AMENDED AND RESTATED CREDIT AGREEMENT Dated as of December 11, 2006 among BREA EMERITUS LLC AND EACH OF ITS SUBSIDIARIES, as Borrowers THE LENDERS PARTY HERETO and GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent and Collateral Agent GE...
$167,000,000
AMENDED
AND RESTATED CREDIT AGREEMENT
Dated
as
of December 11, 2006
among
BREA
EMERITUS LLC AND EACH OF ITS SUBSIDIARIES,
as
Borrowers
THE
LENDERS PARTY HERETO
and
GENERAL
ELECTRIC CAPITAL CORPORATION,
as
Administrative Agent and Collateral Agent
♦
♦
♦
GE
CAPITAL MARKETS, INC.,
as
Sole
Lead Arranger
TABLE
OF
CONTENTS
Page
Section
1.1
|
Defined
Terms
|
1
|
|
Section
1.2
|
UCC
Terms
|
26
|
|
Section
1.3
|
Accounting
Terms and Principles
|
26
|
|
Section
1.4
|
Payments.
|
27
|
|
Section
1.5
|
Interpretation.
|
27
|
ARTICLE
II
THE
FACILITIES
Section
2.1
|
Term
Loan Commitment, Borrowing Procedures and Escrow
Requirement.
|
28
|
|
Section
2.2
|
Termination
of the Commitments, Maturity Date and Repayment
|
||
of
Loans. (a) Termination of Term Loan Commitments.
|
32
|
||
Section
2.3
|
Optional
Prepayments.
|
32
|
|
Section
2.4
|
Mandatory
Payments.
|
33
|
|
Section
2.5
|
Interest.
|
34
|
|
Section
2.6
|
Application
of Payments.
|
34
|
|
Section
2.7
|
Payments
and Computations.
|
35
|
|
Section
2.8
|
Evidence
of Debt.
|
36
|
|
Section
2.9
|
Suspension
of Eurodollar Rate.
|
37
|
|
Section
2.10
|
Breakage
Costs; Increased Costs; Capital Requirements.
|
38
|
|
Section
2.11
|
Taxes.
|
39
|
|
Section
2.12
|
Substitution
of Lenders.
|
41
|
ARTICLE
III
CONDITIONS TO LOANS
Section
3.1
|
Conditions
Precedent to Funding.
|
42
|
|
Section
3.2
|
Determinations
of Initial Borrowing Conditions.
|
45
|
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
Section
4.1
|
Corporate
Existence; Compliance with Law.
|
46
|
|
Section
4.2
|
Loan
and Related Documents.
|
47
|
|
Section
4.3
|
Ownership
of the Borrowers
|
48
|
|
Section
4.4
|
Financial
Statements
|
48
|
|
Section
4.5
|
Material
Adverse Effect.
|
49
|
|
Section
4.6
|
Solvency.
|
49
|
|
Section
4.7
|
Litigation.
|
49
|
|
Section
4.8
|
Taxes.
|
49
|
|
Section
4.9
|
Margin
Regulations
|
50
|
|
Section
4.10
|
No
Burdensome Obligations; No Defaults
|
50
|
|
Section
4.11
|
Single
Purpose Entity
|
50
|
|
Section
4.12
|
Labor
Matters
|
50
|
|
Section
4.13
|
ERISA
|
50
|
|
Section
4.14
|
Environmental
Matters
|
51
|
|
Section
4.15
|
Intellectual
Property
|
51
|
i
TABLE
OF
CONTENTS
(continued) Page
Section
4.16
|
Title;
Real Property
|
52
|
|
Section
4.17
|
Full
Disclosure
|
53
|
|
Section
4.18
|
Operation
|
53
|
|
Section
4.19
|
Estoppel
Certificates
|
54
|
ARTICLE
V
FINANCIAL COVENANTS
Section
5.1
|
Minimum
Consolidated Project Yield
|
54
|
ARTICLE
VI
REPORTING COVENANTS
Section
6.1
|
Financial
Statements
|
55
|
|
Section
6.2
|
Other
Events
|
57
|
|
Section
6.3
|
Copies
of Notices and Reports
|
57
|
|
Section
6.4
|
Taxes
|
57
|
|
Section
6.5
|
Labor
Matters
|
58
|
|
Section
6.6
|
ERISA
Matters
|
58
|
|
Section
6.7
|
Environmental
Matters
|
58
|
|
Section
6.8
|
Other
Information
|
58
|
ARTICLE
VII
AFFIRMATIVE COVENANTS
Section
7.1
|
Maintenance
of Corporate Existence
|
59
|
|
Section
7.2
|
Compliance
with Laws and Healthcare Matters, Etc.
