1) the
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"Full Replacement Cost" (defined above) but no less than the Allocated Loan
Amount of the applicable Mezzanine Property or (2) the maximum amount of
such insurance available under the National Flood Insurance Act of 1968,
the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
amounts and in form and substance satisfactory to Lender in the event any
Mezzanine Property is located in an area with a high degree of seismic
activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this subsection (i).
(ii) commercial general liability insurance against claims
for personal injury, bodily injury, death or property damage occurring
upon, in or about the Mezzanine Properties, such insurance (A) to be on the
so-called "occurrence" form with a combined limit, excluding umbrella
coverage, of not less than One Million and No/100 Dollars ($1,000,000) per
occurrence with a minimum Two Million and No/100 Dollars ($3,000,000)
general aggregate with limits applying on a "per location" basis; (B) to
continue at not less than the aforesaid limit until required to be changed
by Lender by reason of changed economic conditions making such protection
inadequate; and (C) to cover at least the following hazards: (1) premises
and operations; (2) products and completed operations on an "if any" basis;
(3) independent contractors; (4) blanket contractual liability for all
legal contracts; (5) contractual liability covering the indemnities
contained in Article 9 of the related Mortgage to the extent the same is
available; (6) broad form property damage; (7) personal injury (including
death resulting therefrom); (8) healthcare professional liability and (9) a
liquor liability endorsement if alcoholic beverages are sold at any
Mezzanine Property and (D) providing for no deductible in excess of Ten
Thousand and No Dollars ($10,000).
(iii) business interruption insurance (A) with loss payable
to Lender; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above and (xi) below; (C) in an amount
sufficient to avoid any co-insurance penalty and to provide proceeds which
will cover a period of not less than eighteen (18) months from the date of
casualty or loss; (D) containing an extended period of indemnity
endorsement which provides that after the physical loss to the applicable
Mezzanine Property has been repaired, the continued loss of income will be
insured until such income returns to the same level it was prior to the
loss, or the expiration twenty-four (24) months from the date of the loss,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period. The amount of coverage shall be an annual
aggregate amount equal to the projected gross revenue from the Mezzanine
Properties, assuming the aggregate occupancy at such Mezzanine Properties
equals ninety-five percent (95%). The amount of coverage shall be adjusted
annually by Lender to reflect the projected gross revenue during the
succeeding eighteen (18) month period;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to any of the
Improvements, and only if the
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Mezzanine Property's coverage form does not otherwise apply, (A) owner's
contingent or protective liability insurance covering claims not covered by
or under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in
subsection (i) above written in a so-called builder's risk completed value
form (1) on a non-reporting basis, (2) against all risks insured against
pursuant to subsection (i) above, (3) including permission to occupy the
applicable Mezzanine Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits
of the state in which the applicable Mezzanine Property is located, and
employer's liability insurance with a limit of at least One Hundred
Thousand and No/100 Dollars ($100,000) per accident and per disease per
employee, and Five Hundred Thousand and No/100 Dollars ($500,000) aggregate
in respect of any work or operations on or about any Mezzanine Property, or
in connection with any Mezzanine Property or its operation (if applicable);
(vi) broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure vessels,
machinery, and equipment located in, on or about any Mezzanine Property
(including "system breakdown coverage") in an amount equal to or greater
than the repair and full replacement cost of such equipment and insurance
against loss of occupancy or use arising from any breakdown of such
equipment in such amounts as are generally required by institutional
lenders for properties comparable to the Mezzanine Properties;
(vii) umbrella liability insurance in addition to primary
coverage in an amount not less than Twenty-Five Million and No/100 Dollars
($25,000,000) per occurrence on terms consistent with the commercial
general liability insurance policy required under subsection (ii) above
that cover all claims typically covered by an umbrella liability policy
including all legal liability imposed upon any Property Borrower and all
court costs and attorneys' fees connection with the ownership, operation
and maintenance of the Mezzanine Properties;
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of One Million and
No/100 Dollars ($1,000,000);
(ix) if alcoholic beverages are sold at any Mezzanine
Property, so-called "dramshop" insurance or other liability insurance
required in connection with the sale of alcoholic beverages;
(x) insurance against employee dishonesty in an amount not
less than six (6) months of gross revenue from any Mezzanine Properties and
with a deductible not greater than Ten Thousand and No/100 Dollars
($10,000);
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(xi) If the insurance required under clause (i) above
excludes coverage for acts of terrorism, the Borrowers shall provide
terrorism insurance coverage in an amount equal to the lesser of (1) the
"Full Replacement Cost" (defined above) but no less than the Allocated Loan
Amount of the Mezzanine Properties or (2) the maximum amount of such
insurance which is commercially reasonably available, unless at the time of
determination: (i) it is not available at commercially reasonable rates;
(ii) no Affiliates of any Property Borrower are maintaining terrorism
insurance with respect to another property; (iii) terrorism insurance is
not commonly maintained by owners of other similar properties and (iv)
terrorism insurance is not required for loans similar to the Loan and
secured by property similar to the Mezzanine Properties; and
(xii) such other reasonable insurance and in such reasonable
amounts as Lender from time to time may reasonably request against such
other insurable hazards or casualties which at the time are commonly
insured against for property similar to the Mezzanine Properties located in
or around the region in which the Mezzanine Properties are located
including, without limitation, sinkhole, mine subsidence and environmental
insurance, due regard being given to the height and type of property,
construction, location, use and occupancy.
(b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Property Borrowers to Lender. Property Borrowers shall deliver certified copies
of the Policies to Lender within thirty (30) days of the Closing Date and
thereafter upon request. All Policies must have a term of not less than one (1)
year. Equity Borrowers shall cause Mortgage Borrowers to deliver to Lender
copies of all deliveries made by Mortgage Borrowers to Mortgage Lender under
Section 5.1(b) of the Mortgage Loan Agreement.
(c) Any blanket insurance Policy shall specifically allocate to
each Mezzanine Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only such Mezzanine Property in compliance with the provisions
of Section 5.1.1(a).
(d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name each applicable Property Borrower as the insured and Lender and its
successors and/or assigns as the additional insured, as its interests may
appear, and in the case of property damage, terrorism insurance, boiler and
machinery, flood and earthquake insurance, shall contain a so-called New York
standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.
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(e) All Policies of insurance provided for in Section 5.1.1(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of any Property Borrower, or anyone
acting for any Property Borrower, or of any tenant or other occupant, or
failure to comply with the provisions of any Policy, which might otherwise
result in a forfeiture of the insurance or any part thereof, shall in any
way affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(ii) the Policy shall not be materially changed (other than
to increase the coverage provided thereby) or canceled without at least
thirty (30) days' written notice to Lender and any other party named
therein as an additional insured;
(iii) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder; and
(iv) to the extent available at commercially reasonable
rates, a waiver of subrogation rights as to Lender.
(f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to any Property Borrower, to take such action as
Lender deems necessary to protect its interest in the Mezzanine Properties,
including, without limitation, the obtaining of such insurance coverage as
Lender in its sole discretion deems appropriate and all premiums incurred by
Lender in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by Borrowers to Lender upon demand and until paid
shall be secured by the Mortgages and shall bear interest at the Default Rate.
(g) In the event of foreclosure of any Mortgage or other transfer
of title to any Mezzanine Property in extinguishment in whole or in part of the
Debt, all right, title and interest the applicable Borrower in and to the
Policies that are not blanket Policies then in force concerning the Mezzanine
Properties and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or Lender or other transferee in the event of such
other transfer of title.
(h) Each Equity Borrower will cause the related Mortgage
Borrowers to comply with all of the provisions of Article V of the Mortgage Loan
Agreement.
5.1.2. Insurance Company. The Policies shall be issued by one or
more domestic primary insurance companies, duly qualified in the jurisdiction
where the Mezzanine Properties are located and rated A: VII or better by A.M.
Best and having a claims-paying ability of at least "AA" or its equivalent by
each of the Rating Agencies, or by a syndicate of insurers through which at
least seventy-five percent (75%) of the coverage (if there are four (4) or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five (5) or more members of the syndicate) is with carriers having
such claims-paying ability ratings
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(provided that all such carriers shall have claims-paying ability ratings of not
less than "A" or the equivalent by each of the Rating Agencies).
Section 5.2. Casualty And Condemnation.