|
59
|
|
Section
7.3
|
Payment
of Obligations
|
60
|
|
Section
7.4
|
Maintenance
of Property
|
60
|
|
Section
7.5
|
Maintenance
of Insurance
|
60
|
|
Section
7.6
|
Keeping
of Books
|
62
|
|
Section
7.7
|
Access
to Books and Property
|
62
|
|
Section
7.8
|
Environmental
|
63
|
|
Section
7.9
|
Use
of Proceeds
|
63
|
|
Section
7.10
|
Additional
Collateral, Subsidiaries and Further Assurances
|
63
|
|
Section
7.11
|
Deposit
Accounts; Securities Accounts
|
64
|
|
Section
7.12
|
Interest
Rate Contracts
|
64
|
ARTICLE
VIII
NEGATIVE
COVENANTS
Section
8.1
|
Indebtedness
|
64
|
|
Section
8.2
|
Liens
|
65
|
|
Section
8.3
|
Investments
|
65
|
|
Section
8.4
|
Transfers
|
66
|
|
Section
8.5
|
Restricted
Payments
|
67
|
|
Section
8.6
|
Prepayment
of Indebtedness
|
67
|
|
Section
8.7
|
Fundamental
Changes
|
67
|
|
Section
8.8
|
Change
in Nature of Business
|
68
|
|
Section
8.9
|
Transactions
with Affiliates
|
68
|
|
Section
8.10
|
Third-Party
Restrictions on Indebtedness, Liens, Investments or
|
||
Restricted
Payments
|
68
|
||
Section
8.11
|
Modification
of Certain Documents
|
68
|
|
Section
8.12
|
Accounting
Changes; Fiscal Year
|
69
|
ii
TABLE
OF
CONTENTS
(continued) Page
Section
8.13
|
Margin
Regulations
|
69
|
|
Section
8.14
|
Compliance
with ERISA
|
69
|
|
Section
8.15
|
Hazardous
Materials
|
69
|
ARTICLE
IX
EVENTS
OF DEFAULT
Section
9.1
|
Definition
|
69
|
|
Section
9.2
|
Remedies
|
71
|
ARTICLE
X
THE
ADMINISTRATIVE AGENT
Section
10.1
|
Appointment
and Duties
|
71
|
|
Section
10.2
|
Binding
Effect
|
72
|
|
Section
10.3
|
Use
of Discretion
|
73
|
|
Section
10.4
|
Delegation
of Rights and Duties
|
73
|
|
Section
10.5
|
Reliance
and Liability
|
73
|
|
Section
10.6
|
Administrative
Agent Individually
|
74
|
|
Section
10.7
|
Lender
Credit Decision
|
75
|
|
Section
10.8
|
Expenses;
Indemnities
|
75
|
|
Section
10.9
|
Resignation
of Administrative Agent
|
75
|
|
Section
10.10
|
Release
of Collateral
|
76
|
|
Section
10.11
|
Additional
Secured Parties
|
77
|
ARTICLE
XI
MISCELLANEOUS
Section
11.1
|
Amendments,
Waivers, Etc.
|
77
|
|
Section
11.2
|
Assignments
and Participations; Binding Effect
|
79
|
|
Section
11.3
|
Costs
and Expenses
|
81
|
|
Section
11.4
|
Indemnities
|
82
|
|
Section
11.5
|
Survival
|
82
|
|
Section
11.6
|
Limitation
of Liability for Certain Damages
|
83
|
|
Section
11.7
|
Lender-Creditor
Relationship
|
83
|
|
Section
11.8
|
Right
of Setoff
|
83
|
|
Section
11.9
|
Sharing
of Payments, Reinstatement Etc.