5.2.1. Casualty. If a Mezzanine Property shall sustain a
Casualty, each Borrower shall give prompt notice of such Casualty to Lender
(provided that notice shall not need to be required for a Casualty which causes
less than $50,000 worth of damage to a Mezzanine Property) and, provided Lender
permits the applicable Borrower to utilize the Net Proceeds, if any, for any
such Restoration, shall promptly commence and diligently prosecute to completion
the repair and restoration of any Mezzanine Property as nearly as possible to
the condition such Mezzanine Property was in immediately prior to such Casualty
(a "Restoration") and otherwise in accordance with Section 5.3. At the same time
any Mortgage Borrower provides Mortgage Lender of notice of a Casualty to any
Mortgage Property, Borrowers shall cause such notice to be delivered to Lender.
Borrowers shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to, make proof of
loss if not made promptly by any Borrower. In the event of a Casualty where the
loss does not exceed the Restoration Threshold, a Borrower may settle and adjust
such claim; provided that (a) no Event of Default has occurred and is continuing
and (b) such adjustment is carried out in a commercially reasonable and timely
manner. In the event of a Casualty where the loss exceeds the Restoration
Threshold or if an Event of Default then exists, a Borrower may settle and
adjust such claim only with the consent of Lender (which consent shall not be
unreasonably withheld or delayed) and Lender shall have the opportunity to
participate, at Borrowers' cost, in any such adjustments. Notwithstanding any
Casualty, each Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.
5.2.2. Condemnation. Each Borrower shall give Lender prompt
notice of any actual or threatened Condemnation by any Governmental Authority of
all or any part of any Mezzanine Property (provided that notice shall not be
required for a Condemnation which could result in less than $50,000 in
Condemnation Proceeds) and shall deliver to Lender a copy of any and all papers
served in connection with such proceedings. At the same time any Mortgage
Borrower provides Mortgage Lender with notice of any Condemnation to any
Mortgage Property, Borrowers shall cause such notice to be delivered to Lender.
Provided no Event of Default has occurred and is continuing, in the event of a
Condemnation where the amount of the taking does not exceed the Restoration
Threshold, a Borrower may settle and compromise such Condemnation; provided that
the same is effected in a commercially reasonable and timely manner. In the
event a Condemnation where the amount of the taking exceeds the Restoration
Threshold or if an Event of Default then exists, a Borrower may settle and
compromise the Condemnation only with the consent of Lender (which consent shall
not be unreasonably withheld or delayed) and Lender shall have the opportunity
to participate, at Borrowers' cost, in any litigation and settlement discussions
in respect thereof and each Borrower shall from time to time deliver to Lender
all instruments requested by Lender to permit such participation. Each Borrower
shall, at its expense, diligently prosecute any such proceedings, and shall
consult with
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Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any Condemnation, each Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Agreement. Lender shall not be limited to the
interest paid on the Award by any Governmental Authority but shall be entitled
to receive out of the Award interest at the rate or rates provided herein or in
the Note. If any Mezzanine Property or any portion thereof is taken by any
Governmental Authority and provided Lender permits the applicable Borrower to
utilize the Net Proceeds, if any, for the Restoration of the applicable
Property, each Borrower shall promptly commence and diligently prosecute the
Restoration of such Mezzanine Property and otherwise comply with the provisions
of Section 5.3. If such Mezzanine Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.
Section 5.3. Delivery of Net Proceeds.
5.3.1. Minor Casualty or Condemnation. If a Casualty or
Condemnation has occurred to a Mezzanine Property and the Net Proceeds shall be
less than the Restoration Threshold and the costs of completing the Restoration
shall be less than the Restoration Threshold, and provided no Event of Default
shall have occurred and remain uncured, the Net Proceeds will be disbursed by
Lender to the applicable Borrower. Promptly after receipt of the Net Proceeds,
such Borrower shall commence and satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement. If any Net Proceeds
are received by any Borrower and may be retained by such Borrower pursuant to
the terms hereof, such Net Proceeds shall, until completion of the Restoration,
be held in trust for Lender and shall be segregated from other funds of such
Borrower to be used to pay for the cost of Restoration in accordance with the
terms hereof.
5.3.2. Major Casualty or Condemnation.
(a) If a Casualty or Condemnation has occurred to a Mezzanine
Property and the Net Proceeds are equal to or greater than the Restoration
Threshold or the costs of completing the Restoration is equal to or greater than
the Restoration Threshold, Lender shall make the Net Proceeds available for the
Restoration, provided that each of the following conditions are met:
(i) no Event of Default shall have occurred and be
continuing;
(ii) (A) in the event the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of
the Improvements at the applicable Mezzanine Property has been damaged,
destroyed or rendered unusable as a result of such Casualty or (B) in the
event the Net Proceeds are an Award, less than ten percent (10%) of the
land constituting applicable Mezzanine Property is taken, and such land is
located along the perimeter or periphery of the Mezzanine Property, and no
portion of the Improvements is the subject of the Condemnation;
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(iii) (A) in the event of a Casualty, the Casualty resulted
in an actual or constructive loss of less than twenty-five percent (25%) of
the fair market value of the applicable Mezzanine Property or (B) in the
event of a Condemnation, the Condemnation resulted in an actual or
constructive loss of less than ten percent (10%) of the fair market value
of the applicable Mezzanine Property.
(iv) Intentionally Deleted.
(v) The applicable Borrower shall commence the Restoration
as soon as reasonably practicable (but in no event later than sixty (60)
days after such Casualty or Condemnation, or such longer period, not to
exceed 120 days, as is reasonably necessary to adjust the claim or receive
the award; provided, however, with respect to each Mezzanine Property the
use of which is a legal non-conforming use under applicable Legal
Requirements, the Restoration shall be commenced within such period as
required by such Legal Requirements to maintain such status) and shall
diligently pursue the same to satisfactory completion and, in any event, as
to each Mezzanine Property the use of which is a legal non-conforming use
under applicable Legal Requirements, within such period as required by such
Legal Requirements to maintain such status;
(vi) Lender shall be satisfied that any operating deficits
and all payments of principal and interest under the Note will be paid
during the period required for Restoration from (A) the Net Proceeds, or
(B) other funds of the applicable Borrower;
(vii) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (A) the date six (6) months
prior to the Maturity Date, (B) such time as may be required under
applicable Legal Requirements in order to repair and restore the applicable
Mezzanine Property to the condition it was in immediately prior to such
Casualty or to as nearly as possible the condition it was in immediately
prior to such Condemnation, as applicable or (C) the expiration of the
insurance coverage referred to in Section 5.1.1(a)(iii);
(viii) Lender shall be satisfied that after the Restoration,
the fair market value of the applicable Mezzanine Property will be at least
equal to the fair market value of such Mezzanine Property prior to the
Casualty or Condemnation;
(ix) the applicable Mezzanine Property and the use thereof
after the Restoration will be in substantial compliance with and permitted
under all applicable Legal Requirements;
(x) the Restoration shall be done and completed by the
applicable Borrower in an expeditious and diligent fashion and in
substantial compliance with all applicable Legal Requirements; and
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(xi) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the applicable Mezzanine Property or the
related Improvements.
(b) The Net Proceeds shall be paid directly to Lender and held by
Lender in the Net Proceeds Account, and until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by, the
applicable Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the applicable Mezzanine Property
arising out of the Restoration which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the reasonable satisfaction of Lender by the title company issuing
the Title Insurance Policy.
(c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant"). The plans and
specifications shall require that the Restoration be completed in a first-class
workmanlike manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the case of a
partial Condemnation, the Restoration shall be done to the extent reasonably
practical after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the applicable Mezzanine
Property is restored to be of at least equal value and of substantially the same
character as prior to the Casualty. The applicable Borrower shall restore all
Improvements such that when they are fully restored and/or repaired, such
Improvements and their contemplated use substantially comply with all applicable
material Legal Requirements. The identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as well as the contracts under which
they have been engaged, shall be subject to reasonable approval of Lender and
the Casualty Consultant. All costs and expenses incurred by Lender in connection
with recovering, holding and advancing the Net Proceeds for the Restoration
including, without limitation, reasonable attorneys' fees and disbursements and
the Casualty Consultant's fees and disbursements, shall be paid by Borrowers.
(d) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "Casualty
Retainage" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than
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the amount actually held back by the applicable Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions
of this Section 5.3.2(d) and that all approvals necessary for the re-occupancy
and use of the applicable Mezzanine Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Casualty Retainage; provided, however, that Lender will
release the portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the
date upon which the Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title Insurance Policy,
and Lender receives an endorsement to the Title Insurance Policy insuring the
continued priority of the lien of the related Mortgage and evidence of payment
of any premium payable for such endorsement. If required by Lender, the release
of any such portion of the Casualty Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
the contractor, subcontractor or materialman.
(e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
reasonably estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrowers shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender in the Net Proceeds Account and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.3.2 shall constitute additional security
for the Debt.
(g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to the
applicable Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents.
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(h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to a Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt, whether or not then due and payable, in such order,
priority and proportions as Lender in its sole discretion shall deem proper
without any Prepayment Premium, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to a Borrower for such purposes as Lender
shall designate.
ARTICLE VI. ACCOUNTS
Section 6.1. Mezzanine Cash Management Account/Mezzanine Collection
Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the collection of all income from each Mezzanine Property and any deposits from
the Mortgage Cash Management Account with respect to the Mortgage Properties
(the "Mezzanine Cash Management Account"). As a condition precedent to the
closing of the Loan, Borrowers shall cause the Mezzanine Cash Management Bank to
execute and deliver the Mezzanine Cash Management Agreement, which provides,
inter alia, that no party other than Lender and Servicer shall have the right to
withdraw funds from the Mezzanine Cash Management Account. The fees and expenses
of the Mezzanine Cash Management Bank shall be paid by Borrower. On or prior to
the Closing Date, the Borrowers shall establish and thereafter maintain with the
Mezzanine Collection Account Bank a lockbox account (the "Mezzanine Collection
Account"). As a conditon precedent to the closing of the Loan, Borrowers shall
cause the Mezzanine Collection Account Bank to execute and deliver the Mezzanine
Collection Account Agreement, which provides, inter alia, that no party other
than Lender and Servicer shall have the right to withdraw funds from the
Mezzanine Collection Account. The fees and expenses of the Mezzanine Collection
Account Bank shall be paid by the Borrowers.
(b) On the Closing Date, with respect to each Mezzanine Property,
each Borrower shall deliver a written notice (a "Payor Notice") to each Third
Party Payor that is under Medicare and Medicaid, which notice shall provide that
(A) all payments from such Third Party Payor shall thereafter be transmitted
directly by it to, and deposited directly into, the Mezzanine Collection Account
and (B) such instruction may not be rescinded unless and until such Third Party
Payor receives from a Borrower or Lender a copy of Lender's written consent to
such rescission. Each Borrower shall send a copy of each such written notice to
Lender and shall re-deliver such notices to each Third Party Payor until such
time as such Third Party Payor complies therewith. Each Borrower covenants to
cause all Rents relating to the Mezzanine Properties and all other money
received by each Borrower or Manager with respect to the Mezzanine Properties,
including, but not limited to, payments from all other Third Party Payors
(excluding Medicare and Medicaid) ("Private Third Party Payors") and Self-Pay
Receivables to be deposited in the Mezzanine Collection Account by the end of
the first (1st) Business Day following any Borrower's or Manager's receipt
thereof; and each Borrower shall be permitted to deposit in the Mezzanine
Collection Account such additional amounts as any Borrower may
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elect. The parties acknowledge and agree that with respect to each Mezzanine
Property, the payments from the Private Third Party Payors and the Self-Pay
Receivables constituting checks will be remitted by each Borrower once such
Borrower has accumulated $1,000.00 worth of such checks, by overnight delivery
to Manager. Manager shall hold such checks in trust and will deposit such checks
within one (1) Business Day of receipt.
(c) Lender shall have the right to replace the Mezzanine Cash
Management Bank or the Mezzanine Collection Account Bank with any other Eligible
Institution in which Eligible Accounts may be maintained which will promptly
execute and deliver to Lender a Mezzanine Cash Management Agreement or Mezzanine
Collection Account Agreement, (and each Borrower shall cooperate with Lender in
connection with such transfer) in the event that (i) at any time the Mezzanine
Cash Management Bank or the Mezzanine Collection Account Bank ceases to be an
Eligible Institution or (ii) the Mezzanine Cash Management Bank or the Mezzanine
Collection Account Bank resigns or otherwise fails to comply with the Mezzanine
Cash Management Agreement, as applicable or (iii) there is a default by the
Mezzanine Cash Management Bank or the Mezzanine Collection Account Bank, as
applicable under its Mezzanine Cash Management Agreement or Mezzanine Collection
Account Agreement. Notwithstanding the foregoing, Lender shall have the right to
hold the Collateral Accounts at any other Eligible Institution.
Section 6.2. Distributions From Mezzanine Cash Management Account.
(a) At the end of each Business Day, the Mezzanine Collection
Account Bank shall remit all available funds in the Mezzanine Collection Account
to the Mezzanine Cash Management Account.
(b) On each Business Day, provided no Event of Default has
occurred and no Mezzanine Cash Management Period exists, the Mezzanine Cash
Management Bank shall withdraw all available funds in the Mezzanine Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:
(i) to the Ground Rent Escrow Account, the amount required
to be deposited therein pursuant to Section 6.10
(ii) to the Tax and Insurance Escrow Account, the amount
required to be deposited therein pursuant to Section 6.3;
(iii) to the Debt Service Account, the amount required to be
deposited therein pursuant to Section 6.4;
(iv) to the Capital Expenditure Reserve Account, the amount
required to be deposited therein pursuant to Section 6.6; and
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(v) any remaining amounts shall be disbursed to such account
as the applicable Borrower may direct.
(c) If a Mezzanine Cash Management Period exists but no Event of
Default has occurred and is continuing, the Mezzanine Cash Management Bank shall
withdraw on each Business Day all available funds in the Mezzanine Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:
(i) to the Ground Rent Escrow Account, the amount required
to be deposited therein pursuant to Section 6.10
(ii) to the Tax and Insurance Escrow Account, the amount
required to be deposited therein pursuant to Section 6.3;
(iii) to the Debt Service Account, the amount required to be
deposited therein pursuant to Section 6.4;
(iv) to the Operating Expense Reserve Account, the amount
required to be deposited therein pursuant to Section 6.5;
(v) to the Capital Expenditure Reserve Account, the amount
required to be deposited therein pursuant to Section 6.6; and
(vi) any remaining amounts to be disbursed to the Debt
Service Account to be applied to the prepayment of the Loan.
(d) If an Event of Default has occurred and is continuing, Lender
shall promptly notify Mezzanine Cash Management Bank of such Event of Default
and Lender may, in addition to all other rights and remedies provided for under
the Loan Documents, disburse and apply the amounts in the Mezzanine Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses for the Mezzanine Properties or Capital
Expenditures, in such sequence as Lender shall elect in its sole discretion.
(e) If on any Payment Date, any Collateral Account has not been
fully funded in the applicable amount described in Section 6.2(b) or Section
6.2(c), as applicable, Borrowers shall deposit into the Mezzanine Cash
Management Account on such Payment Date the amount of such deficiency. If
Borrowers shall fail to make such deposit, the same shall constitute an Event of
Default and, in addition to all other rights and remedies provided for under the
Loan Documents, Lender may disburse and apply the amounts in the Mezzanine Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses or for the Mezzanine Properties Capital
Expenditures, in such sequence as Lender shall elect in its sole discretion.
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Section 6.3. Tax and Insurance Escrow Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by any Borrower in respect of Taxes and
Insurance Premiums for each Mezzanine Property (the "Tax and Insurance Escrow
Account").
(b) On or prior to the Closing Date, the Tax and Insurance Escrow
Account shall be funded in an amount equal to the sum of (i) an amount
sufficient to pay all Taxes for the Mezzanine Properties by the thirtieth (30th)
day prior to the date they come due, assuming subsequent monthly fundings on
Payment Dates of one-twelfth (1/12th) of projected annual Taxes, plus (ii) an
amount sufficient to pay all Insurance Premiums for the Mezzanine Properties by
the thirtieth (30th) day prior to the date they come due, assuming subsequent
monthly fundings on Payment Dates of one-twelfth (1/12th) of projected Insurance
Premiums.
(c) On each subsequent Business Day during an Interest Accrual
Period, the Mezzanine Cash Management Bank shall withdraw all available funds in
the Mezzanine Cash Management Account and shall disburse such funds into the Tax
and Insurance Escrow Account in accordance with the provisions set forth in
Section 6.2 until an amount equal to the sum of:
(A) one-twelfth (1/12th) of the Taxes for the Mezzanine
Properties that Lender reasonably estimates, based on information provided
by Borrowers, will be payable during the next ensuing twelve (12) months,
plus
(B) one-twelfth (1/12th) of the Insurance Premiums for the
Mezzanine Properties that Lender reasonably estimates, based on information
provided by Borrowers, will be payable during the next ensuing twelve (12)
months;
has been deposited into the Tax and Insurance Escrow Account provided, however,
that if at any time Lender reasonably determines that the amount in the Tax and
Insurance Escrow Account will not be sufficient to accumulate (upon payment of
subsequent monthly amounts in accordance with the provisions of this Agreement)
the full amount of all installments of Taxes and Insurance Premiums for the
Mezzanine Properties by the date on which such amounts come due, then Lender
shall notify Borrowers of such determination and Borrowers shall increase the
monthly payments to the Tax and Insurance Escrow Account by the amount that
Lender reasonably estimates is sufficient to achieve such accumulation.