|
83
|
|
Section
11.10
|
Marshaling;
Payments Set Aside
|
84
|
|
Section
11.11
|
Notices
|
84
|
|
Section
11.12
|
Electronic
Transmissions
|
86
|
|
Section
11.13
|
Governing
Law
|
87
|
|
Section
11.14
|
Jurisdiction
|
87
|
|
Section
11.15
|
Waiver
of Jury Trial
|
87
|
|
Section
11.16
|
Severability
|
87
|
|
Section
11.17
|
Execution
in Counterparts
|
88
|
|
Section
11.18
|
Entire
Agreement
|
88
|
|
Section
11.19
|
Use
of Name
|
88
|
|
Section
11.20
|
Non-Public
Information; Confidentiality
|
88
|
|
Section
11.21
|
Patriot
Act Notice
|
89
|
|
Section
11.22
|
Limitation
of Liability
|
89
|
|
Section
11.23
|
Existing
Agreements Superseded; Exhibits and Schedules
|
89
|
iii
TABLE
OF
CONTENTS
(continued) Page
SCHEDULES
|
||
Schedule
I
|
-
|
Commitments
|
Schedule
2.1
|
-
|
Repairs,
Replacements and Improvements
|
Schedule
4.2
|
-
|
Consents
|
Schedule
4.3
|
-
|
Ownership
of the Borrowers
|
Schedule
4.7
|
-
|
Litigation
|
Schedule
4.12
|
-
|
Labor
Matters
|
Schedule
4.13
|
-
|
List
of Plans
|
Schedule
4.14
|
-
|
Environmental
Matters
|
Schedule
4.16
|
-
|
Real
Property, Allocated Loan Amount and Beds
|
Schedule
7.2
|
-
|
Provider
Agreements and Licenses
|
Schedule
8.1
|
-
|
Existing
Indebtedness
|
Schedule
8.2
|
-
|
Existing
Liens
|
Schedule
8.3
|
-
|
Existing
Investments
|
Schedule
8.7
|
-
|
Permitted
Acquisitions
|
EXHIBITS
|
EXHIBITS
|
|
Exhibit
A
|
-
|
List
of Borrowers
|
Exhibit
B
|
-
|
Form
of Assignment
|
Exhibit
C
|
-
|
Form
of Compliance Certificate
|
Exhibit
D
|
-
|
Corporate
Chart
|
Exhibit
E
|
-
|
Form
of Note
|
Exhibit
F
|
-
|
Notice
of Borrowing
|
iv
This
AMENDED AND RESTATED CREDIT
AGREEMENT,
dated
as of December 11, 2006, is entered into among BREA
EMERITUS LCC,
a
Delaware limited liability company (the “Parent”),
and
each of its subsidiaries listed on Exhibit A hereto (each an “SPE”
and
collectively with the Parent, the “Borrowers”), the
Lenders (as defined below), GENERAL
ELECTRIC CAPITAL CORPORATION
(“GE
Capital”),
as
administrative agent and collateral agent for the Lenders (in such capacity,
and
together with its successors and permitted assigns, the
“Administrative
Agent”)
and
GE
CAPITAL MARKETS, INC., as sole lead arranger.
WHEREAS,
in order to correct certain scrivener’s errors and to add Xxxxxxx Xxxxx Capital,
a Division of Xxxxxxx Xxxxx Business Financial Services Inc. as a Lender
hereunder, the parties have agreed to amend and restate that certain Credit
Agreement, dated as of December 1, 2006, among the Parent, the other Borrowers,
the Administrative Agent and GE Capital Markets, Inc. (the “Original
Credit Agreement”).
NOW,
THEREFORE,
in
consideration of the promises and covenants contained in this Agreement,
and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties covenant and agree as follows:
ARTICLE
I
DEFINITIONS,
INTERPRETATION AND ACCOUNTING TERMS
Section
1.1 Defined
Terms As
used
in this Agreement, the following terms have the following meanings:
“Acquisition”
means
the acquisition of each Facility and the assets related thereto of the Seller
and its Subsidiaries to the extent such Facility is acquired pursuant to
the
terms of the Acquisition Agreement.
“Acquisition
Agreement”
means
that certain Purchase and Sale Agreement, among the Seller and the
Borrowers.
“Administrative
Agent”
has
the
meaning specified in the preamble hereto.
“Affected
Lender”
has
the
meaning specified in Section 2.12.
“Affiliate”
means,
with respect to any Person, each officer, director, general partner or
joint-venturer of such Person and any other Person that directly or indirectly
controls, is controlled by, or is under common control with, such Person;
provided,
however,
that no
Secured Party shall be an Affiliate of any Borrower. For purpose of this
definition, “control”
means
the possession of either (a) the power to vote, or the beneficial ownership
of,
10% or more of the Voting Interests of such Person or (b) the power to direct
or
cause the direction of the management and policies of such Person, whether
by
contract or otherwise.
“Agreement”
means
this Credit Agreement.