(d) Each Borrower shall provide Lender with copies of all tax and
insurance bills relating to each Mezzanine Property promptly after the
applicable Borrower's receipt thereof. Lender will apply amounts in the Tax and
Insurance Escrow Account toward the purposes for which such amounts are
deposited therein. In connection with the making of any payment from the Tax and
Insurance Escrow Account, Lender may cause such payment to be made according to
any xxxx, statement or estimate procured from the appropriate public office or
insurance carrier, without inquiry into the accuracy of such xxxx, statement or
estimate or into the
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validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof unless given written advance notice by a Borrower of such inaccuracy,
invalidity or other contest.
Section 6.4. Debt Service Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by Borrowers in respect of Debt Service
(the "Debt Service Account").
(b) On each Business Day during an Interest Accrual Period, the
Cash Management Bank shall withdraw all available funds in the Mezzanine Cash
Management Account and shall disburse such funds into the Debt Service Account
in accordance with the provisions set forth in Section 6.2 until an amount equal
to the amount of all scheduled or delinquent interest on the Loan and other
amounts due and payable under the Loan Documents on the next Payment Date has
been deposited into the Debt Service Account; provided, however, the amounts to
be applied in prepayment of the Loan due to the occurrence of a Mezzanine Cash
Management Event shall be deposited at such time as described in Section
6.2(c)(vi). To the extent Lender receives any prepayments of the Debt in an
Interest Accrual Period on a date other than a Payment Date, the total amount of
such prepayment shall be deposited into the Debt Service Account, together with
all other sums payable with respect to such prepayment including, but not
limited to, any Prepayment Premium and all interest that would have accrued from
the date of such prepayment through the applicable Payment Date. Any Net
Proceeds actually received by Lender shall be deposited directly into the Net
Proceeds Account pursuant to Section 6.8 hereof.
Section 6.5. Operating Expense Reserve Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts in respect of Operating Expenses for the
Mezzanine Properties (the "Operating Expense Reserve Account").
(b) On each Business Day during a Mezzanine Cash Management
Period, the Mezzanine Cash Management Bank shall withdraw all available funds in
the Mezzanine Cash Management Account and shall disburse such funds into the
Operating Expense Reserve Account in accordance with the provisions set forth in
Section 6.2 until an amount equal to the funds necessary to pay all Operating
Expenses for the Mezzanine Properties which are (A) to be incurred during the
applicable Interest Accrual Period in accordance with the Annual Budget, or (B)
certified by Borrowers from time to time and approved by Lender in its sole
discretion, has been deposited into the Operating Expense Reserve Account.
(c) Upon the request of a Borrower at any time, provided that no
Event of Default has occurred, Lender shall remit to such Borrower from the
Operating Expense Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for
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Operating Expenses incurred by such Borrower in connection with any of the
Mezzanine Properties, provided that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs are within the limits of the
Annual Budget and all such costs have been previously paid by such Borrower
or will be paid from the proceeds of the requested disbursement; and
(iii) Lender may condition the making of a requested
disbursement on reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to which specific draws made hereunder relate.
Section 6.6. Capital Expenditure Reserve Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts in respect of Capital Expenditures (the
"Capital Expenditure Reserve Account").
(b) On each Business Day, the Mezzanine Cash Management Bank
shall withdraw all available funds in the Mezzanine Cash Management Account and
shall disburse such funds into the Capital Expenditure Reserve Account in
accordance with the provisions set forth in Section 6.2 until an amount equal to
the Monthly Capital Expenditure Reserve Amount has been deposited therein.
(c) Upon the request of any Borrower at any time (but not more
often than once per calendar month), provided no Event of Default has occurred
and is continuing, Lender shall remit to such Borrower from the Capital
Expenditure Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Capital Expenditures made in accordance herewith;
provided that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs have been previously paid by
such Borrower or will be paid from the proceeds of the requested
disbursement; and
(iii) Lender may condition the making of a requested
disbursement on (1) reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to
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which specific draws made hereunder relate, (2) a reasonably satisfactory
site inspection, and (3) receipt of lien releases and waivers from any
contractors, subcontractors and others in connection with such amounts.
Section 6.7. Deferred Maintenance and Environmental Escrow Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts anticipated to be required to correct Deferred
Maintenance Conditions (the "Deferred Maintenance and Environmental Escrow
Account").
(b) On the Closing Date, Borrowers shall deposit into the
Deferred Maintenance and Environmental Escrow Account, from the proceeds of the
Loan, an amount equal to the Deferred Maintenance Amount.
(c) Borrowers shall correct the Deferred Maintenance Conditions
in a diligent, workmanlike manner and shall complete the same within twelve (12)
months of the Closing Date. Upon the request of a Borrower at any time (but not
more often than once per calendar month), provided no Event of Default has
occurred and is continuing, Lender shall disburse to such Borrower from the
Deferred Maintenance and Environmental Escrow Account amounts to permit such
Borrower to pay (or to reimburse such Borrower) for reasonable costs and
expenses incurred in order to correct Deferred Maintenance Conditions; provided
that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs have been previously paid by
Borrower or will be paid from the proceeds of the requested disbursement;
(iii) Lender may condition the making of a requested
disbursement on (1) reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to which specific draws made hereunder relate, (2)
a reasonably satisfactory site inspection, and (3) receipt of lien releases
and waivers from any contractors, subcontractors and others with respect to
such amounts; and
(iv) as to any Deferred Maintenance Condition, the
applicable Borrower shall only be entitled to a disbursement of the amount
equal to the cost for such Deferred Maintenance Condition.
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Section 6.8. Net Proceeds Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of depositing any Net Proceeds (the "Net Proceeds Account") from the
Properties.
(b) Provided no Event of Default has occurred, funds in the Net
Proceeds Account shall be applied in accordance with Section 5.3.
Section 6.9. Intentionally Deleted.
Section 6.10. Ground Rent Escrow Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by Borrower in respect of Ground Rent
(the "Ground Rent Escrow Account").
(b) On or prior to the Closing Date, the Ground Rent Escrow
Account shall be funded in an amount sufficient to pay the Ground Rent by the
thirtieth (30th) day prior to the date such Ground Rent comes due, assuming
subsequent monthly fundings on Payment Dates of one-twelth (1/12) of annual
Ground Rent. On each subsequent Business Day, the Mezzanine Cash Management Bank
shall withdraw all available funds in the Mezzanine Cash Management Account and
shall disburse such funds into the Ground Rent Escrow Account until an amount
equal to one-twelth 1/12 of the Ground Rent that Lender reasonably estimates,
based on information provided by Borrowers, will be payable during the next
ensuing twelve (12) months, has been deposited into the Ground Rent Escrow
Account, provided, however, that if at any time Lender reasonably determines
that the amount in the Ground Rent Escrow Account will not be sufficient to
accumulate (upon payment of subsequent monthly amounts in accordance with the
provisions of this Agreement) the full amount of all installments of Ground Rent
by the date on which such amounts come due, then Lender shall notify Borrowers
of such determination and Borrowers shall increase the monthly payments to the
Ground Rent Escrow Account by the amount that Lender reasonably estimates is
sufficient to achieve such accumulation.
(c) Each applicable Borrower shall provide Lender with copies of
all bills for Ground Rent promptly after such Borrower's receipt thereof. Lender
will apply amounts in the Ground Rent Escrow Account toward the purposes for
which such amounts are deposited therein. In connection with the making of any
payment from the Ground Rent Escrow Account, Lender may cause such payment to be
made according to any xxxx, statement or estimate submitted by the applicable
Borrower, without inquiry into the accuracy of such xxxx, statement or estimate.
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Section 6.11. Account Collateral.
(a) Each Borrower hereby grants a perfected first-priority
security interest in favor of Lender in and to the Account Collateral (other
than the Collection Account) as security for the Debt, together with all rights
of a secured party with respect thereto. Each Collateral Account shall be an
Eligible Account under the sole dominion and control of Lender and shall be in
the name of Borrowers, as pledgors, and Lender, as pledgee. Each Borrower shall
have no right to make withdrawals from any of the Collateral Accounts. Funds in
the Collateral Accounts shall not be commingled with any other monies at any
time. Each Borrower shall execute any additional documents that Lender in its
reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral (other than the Collection Account).
(b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve any Borrower from its obligation to fulfill all
covenants contained in the Loan Documents.
(c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, toward the payment of the Debt and/or toward the payment of Basic
Carrying Costs, Operating Expenses for the Mezzanine Properties or Capital
Expenditures in such sequence as Lender shall elect in its sole discretion.
Section 6.12. Permitted Investments.
(a) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts (other than the Collection Account) in Permitted
Investments and to sell or liquidate such Permitted Investments and reinvest
proceeds from such sale or liquidation in other Permitted Investments (but
Lender shall have no liability whatsoever in respect of any failure by the
Mezzanine Cash Management Bank to do so), with all such proceeds and
reinvestments to be held in the applicable Collateral Account; provided,
however, that the maturity of an adequate portion of the Permitted Investments
on deposit in the Collateral Accounts shall be no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
therefrom pursuant to this Agreement, and provided further that Borrowers shall
remit into the applicable Collateral Account an amount equal to any losses
realized on Permitted Investments contained therein within five (5) Business
Days of the date of such loss. Funds in the Collection Account shall not be
invested. No Permitted Investment shall be liquidated at a loss at the direction
of any Borrower except to the extent necessary to make a required payment to
Lender on a Payment Date.
(b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrowers and Lender, Borrowers shall treat all income,
gains and losses from the
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investment of amounts in the Collateral Accounts as its income or loss for
federal, state and local income tax purposes.
(c) After the Debt has been paid in full, the Collateral Accounts
shall be closed and the balances therein, if any, shall be paid to Borrowers.
Section 6.13. Bankruptcy.
Each Borrower and Lender acknowledge and agree that upon the filing of
a bankruptcy petition by or against any Borrower under the Bankruptcy Code, the
Account Collateral and the Operating Income relating to the Borrowers or the
Mezzanine Properties (whether then already in the Collateral Accounts, or then
due or becoming due thereafter) shall be deemed not to be property of such
Borrower's bankruptcy estate within the meaning of Section 541 of the Bankruptcy
Code. However, if a court of competent jurisdiction determines that,
notwithstanding the foregoing characterization of the Account Collateral and the
Operating Income relating to the Borrowers or the Mezzanine Properties by any
Borrower and Lender, the Account Collateral and/or the Operating Income relating
to the Borrowers or the Mezzanine Properties do constitute property of such
Borrower's bankruptcy estate, then Borrowers and Lender further acknowledge and
agree that all such Operating Income relating to the Borrowers or the Mezzanine
Properties, whether due and payable before or after the filing of the petition,
are and shall be cash collateral of Lender. Each Borrower acknowledges that
Lender does not consent to any Borrower's use of such cash collateral and that,
in the event Lender elects (in its sole discretion) to give such consent, such
consent shall only be effective if given in writing signed by Lender. Except as
provided in the immediately preceding sentence, each Borrower shall not have the
right to use or apply or require the use or application of such cash collateral
(i) unless the applicable Borrower shall have received a court order authorizing
the use of the same, and (ii) the applicable Borrower shall have provided such
adequate protection to Lender as shall be required by the bankruptcy court in
accordance with the Bankruptcy Code.
Section 6.14. Letters of Credit.
(a) In lieu of making the payments to any of the Collateral
Accounts (other than the Debt Service or Operating Expense Reserve Account),
Borrowers may deliver to Lender a Letter of Credit in accordance with the
provisions of this Section. Additionally, Borrowers may deliver to Lender a
Letter of Credit in accordance with the provisions of this Section in lieu of
deposits previously made to the Collateral Accounts (other than the Debt Service
or Operating Expense Reserve Account). The aggregate amount of any Letter of
Credit and cash on deposit with respect to any of such Collateral Accounts shall
at all times be at least equal to the aggregate amount which each Borrower is
required to have on deposit in such Collateral Account pursuant to this
Agreement through the end of the calendar year in which the Letter of Credit is
delivered, as reasonably estimated by Lender (and in the case of Taxes and
Insurance Premiums in no event less than an amount equal to one year of
Insurance Premiums and estimated Taxes for the Mezzanine Properties). In
determining the aggregate amount of any Letter of Credit and cash required to be
delivered to Lender in respect of the Capital Expenditure Reserve Account, such
aggregate amounts shall equal all amounts required to be deposited
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hereunder through the end of the calendar year in which the Letter of Credit is
delivered, less amounts expended by any Borrower for Capital Expenditures for
which any Borrower has satisfied the conditions to withdrawal from the Capital
Expenditure Reserve Account. In the event that a Letter of Credit is delivered
in lieu of any deposits to the Tax and Insurance Reserve Account, Borrowers
shall be responsible for the payment of Taxes or Insurance Premiums for the
Mezzanine Properties, as applicable, and Lender shall not be responsible
therefor.
(b) Borrowers shall give Lender no less than thirty (30) days
notice of a Borrower's election to deliver a Letter of Credit and Borrowers
shall pay to Lender all of Lender's reasonable out-of-pocket costs and expenses
in connection therewith. Each Borrower shall not be entitled to draw from any
such Letter of Credit. Upon thirty (30) days notice to Lender, a Borrower may
replace a Letter of Credit with a cash deposit to the applicable Collateral
Account if a Letter of Credit has been outstanding for more than six (6) months.
Prior to the return of a Letter of Credit, Borrowers shall deposit an amount
equal to the amount that would have accumulated in the applicable Collateral
Account and not been disbursed in accordance with this Agreement if such Letter
of Credit had not been delivered.
(c) Each Borrower shall provide Lender with notice of any
increases in the annual payments for Taxes, Insurance Premiums, Capital
Expenditures or Ground Rent for any of the Mezzanine Properties thirty (30) days
prior to the effective date of any such increase and any applicable Letter of
Credit shall be increased by such increased amount at least ten (10) days prior
to the effective date of such increase.
Section 6.15. Provisions Regarding Letters of Credit.
6.15.1. Security for Debt. Each Letter of Credit delivered under
this Agreement shall be additional security for the payment of the Debt. Upon
the occurrence of a Default or an Event of Default, Lender shall have the right,
at its option, to draw on any Letter of Credit and to apply all or any part
thereof to the payment of the items for which such Letter of Credit was
established or to apply each such Letter of Credit to payment of the Debt in
such order, proportion or priority as Lender may determine. Any such application
to the Debt shall be subject to the Prepayment Premium.
6.15.2. Additional Rights of Lender. In addition to any other
right Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) upon receipt of notice
from the issuing bank that the Letter of Credit will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided); or
(c) if the bank issuing the Letter of Credit shall cease to be an Eligible
Institution and any Borrower fails to deliver a replacement Letter of Credit
within ten (10) days of the date that the issuing bank is no longer an Eligible
Institution. Notwithstanding anything to the contrary contained in the above,
Lender is not obligated to draw any Letter of Credit upon the
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happening of an event specified in (a), (b) or (c) above and shall not be liable
for any losses sustained by any Borrower due to the insolvency of the bank
issuing the Letter of Credit if Lender has not drawn the Letter of Credit.
ARTICLE VII. PROPERTY MANAGEMENT
Section 7.1. The Management Agreement.
Each Property Borrower shall cause Manager to manage the Mezzanine
Properties in accordance in all material respects with the Management Agreement.
Each Property Borrower shall (i) diligently perform and observe in all material
respects all of the terms, covenants and conditions of the Management Agreement
on the part of such Property Borrower to be performed and observed (ii) promptly
notify Lender of any default by Manager under the provisions of the Management
Agreement and (iii) promptly notify Lender of any notice to any Property
Borrower of any default by such Property Borrower in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of such Property Borrower to be performed and observed. If
any Property Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
such Property Borrower to be performed or observed, then, without limiting
Lender's other rights or remedies under this Agreement or the other Loan
Documents, and without waiving or releasing any Property Borrower from any of
its obligations hereunder or under the Management Agreement, Lender shall have
the right, but shall be under no obligation, to pay any sums and to perform any
act as may be appropriate to cause all the material terms, covenants and
conditions of the Management Agreement on the part of any Property Borrower to
be performed or observed. Each Equity Borrower shall cause the related Mortgage
Borrowers to comply with terms and provisions of Article VII of the Mortgage
Loan Agreement.
Section 7.2. Prohibition Against Termination or Modification.