“Applicable
Margin” means
2.35%; provided,
however,
from
and after the first five (5) Fiscal Quarters immediately following the Closing
Date and provided no Event of Default has occurred and is continuing, the
Applicable Margin will be reduced as follows for the then current
1
Fiscal
Quarter if the Consolidated Project Yield (based on the average end of quarter
balance for the immediately preceding four (4) quarters) for each of the
two (2)
immediately preceding Fiscal Quarters then most recently ended for which
a
Compliance Certificate has been delivered (and if no Compliance Certificate
is
delivered, it shall not be reduced as follows), (a) is greater than or equal
to
10% and less than 11%, then the Applicable Margin for the period for which
the
determination is being made shall be equal to 2.20%, or (b) is greater than
or
equal to 11%, then the Applicable Margin for the period for which the
determination is being made shall be equal to 2.00%.
Each
date
of determination for the “Applicable
Margin”
shall
be the date that is 3 Business Days after delivery by the Borrowers to the
Administrative Agent of a new Compliance Certificate pursuant to Section 6.1(d).
Notwithstanding anything to the contrary set forth in this Agreement (including
the then effective Consolidated Project Yield), the Applicable Margin shall
equal 2.35%, effective immediately upon (x) the occurrence of any Event of
Default under Section 9.1(e)(ii)
or (y)
the delivery of a notice by the Administrative Agent to the Parent during
the
continuance of any other Event of Default and, in each case, for as long
as such
Event of Default shall be continuing.
“Approved
Fund”
means,
with respect to any Lender, any Person (other than a natural Person) that
(a) is
or will be engaged in making, purchasing, holding or otherwise investing
in
commercial loans and similar extensions of credit in the ordinary course
of its
business and (b) is advised or managed by (i) such Lender, (ii) any Affiliate
of
such Lender or (iii) any Person (other than an individual) or any Affiliate
of
any Person (other than an individual) that administers or manages such
Lender.
“Assignment”
means
an assignment agreement entered into by a Lender, as assignor, and any
prospective assignee thereof and accepted by the Administrative Agent, in
substantially the form of Exhibit B.
“As-Built
Survey”
shall
mean an “as-built” survey of the Real Property, showing all of the Improvements
situated thereon, which shall (i) be in the form of an ALTA/ACSM “as-built”
Survey, be made in accordance with the 2005 Minimum Standard Detailed
Requirements for such surveys, shall include items 1 through 4, 6, 7(a),
7(b)(1), 7(c), 8, 9, 10, 11(a), 13, 16, 17 and 18 of Table A, and be in
accordance with the then-current “Accuracy Standards for ALTA/ACSM Land Title
Surveys” as adopted by the American Land Title Association, American Congress on
Surveying & Mapping and National Society of Professional Surveyors, (ii) be
certified to Lender and the Title Company, and (iii) set forth such other
information as Lender may reasonably require.
“Base
Rate”
means,
at any time, a rate per annum equal to the higher of (a) the rate last quoted
by
The Wall Street Journal as the “base rate on corporate loans posted by at least
75% of the nation’s largest banks” in the United States or, if The Wall Street
Journal ceases to quote such rate, the highest per annum interest rate published
by the Federal Reserve Board in Federal Reserve Statistical Release H.15
(519)
(Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no
longer quoted therein, any similar rate quoted therein (as determined by
the
Administrative Agent) or any similar release by the Federal Reserve Board
(as
determined by the Administrative Agent) and (b) the sum of 0.5% per annum
and
the Federal Funds Rate.
2
“Benefit
Plan”
means
any employee benefit plan as defined in Section 3(3) of ERISA (whether governed
by the laws of the United States or otherwise) to which any Borrower incurs
or
otherwise has any obligation or liability.
“Blackstone”
means
Blackstone Real Estate Associates V L.P.
“Borrowers”
has
the
meaning specified in the preamble hereto.
“Borrowers’
Accountants”
means
KPMG LLP or other nationally-recognized independent registered certified
public
accountants acceptable to the Administrative Agent.
“Boynton”
means
that certain healthcare facility known as The Gardens, formerly known as
Cypress
Gardens at Boynton Village, and located at 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx.
“Business
Day”
means
any day of the year that is not a Saturday, Sunday or a day on which banks
are
required or authorized to close in New York City and, when determined in
connection with notices and determinations in respect of any Eurodollar Rate
or
Eurodollar Rate Loan or any funding, conversion, continuation, Interest Period
or payment of any Eurodollar Rate Loan, that is also a day on which dealings
in
Dollar deposits are carried on in the London interbank market.
“Capital
Expenditures”
means,
for any Person
for any
period, the aggregate of all expenditures, whether or not made through the
incurrence of Indebtedness, by such Person and its Subsidiaries during such
period for the acquisition, leasing (pursuant to a Capital Lease), construction,
replacement, repair, substitution or improvement of fixed or capital assets
or
additions to equipment, in each case required to be capitalized under GAAP
on a
Consolidated balance sheet of such Person, excluding (a) interest capitalized
during construction
and (b)
any expenditure to the extent, for purpose of the definition of Permitted
Acquisition, such expenditure is part of the aggregate amounts payable in
connection with, or other consideration for, any Permitted Acquisition
consummated during or prior to such period.
“Capital
Improvement Holdback”
has
the
meaning given such term in Section
2.1(b)(i).
“Capital
Lease”
means,
with respect to any Person, any lease of, or other arrangement conveying
the
right to use, any property (whether real, personal or mixed) by such Person
as
lessee that has been or should be accounted for as a capital lease on a balance
sheet of such Person prepared in accordance with GAAP.
“Cash
Equivalents”
means
(a) any readily-marketable securities (i) issued by, or directly,
unconditionally and fully guaranteed or insured by the United States federal
government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of
any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Xxxxx’x, (c) any
commercial paper rated at least “A-1”
by
S&P or “P-1”
by
Xxxxx’x and issued by any Person organized under the laws of any state of the
United States, (d) any Dollar-denominated time deposit, insured certificate
of
deposit, overnight bank deposit or bankers’
3
acceptance
issued or accepted by (i) any Lender or (ii) any commercial bank that is
(A) organized under the laws of the United States, any state thereof or the
District of Columbia, (B) “adequately capitalized” (as defined in the
regulations of its primary federal banking regulators) and (C) has Tier 1
capital (as defined in such regulations) in excess of $250,000,000 and (e)
shares of any United States money market fund that (i) has substantially
all of
its assets invested continuously in the types of investments referred to
in
clause
(a),
(b),
(c)
or
(d)
above
with maturities as set forth in the proviso below, (ii) has net assets in
excess
of $500,000,000 and (iii) has obtained from either S&P or Xxxxx’x the
highest rating obtainable for money market funds in the United States;
provided,
however,
that
the maturities of all obligations specified in any of clauses
(a),
(b),
(c)
and
(d)
above
shall not exceed 365 days.
“CERCLA”
means
the United States Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. §§ 9601 et seq.).
“Change
of Control”
means
the occurrence of any of the following: (a) the Permitted Investors shall
cease
to own at least 51% and control legally and beneficially all of the economic
and
voting rights of Parent, (b) Parent shall cease to own and control legally
and
beneficially all of the economic and voting rights any SPE, or (c) any Facility
ceases to be managed or operated by a Qualified Manager.
“Closing
Date”
means
December 1, 2006.
“Code”
means
the U.S. Internal Revenue Code of 1986.
“Collateral”
means
all property and interests in property and proceeds thereof now owned or
hereafter acquired by any Borrower in or upon which a Lien is granted or
purported to be granted pursuant to any Loan Document.
“Commitment”
means,
with respect to each Lender, the commitment of such Lender to make Term Loans
to
the Borrowers, which commitment is in the amount set forth opposite such
Lender’s name on Schedule I
under
the caption “Commitment”,
as
amended to reflect Assignments and as such amount may be reduced pursuant
to
this Agreement. The aggregate amount of the Commitments on the date hereof
equals $167,000,000.
“Compliance
Certificate”
means
a
certificate substantially in the form of Exhibit C.
“Consolidated”
means,
with respect to any Person, the accounts of such Person and its Subsidiaries
consolidated in accordance with GAAP.
“Consolidated
Current Assets”
means,
at any date, the total Consolidated current assets of the Parent at such
date
other than cash, Cash Equivalents and any Indebtedness owing to the Parent
or
any of its Subsidiaries by Affiliates of the Parent.
“Consolidated
Current Liabilities”
means,
at any date, all liabilities of the Parent and its Subsidiaries at such date
that should be classified as current liabilities on a Consolidated balance
sheet
of the Parent; provided,
however,
that
“Consolidated
Current Liabilities”
shall
exclude the principal amount of the Loans then outstanding.