No Property Borrower shall surrender, terminate, cancel, amend,
modify, renew or extend the Management Agreement, or enter into any other
agreement relating to the management or operation of any Mezzanine Property with
Manager or any other Person, or consent to the assignment by Manager of its
interest under the Management Agreement, in each case without the express
consent of Lender, which consent may be granted or denied in Lender's sole
discretion; provided, however, with respect to a new manager such consent may be
conditioned upon delivering a Rating Agency Confirmation as to such new manager
and management agreement. If at any time Lender consents to the appointment of a
new manager, such new manager and Borrowers shall, as a condition of Lender's
consent, execute a subordination of management agreement in the form then used
by Lender. The management fees and other fees reserved under the Management
Agreement shall not exceed in the aggregate the prevailing rate for properties
of comparable size, quality and tenant mix in the market in which the Mezzanine
Properties are located. In no event shall such fees exceed seven percent (7%) of
the Operating Income for the applicable Mezzanine Property.
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Section 7.3. Replacement of Manager.
Lender shall have the right to require the Property Borrowers to
terminate the Management Agreement and to replace the Manager with a Person
chosen by the Property Borrowers and approved by Lender, upon the occurrence of
any one or more of the following events: (i) at any time following the
occurrence of an Event of Default, (ii) if Manager shall be in default under the
Management Agreement or the Assignment of Management Agreement beyond any
applicable notice and cure period, (iii) if at any time Manager has engaged in
gross negligence, malfeasance, fraud or willful misconduct and (iv) if the Debt
Service Coverage Ratio is less than 1.25:1.00.
ARTICLE VIII. TRANSFERS
Section 8.1. Transfer of the Properties and Collateral.
Each Borrower may not transfer, and each Equity Borrower may not
permit any Mortgage Borrower to transfer, any of the Properties to another party
(i) unless Lender shall have consented in writing to such transfer which consent
may be granted or denied in Lender's sole discretion, (ii) after a
Securitization has occurred, Rating Agency Confirmation is obtained, (iii)
acceptable opinions relating to such transfer shall have been delivered by
Borrowers to Lender and to the Rating Agencies (including without limitation tax
and non-consolidation opinions), (iv) the transferee assumes in writing all
obligations of the transferor under the Loan Documents and executes and delivers
such other documentation as may be required by Lender or the Rating Agencies,
(v) Borrowers pay an assumption fee equal to one half of one percent (.5%) of
the Loan Amount and (vi) Borrowers pay all reasonable expenses incurred by
Lender in connection with such transfer. Each Equity Borrower shall not Transfer
any of its interests in the Collateral without the prior written consent of the
Lender which may be granted or denied in its sole consent.
Section 8.2. Transfer of Equity Interests.
Any transfer of any direct or indirect equity interests in any
Borrower shall be prohibited unless (i) Lender shall have consented in writing
to such transfer or transfers which may be granted or denied in Lender's sole
discretion, (ii) Rating Agency Confirmation is obtained, (iii) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrowers to Lender and the Rating Agencies (including, without limitation, tax
and non-consolidation opinions), and (iv) Borrowers pay all reasonable expenses
incurred by Lender in connection with such transfer or transfers.
Notwithstanding the foregoing, transfers of interests in the Parent which do not
constitute a Change of Control (as defined in the Master Guaranty) to the extent
permitted under the Master Guaranty shall be permitted hereunder.
Section 8.3. Lender's Consent Rights.
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and
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payable upon a Transfer without Lender's consent. This provision shall apply to
every Transfer, other than any Transfer permitted pursuant to Sections 8.1 and
8.2, regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.
ARTICLE IX. SALE AND SECURITIZATION OF MORTGAGE
Section 9.1. Sale of Mortgages and Securitization.
(a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization." Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").
(b) If requested by Lender, each Borrower shall assist Lender in
satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:
(i) (A) provide updated financial and other information with
respect to the Properties, the business operated at the Properties, each
Borrower, each Mortgage Borrower and the Managers, (B) provide updated
budgets relating to the Properties and (C) provide updated appraisals,
market studies, environmental assessments (Phase I's and, if appropriate,
Phase II's), property condition reports and other due diligence
investigations of the Properties (the "Updated Information"), together, if
customary, with appropriate verification of the Updated Information through
letters of auditors or opinions of counsel acceptable to Lender and the
Rating Agencies;
(ii) provide opinions of counsel, which may be relied upon
by Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation or any other opinion customary in
Secondary Market Transactions or required by the Rating Agencies with
respect to the Properties and Borrowers and Affiliates, which counsel and
opinions shall be satisfactory to Lender and the Rating Agencies;
(iii) provide updated, as of the closing date of the
Secondary Market Transaction, representations and warranties made in the
Loan Documents and such additional representations and warranties as the
Rating Agencies may require; and
(iv) execute amendments to the Loan Documents and any
Borrower's organizational documents reasonably requested by Lender;
provided, however, that such Borrower shall not be required to modify or
amend any Loan Document if such modification or amendment would (A) change
the interest rate, the
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stated maturity or the amortization of principal as set forth herein or in
the Note, or (B) modify or amend any other material economic term of the
Loan.
(c) Each Borrower acknowledges that the Loan may be further
divided into two or more separate notes (or components) that correspond to one
or more tranches of certificates created in a Securitization and each Borrower
agrees to cooperate with Lender in connection therewith. Such notes or note
components may be assigned different interest rates, so long as the weighted
average of such interest rates equals the applicable Interest Rate; provided,
that each Borrower recognizes that, in the case of partial prepayments
associated with principal reduction funded from Net Proceeds, the application of
amounts to principal following an Event of Default under the Loan, or any other
prepayment of a portion of the Loan by any Borrower, the weighted average
interest rate of the Loan may increase because principal may be applied
sequentially, starting with the most senior tranche of certificates. In
addition, each Borrower acknowledges and agrees that Lender shall have the right
to split the Note into an "A" note and a "B" note and each Borrower agrees to
cooperate with Lender in connection therewith in connection with the foregoing
so long as the weighted average interest rate of the "A" note and the "B" note
equals the applicable Interest Rate; provided, that each Borrower recognizes
that, in the case of partial prepayments associated with principal reduction
funded from Net Proceeds, the application of amounts to principal following an
Event of Default under the Loan, or any other prepayment of a portion of the
Loan by any Borrower, the weighted average interest rate of the Loan may
increase because in certain circumstances principal may be applied sequentially
to the "A" and the "B" note.
Section 9.2. Securitization Indemnification.
(a) Each Borrower understands that information provided to Lender
by any Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.
(b) Upon request, each Borrower shall provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, an
agreement (A) certifying that each Borrower has examined such Disclosure
Documents specified by Lender and that each such Disclosure Document, as it
relates to each Borrower, Borrower Affiliates, the Properties, Manager and all
other aspects of the Loan (the "Relevant Material"), does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading, (B) indemnifying Lender (and for purposes of this
Section 9.2, Lender hereunder shall include its
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officers and directors and each Person that controls Lender within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,
collectively, the "Ventas Group"), the party that has filed the registration
statement relating to the Securitization (the "Registration Statement"), each of
its directors, each of its officers who have signed the Registration Statement
and each Person that controls such party within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "Underwriter
Group") for any losses, claims, damages or liabilities (collectively, the
"Liabilities") to which Lender, Ventas Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Relevant Material or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in the Relevant
Material or necessary in order to make the statements in the Relevant Material,
in light of the circumstances under which they were made, not misleading and (C)
agreeing to reimburse Lender, the Ventas Group and/or the Underwriter Group for
any legal or other expenses reasonably incurred by Lender, the Ventas Group and
the Underwriter Group in connection with investigating or defending the
Liabilities; provided, however, that each Borrower will be liable in any such
case under clauses (B) or (C) above only to the extent that any such loss claim,
damage or liability arises out of or is based upon any such untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of any Borrower in connection with the
preparation of the Disclosure Document or in connection with the underwriting or
closing of the Loan, including, without limitation, financial statements of any
Borrower, operating statements, rent rolls, appraisals, market studies,
environmental site assessment reports and property condition reports with
respect to the Properties. This indemnity will be in addition to any liability
which any Borrower may otherwise have.
(c) In connection with Exchange Act Filings, each Borrower shall
(i) indemnify Lender, the Ventas Group and the Underwriter Group for Liabilities
to which Lender, the Ventas Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Ventas Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Ventas
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to
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participate therein and, to the extent that it (or they) may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party under this Section 9.2, such
indemnified party shall pay for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there are any
legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party at the cost of the indemnifying
party. The indemnifying party shall not be liable for the expenses of more than
one separate counsel unless an indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the applicable indemnified party's
and each Borrower's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and each Borrower hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrowers and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
ARTICLE X. DEFAULTS
Section 10.1. Event of Default.