4
“Consolidated
EBITDA”
means,
for any period, (a) the Consolidated Net Income of the Parent for such period
plus
(b) the
sum of, in each case to the extent included in the calculation of such
Consolidated Net Income but without duplication, (i) any provision for
United States federal income taxes or other taxes measured by net income,
(ii)
Consolidated Interest Expense, amortization of debt
discount and commissions and other fees and charges associated with Indebtedness
(except amortization and expenses related to the consummation of Term Loan
on
the Closing Date and the Related Transactions and the payment of all fees,
costs
and expenses associated with the foregoing), (iii) Consolidated Rent Expense,
(iv) an amount equal to any Management Fee actually paid, (v) any loss from
extraordinary items, (vi) any depreciation, depletion and amortization expense,
(vii) any aggregate net loss on the Transfer of property (other than accounts
(as defined under the applicable UCC) and inventory) outside the ordinary
course
of business and (viii) any other non-cash expenditure, charge or loss for
such period (other than any non-cash expenditure, charge or loss relating
to
write-offs, write-downs or reserves with respect to accounts and inventory),
including the amount of any compensation deduction as the result of any grant
of
Equity Interests or Equity Equivalents to employees, officers, directors
or
consultants and minus
(c) the
sum of, in each case to the extent included in the calculation of such
Consolidated Net Income and without duplication, (i) any credit for United
States federal income taxes or other taxes measured by net income, (ii) any
interest income, (iii) a capital replacement reserve in an amount per annum
equal to $300 per bed, (iv) management fees, which for the purposes of this
definition shall be deemed to be an amount per annum equal to five percent
(5%)
of the aggregate total operating revenue generated from the Facilities, for
the
full twelve (12) month period immediately preceding the date of determination,
(v) the value of any impact of definitive Medicare/Medicaid changes imposed
by
any Governmental Authority, as reasonably determined by the Administrative
Agent, (vi) any gain from extraordinary items and any other non-recurring
gain,
(vii) any aggregate net gain from the Transfer of property (other than accounts
(as defined in the applicable UCC) and inventory) out of the ordinary course
of
business by the Parent, (viii) any other non-cash gain, including any reversal
of a charge referred to in clause
(b)(viii)
above by
reason of a decrease in the value of any Equity Interest or Equity Equivalent,
and (vi) any other cash payment in respect of expenditures, charges and losses
that have been added to Consolidated EBITDA of the Parent pursuant to
clause
(b)(viii)
above in
any prior period; provided,
however,
if the
actual occupancy of all of the Facilities, taken as a whole, exceeds 95%,
Consolidated Adjusted EBITDA shall be proportionately reduced assuming an
occupancy of 95%.
“Consolidated
Interest Coverage Ratio”
means,
for any period, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
“Consolidated
Interest Expense”
means,
for any period, (a) Consolidated total interest expense of the Parent and
its
Subsidiaries for such period and including, in any event, (i) interest
capitalized during such period and net costs under Interest Rate Contracts
for
such period and (ii) all fees, charges, commissions, discounts and other
similar
obligations (other than reimbursement obligations) with respect to letters of
credit, bank guarantees, banker’s acceptances, surety bonds and performance
bonds (whether or not matured) payable by such Person and its Subsidiaries
during such period minus
(b) the
sum of (i) Consolidated net gains of the Parent and its Subsidiaries under
Interest Rate Contracts for such period and (ii) Consolidated interest
income of the Parent and its Subsidiaries for such period.
“Consolidated
Project Yield”
means,
for any period, the ratio of (a) Consolidated EBITDA for such period to (b)
the
Consolidated Total Debt for such period.
5
“Consolidated
Net Income”
means,
for any period, the Consolidated net income (or loss) of the Parent and its
Subsidiaries for such period; provided,
however,
that
the following shall be excluded: (a) the net income of any other Person in
which
the Parent or one of its Subsidiaries has a joint interest with a third-party
(which interest does not cause the net income of such other Person to be
Consolidated into the net income of the Parent), except to the extent of
the
amount of dividends or distributions paid to such Person or Subsidiary, (b)
the
net income of any Subsidiary of the Parent that is, on the last day of such
period, subject to any restriction or limitation on the payment of dividends
or
the making of other distributions, to the extent of such restriction or
limitation, except restrictions or limitations set forth herein, and (c)
the net
income of any other Person arising prior to such other Person becoming a
Subsidiary of the Parent or merging or consolidating into the Parent or its
Subsidiaries.
“Consolidated
Rent Expense”
means
the Consolidated rent expense of the Parent and its Subsidiaries for such
period.