(a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):
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(i) if any portion of the Debt is not paid when due or if
any Borrower fails to pay any other amount payable pursuant to this
Agreement (including, without limitation, any deposits or payments to the
Collateral Accounts) or any other Loan Document when due and payable in
accordance with the provisions hereof or thereof, as the case may be;
(ii) subject to Borrowers' right to contest Taxes and Other
Charges pursuant to Section 4.1.2 and provided Borrower is complying with
the terms of such Section, if any of the Taxes or Other Charges are not
paid when due;
(iii) if the Policies are not kept in full force and effect;
(iv) if any Borrower breaches or permits or suffers a breach
of Article 6 of any Mortgage;
(v) if any representation or warranty made by any Borrower
herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as of
the date the representation or warranty was made;
(vi) if any Borrower shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be
appointed for any Borrower or if any Borrower shall be adjudicated a
bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to, or acquiesced in by,
any Borrower, or if any proceeding for the dissolution or liquidation of
any Borrower shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to
by any Borrower, upon the same not being discharged, stayed or dismissed
within thirty (30) days;
(viii) if any Borrower attempts to assign its rights under
this Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if any Borrower breaches any representation, warranty
or covenant contained in the Pledge Agreement;
(x) if any Borrower breaches any representation, warranty or
covenant contained in Section 3.1.24 hereof or if any Borrower is not a
Single-Purpose Entity or if any provision of any organizational document of
any Borrower is amended or modified in any respect without the prior
written consent of Lender;
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(xi) if any Borrower shall continue to be in Default under
any of the other terms, covenants or conditions of this Agreement not
specified in subsections (i) to (x) above, for ten (10) days after notice
to any Borrower from Lender, in the case of any Default which can be cured
by the payment of a sum of money, or for thirty (30) days after notice from
Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30-day period and provided further that a Borrower shall have
commenced to cure such Default within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period
shall be extended for such time as is reasonably necessary for such
Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed sixty (60) days;
(xii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such Loan
Documents, whether as to any Borrower or any of the Properties, or if any
other such event shall occur or condition shall exist, if the effect of
such event or condition is to accelerate the maturity of any portion of the
Debt or to permit Lender to accelerate the maturity of all or any portion
of the Debt;
(xiii) if any Guarantor breaches any covenant, warranty or
representation contained in any Loan Document to which it is a party,
including, but not limited to, the Master Guaranty and Master Guaranty
Pledge which is not remedied within any grace period; or
(xiv) if any Borrower breaches any of the terms of: Section
2.4.2(b) (Mandatory Prepayments/Liquidation Events), Section 4.1.14
(Special Distributions), Section 4.2.1 (Due on Sale and Encumbrance),
Section 4.2.2 (Liens), Section 4.2.3 (Issuance of Equity Interests) or
Section 4.2.14 (Limitations on Distributions), Section 4.2.15 (Other
Limitations);
(xv) if a final unappealable determination shall have been
made by any applicable Governmental Authority of any Borrower's
non-compliance with material Legal Requirements applicable to any Mezzanine
Property, or of the revocation of any material license, permit or approval
required for the lawful operation of any Mezzanine Property, or any other
circumstances under which any Borrower is required by a final unappealable
determination of any such Governmental Authority to cease operations of
such Mezzanine Property as a Nursing Facility, Assisted Living Facility or
Specialty Hospital, in each case as described on the attached Schedule III
(as such Schedule may be amended to show any change of use of any
Property);
(xvi) intentionally deleted;
(xvii) if there is a reduction in the number of licensed
beds or a change in the type of licensed beds for any Mezzanine Property in
violation of the requirements of this Agreement; or
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(xviii) if any Borrower shall fail to correct, within the
time deadlines set by any Medicare, Medicaid, health, reimbursement,
licensing or similar agency, any deficiency that justifies either of the
following actions by such agency with respect to any Mezzanine Property and
such agency commences either of the following actions:
(1) a termination of any Medicare contract, Medicaid
contract or Regulatory Permit;
(2) a ban on new admissions generally or on admission
of patients otherwise qualifying for Medicaid or
Medicare coverage which ban is not lifted within
sixty (60) days or as to which a Borrower fails to
file a plan of correction within ten (10) days of
such loan;
(xix) if any Mezzanine Property is assessed material fines
or penalties by any state or any Medicare, Medicaid, health, reimbursement,
licensing or similar agency having jurisdiction over any Borrower or any
Mezzanine Property;
(xx) except as may be permitted pursuant to this Agreement,
as to each Mezzanine Property, if any Borrower ceases to operate, or
changes the use of, such Mezzanine Property as or from a Nursing Facility,
Assisted Living Facility or Rehabilitation Hospital in each case as
described on the attached Schedule III (as such Schedule may be amended to
show any change of use of any Property) or terminates such business for any
reason whatsoever (other than a temporary cessation in connection with any
renovations);
(xxi) if, with respect to any Mezzanine Property, any
Governmental Authority (a) makes a substandard quality of care
determination regarding such Mezzanine Property which determination is not
corrected in sixty (60) days (or if incapable of being cured within such
sixty (60) days period, within one hundred twenty (120) days provided
Borrowers are taking all appropriate actions to correct such
determination); (b) makes a determination that such Mezzanine Property is
not in substantial compliance with any applicable regulatory requirements
which determination is not corrected in sixty (60) days (or if incapable of
being cured within such sixty (60) days period, within one hundred twenty
(120) days, provided Borrowers are taking all appropriate actions to
correct such determination); (c) designates any portion of such Mezzanine
Property or the entirety of such Mezzanine Property as part of a "poor
performing chain"; (d) cites deficiencies at the scope or severity of "G",
"H" or higher with respect to such Mezzanine Property and for which no plan
of correction is in place within ten (10) days of receipt of such
deficiency statement; (e) cites deficiencies at the scope and severity of
"G", "H" or higher with respect to such Mezzanine Property for which a plan
of correction has been filed but not approved by such Governmental
Authority, with such designation, determination or action continuing
unremedied for a
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period of sixty (60) days (or if incapable of being cured within such sixty
(60) days period, within one hundred twenty (120) days, provided Borrowers
are taking all appropriate actions to correct such determination) or (ten
(10) days for immediate jeopardy deficiencies) following any Borrower's
first receipt of notice of such designation, determination or action; or
(f) takes adverse regulatory action with respect to such Mezzanine
Property, including, without limitation, the imposing of civil money
penalties, with such designation, determination or action continuing
unremedied for a period of sixty (60) days (or if incapable of being cured
within such sixty (60) days period, within one hundred twenty (120) days,
provided Borrowers are taking all appropriate actions to correct such
determination) or (ten (10) days for immediate jeopardy deficiencies)
following any Borrower's receipt of notice of such designation,
determination or action;
(xxii) if any relevant Borrower shall default beyond any
applicable grace period in the payment of any rent, additional rent or
other charge payable under any Ground Lease; or any relevant Borrower shall
default in the observance or performance of any other term, covenant or
condition of such Ground Lease and such default is not cured prior to the
expiration of any applicable grace period provided therein; or any event
shall occur that would cause any Ground Lease to terminate or would entitle
the ground lessor thereunder to terminate such Ground Lease and the term
thereof by giving notice to any relevant Borrower; or the leasehold estate
created by any Ground Lease shall be surrendered or such Ground Lease shall
be terminated or cancelled for any reason or under any circumstance
whatsoever; or any term of such Ground Lease shall be modified or
supplemented without Lender's consent; or
(xxiii) any "Event of Default" under the Mortgage Loan
Documents.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against any Borrower and in and to
any or all of the Properties, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents and may exercise all
the rights and remedies of a secured party under the Uniform Commercial Code
where any of the Collateral is located, against any Borrower and any or all of
the Mezzanine Properties and Collateral, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi), (vii) or (viii) above, the Debt and all other
obligations of each Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and each Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
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Section 10.2. Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against any Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, any
Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to any or all of the Mezzanine Properties
and Collateral. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
Without limiting the generality of the foregoing, if an Event of Default is
continuing (i) Lender is not subject to any "one action" or "election of
remedies" law or rule to the face extent allowed by applicable law, and (ii) all
liens and other rights, remedies or privileges provided to Lender shall remain
in full force and effect until Lender has exhausted all of its remedies against
the Mezzanine Properties and Collateral and each Mortgage has been foreclosed,
sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has
been paid in full.