“Consolidated
Total Debt”
of
any
Person means all Indebtedness of a type described in clause (a),
(b),
(c)(i),
(d)
or
(f)
of the
definition thereof and all Guaranty Obligations with respect to any such
Indebtedness, in each case of such Person and its Subsidiaries on a Consolidated
basis.
“Constituent
Documents”
means,
with respect to any Person, collectively and, in each case, together with
any
modification of any term thereof, (a) the articles of incorporation, certificate
of incorporation, constitution or certificate of formation of such Person,
(b)
the bylaws, operating agreement or joint venture agreement of such Person,
(c)
any other constitutive, organizational or governing document of such Person,
whether or not equivalent, and (d) any other document setting forth the manner
of election or duties of the directors, officers or managing members of such
Person or the designation, amount or relative rights, limitations and
preferences of any Equity Interest of such Person.
“Contractual
Obligation”
means
with respect to any Person, any provision of any Security issued by such
Person
or of any document or undertaking to which such Person is a party or by which
it
or any of its property is bound or to which any of its property is subject,
in
each case, other than a Loan Document.
“Control
Agreement”
means,
with respect to any deposit account, any securities account, commodity account,
securities entitlement or commodity contract, an agreement, in form and
substance satisfactory to the Administrative Agent, among the Administrative
Agent, the financial institution or other Person at which such account is
maintained or with which such entitlement or contract is carried and the
Borrower maintaining such account, effective to grant “control” (as defined
under the applicable UCC) over such account to the Administrative
Agent.
“Controlled
Deposit Account”
means
each deposit account (including all funds on deposit therein) that is the
subject of an effective Control Agreement and that is maintained by any Borrower
with a financial institution approved by the Administrative Agent.
“Controlled
Securities Account”
means
each securities account or commodity account (including all financial assets
held therein and all certificates and instruments, if any, representing or
evidencing such financial assets) that is the subject of an effective Control
Agreement and that
6
is
maintained by any Borrower with a securities intermediary or commodity
intermediary approved by the Administrative Agent.
“Copyrights”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to copyrights and all mask work,
database and design rights, whether or not registered or published, all
registrations and recordations thereof and all applications in connection
therewith.
“Corporate
Chart”
means
a
document in form reasonably acceptable to the Administrative Agent, and the
form
delivered to Administrative Agent prior to the date hereof and attached as
Exhibit D hereto, setting forth, as of a date set forth therein, for each
Person
that is a Borrower, Emeritus and Blackstone and any direct or indirect
Subsidiary of Emeritus and Blackstone that owns or holds any Equity Interest
in
any Borrower, but excluding any limited partners of Blackstone or its
Affiliates, (a) the full legal name of such Person, (b) the jurisdiction
of
organization and any organizational number and tax identification number
of such
Person, and (c) the number of shares or percentage, as the case may be, of
each
class of Equity Interests of such Person, and, with respect to Emeritus only,
the authorized, number outstanding and number and percentage of such outstanding
shares for each such class owned, directly or indirectly, by any Borrower,
such
Subsidiary, Emeritus or Blackstone.
“Customary
Permitted Liens”
means,
with respect to any Person, any of the following:
(a) Liens
(i)
with respect to the payment of taxes, assessments or other governmental charges
or (ii) of suppliers, carriers, materialmen, warehousemen, workmen or mechanics
and other similar Liens, in each case imposed by law or arising in the ordinary
course of business, and, for each of the Liens in clauses
(i)
and
(ii)
above
for amounts that are not yet due or that are being contested in good faith
by
appropriate proceedings diligently conducted and with respect to which, if
being
contested, adequate reserves or other appropriate provisions are maintained
on
the books of such Person in accordance with GAAP;
(b) Liens
of
a collection bank on items in the course of collection arising under Section
4-208 of the UCC as in effect in the State of New York or any similar section
under any applicable UCC or any similar Requirement of Law of any foreign
jurisdiction;
(c) pledges
or cash deposits made in the ordinary course of business (i) in connection
with workers’ compensation, unemployment insurance or other types of social
security benefits (other than any Lien imposed by ERISA), (ii) to secure
the performance of bids, tenders, leases (other than Capital Leases) sales
or
other trade contracts (other than for the repayment of borrowed money) or
(iii) made in lieu of, or to secure the performance of, surety, customs,
reclamation or performance bonds (in each case not related to judgments or
litigation);
(d) judgment
liens (other than for the payment of taxes, assessments or other governmental
charges) securing judgments and other proceedings not constituting an Event
of
Default under Section 9.1(e)
and
pledges or cash deposits made in lieu of, or to secure the performance of,
judgment or appeal bonds in respect of such judgments and
proceedings;
(e) Liens
(i)
arising by reason of zoning restrictions, easements, licenses, reservations,
restrictions, covenants, rights-of-way, encroachments, minor defects or
irregularities in title (including leasehold title) and other similar
encumbrances on the use of real property or
7
(ii)
consisting of leases, licenses or subleases granted by a lessor, licensor
or
sublessor on its property (in each case other than Capital Leases) otherwise
permitted under Section 8.4(b)
that,
for each such Liens, do not, in the aggregate, materially (x) impair the
value
or marketability of such real property or (y) interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such real
property; and
(f) the
title
and interest of a lessor or sublessor in and to personal property leased
or
subleased (other than through a Capital Lease), in each case extending only
to
such personal property.