(b) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to partially foreclose
the Mortgages or the Pledge Agreement in any manner and for any amounts secured
by the Mortgages and Pledge Agreement then due and payable as determined by
Lender in its sole discretion including, without limitation, the following
circumstances: (i) in the event any Borrower defaults beyond any applicable
grace period in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose one or more of the Mortgages and Pledge Agreement
to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose one or more the Mortgages and Pledge Agreement to recover
so much of the principal balance of the Loan as Lender may accelerate and such
other sums secured by one or more of the Mortgages and Pledge Agreement as
Lender may elect. Notwithstanding one or more partial foreclosures, the
Mezzanine Properties and Collateral shall remain subject to the Mortgages and
Pledge Agreement, respectively, to secure payment of sums secured by the
Mortgages and not previously recovered.
(c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Each Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to
91
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Each Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, each Borrower ratifying all that
its said attorney shall do by virtue thereof; provided, however, Lender shall
not make or execute any such documents under such power until three (3) days
after notice has been given to any Borrower by Lender of Lender's intent to
exercise its rights under such power. Except as may be required in connection
with a Securitization pursuant to Section 9.1 hereof, (i) each Borrower shall
not be obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by each Borrower only as of the Closing Date.
(d) Any amounts recovered from the Mezzanine Properties, the
Collateral or any other collateral for the Loan after an Event of Default may be
applied by Lender toward the payment of any interest and/or principal of the
Loan and/or any other amounts due under the Loan Documents in such order,
priority and proportions as Lender in its sole discretion shall determine.
Section 10.3. Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against any Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to any Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by any Borrower or to
impair any remedy, right or power consequent thereon.
ARTICLE XI. MISCELLANEOUS
Section 11.1. Successors and Assigns.
All covenants, promises and agreements in this Agreement, by or on
behalf of any Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.
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Section 11.2. Lender's Discretion.
Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.
Section 11.3. Governing Law.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
APPLICABLE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN XXX XXXX XX XXX XXXX, XXXXXX XX XXX
XXXX, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CT CORPORATION SYSTEM
000 XXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 11.4. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on any Borrower,
shall entitle any Borrower to any other or future notice or demand in the same,
similar or other circumstances.
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Section 11.5. Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other
Loan Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be
deemed to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 11.6. Notices.
All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Notice to any Borrower shall be deemed notice
as to all Borrowers and the Lender shall not be required to deliver any Notice
to all Borrowers as long as such Notice is delivered to any one Borrower. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:
If to Lender: Ventas Realty, Limited Partnership
c/o Ventas, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No. (000)-000-0000
with a copy to: Ventas Realty, Limited Partnership
c/o Ventas, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No. (000)-000-0000
95
with a copy to: Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No. (000) 000-0000
If to a Borrower: c/o Trans Healthcare, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No. (000) 000-0000
with a copy to: Xxxxxx Xxxxx & Xxxx, P.C.
0000 Xxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No. (000) 000-0000
Section 11.7. Waiver of Right to Trial by Jury.
BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.
Section 11.8. Headings.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and are not to
be construed as defining or limiting the scope or intent of the provisions
hereof.
Section 11.9. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
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extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 11.10. Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by any Borrower to any portion of the
obligations of any Borrower hereunder. To the extent any Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 11.11. Waiver of Notice.
To the extent permitted by applicable law, each Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to a Borrower and except
with respect to matters for which any Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice to the full extent
permitted by applicable law. Each Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to a Borrower.
Section 11.12. Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and a
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment. Any expedited procedure legally available with such a
declaratory judgment action or action for injunctive relief may be utilized to
the extent possible.
Section 11.13. Expenses; Indemnity.
(a) Each Borrower shall pay or, if any Borrower fails to pay,
reimburse Lender upon receipt of notice from Lender, for all reasonable costs
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) any Borrower's ongoing performance of and
compliance with any Borrower's agreements and
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covenants contained in this Agreement, the Cooperation Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date, including, without limitation, confirming compliance with environmental
and insurance requirements; (ii) Lender's ongoing performance of and compliance
with all agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by any
Borrower; (iv) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred, in creating and perfecting
the Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (v) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting any Borrower, this
Agreement, the other Loan Documents, the Mezzanine Properties, the Collateral or
any other security given for the Loan; (vi) the Re-sizing and (vii) enforcing
any obligations of or collecting any payments due from any Borrower under this
Agreement, the other Loan Documents or with respect to the Mezzanine Properties
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings; provided, however, that each Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any costs due and payable to Lender may be paid to Lender
pursuant to the Mezzanine Cash Management Agreement.
(b) Each Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, agents and employees (and the successors and
assigns of the foregoing (the "Lender Indemnitees")) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for Lender Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against Lender Indemnitees in any manner relating to or
arising out of (i) any breach by any Borrower of its obligations under, or any
material misrepresentation by any Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "Indemnified Liabilities"); provided, however, that each
Borrower shall not have any obligation to Lender Indemnitees hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender Indemnitees. To the extent
that the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrowers shall pay the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender Indemnitees.
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Section 11.14. Schedules Incorporated.
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
Section 11.15. Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by each Borrower.
Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Each Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between any
Borrower and Lender nor to grant Lender any interest in the Properties other
than that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 11.17. Publicity.
All news releases, publicity or advertising by any Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender or any of its Affiliates shall be subject to the prior approval of
Lender.
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Section 11.18. Waiver of Marshalling of Assets.
To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
any Borrower, any Borrower's partners and others with interests in any Borrower,
and of the Mezzanine Properties and Collateral, and shall not assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Mezzanine Properties and
Collateral for the collection of the Debt without any prior or different resort
for collection or of the right of Lender to the payment of the Debt out of the
net proceeds of the Mezzanine Properties and Collateral in preference to every
other claimant whatsoever.
Section 11.19. Waiver of Offsets/Defenses/Counterclaims.
To the extent permitted by applicable law, each Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents or otherwise to offset any obligations to make the payments required by
the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any
payments which any Borrower is obligated to make under any of the Loan
Documents.
Section 11.20. Conflict; Construction of Documents; Reliance.
In the event of any conflict or inconsistency between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Loan, each
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in any Borrower, and each Borrower hereby irrevocably waives
the right to raise any defense or take any action on the basis of the foregoing
with respect to Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of any Borrower or its Affiliates.
100
Section 11.21. Brokers and Financial Advisors.
Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Each Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against
any and all claims, liabilities, costs and expenses of any kind (including
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of any Borrower or Lender
Indemnitees in connection with the transactions contemplated herein. The
provisions of this Section 11.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.
Section 11.22. Intentionally Deleted.
Section 11.23. Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the loan
commitment dated October 2, 2002, and all attachments thereto including, but not
limited to, the term sheet between Borrowers and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.
Section 11.24. Servicer.
At the option of Lender, the Loan may be serviced by a servicer
including, but not limited to any sub-servicers or master servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Borrowers shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrowers shall not be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.
Section 11.25. Duplicate Originals; Counterparts.
This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.
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Section 11.26. Cross Collateralization.
Without limitation to any other right or remedy provided to Lender in
this Agreement or any of the other Loan Documents, each Borrower acknowledges
and agrees that to the full extent permitted under applicable law, upon the
occurrence of an Event of Default (i) Lender shall have the right to pursue all
of its rights and remedies in one proceeding, or separately and independently in
separate proceedings which it, as Lender, in its sole and absolute discretion,
shall determine from time to time, (ii) Lender is not required to either
xxxxxxxx assets, sell any of the collateral for the Loan in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any of the collateral
for the Loan will not impede Lender from subsequently or simultaneously
exercising remedies against other collateral for the Loan, (iv) all Liens and
other rights, remedies and privileges provided to Lender in this Agreement and
in the other Loan Documents or otherwise shall remain in full force and effect
until Lender has exhausted all of its remedies against the collateral for the
Loan and all of the collateral for the Loan has been foreclosed, sold and/or
otherwise realized upon and (v) all of the Mezzanine Properties and Collateral
shall be security for the performance of all of each Borrower's obligations
hereunder.
Section 11.27. Joint and Several Liability.
If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
LENDER:
VENTAS REALTY, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Ventas, Inc.
a Delaware corporation,
its sole general partner
By: /s/ T. XXXXXXX XXXXX
------------------------------------------------
Name: T. Xxxxxxx Xxxxx
Title: Executive Vice President/General Counsel
[Signatures continue on following page]
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BORROWER:
THI OF OHIO SNFS, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO ALFS I, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT BEREA, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT CORTLAND, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT KENT, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
----------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
104
THI OF MARYLAND SNFS I, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND SNFS II, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT FRANKLIN SQUARE, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT FORT WASHINGTON, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
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