“Default”
means
any Event of Default and any event that, with the passing of time or the
giving
of notice or both, would become an Event of Default.
“Disclosure
Documents”
means,
collectively, (a) all confidential information memoranda and related materials
prepared in connection with the syndication of the Facilities and (b) all
other
documents filed by any Borrower with the United States Securities and Exchange
Commission.
“Dollars”
and
the
sign “$”
each
mean the lawful money of the United States of America.
“Domestic
Person”
means
any “United
States person”
under
and as defined in Section 770l(a)(30) of the Code.
“Electronic
Fax”
means
any system used to receive or transmit faxes electronically.
“Electronic
Signature”
means
the process of attaching to or logically associating with an Electronic
Transmission an electronic symbol, encryption, digital signature or process
(including the name or an abbreviation of the name of the party transmitting
the
Electronic Transmission) with the intent to sign, authenticate or accept
such
Electronic Transmission.
“Electronic
System”
means
any electronic system, including Intralinks®
and any
other Internet or extranet-based site, whether such electronic system is
owned,
operated or hosted by the Administrative Agent, any of its Related Persons
or
any other Person, providing for access to data protected by passcodes or
other
security system.
“Electronic
Transmission”
means
each document, instruction, authorization, file, information and any other
communication transmitted, posted or otherwise made or communicated by
electronic mail or Electronic Fax, or otherwise to or from an Electronic
System
or other equivalent service.
“Emeritus”
means
Emeritus Corporation, a Washington corporation.
“Environmental
Indemnity”
means
one or more agreements pursuant to which Emeritus and the Borrowers provide
an
environmental indemnity, (i) recourse to Emeritus with such recourse limited
to
the top 10% of the Loan Amount ($16,700,000) and (ii) which indemnity is
fully
recourse to the Borrowers.
“Environmental
Laws”
means
all Requirements of Law and Permits imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety,
the
environment and natural resources, including CERCLA, the SWDA, the Hazardous
Materials
8
Transportation
Act (49 U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Toxic Substances Control Act (15
U.S.C. §§ 2601 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the
Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Safe Drinking
Water Act (42 U.S.C. §§ 300(f) et seq.), all regulations promulgated under
any of the foregoing, all analogous Requirements of Law and Permits and any
environmental transfer of ownership notification or approval statutes, including
the Industrial Site Recovery Act (N.J. Stat. Xxx. §§ 13:1K-6 et
seq.).
“Environmental
Liabilities”
means
all Liabilities (including costs of Remedial Actions, natural resource damages
and costs and expenses of investigation and feasibility studies) that may
be
imposed on, incurred by or asserted against any Borrower as a result of,
or
related to, any claim, suit, action, investigation, proceeding or demand
by any
Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law or otherwise, arising
under
any Environmental Law or in connection with any Release and resulting from
the
ownership, lease, sublease or other operation or occupation of property by
any
Borrower, whether on, prior or after the date hereof.
“Equity
Equivalents”
means
all securities convertible into or exchangeable for any Equity Interest or
any
other Equity Equivalent and all warrants, options or other rights to purchase,
subscribe for or otherwise acquire any Equity Interest or any other Equity
Equivalent, whether or not presently convertible, exchangeable or
exercisable.
“Equity
Interest”
means
all shares of capital stock (whether denominated as common stock or preferred
stock), equity interests, beneficial, partnership or membership interests,
joint
venture interests, participations or other ownership or profit interests
in or
equivalents (regardless of how designated) of or in a Person (other than
an
individual), whether voting or non-voting.
“ERISA”
means
the United States Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate”
means,
collectively, any Borrower, and any Person under common control, or treated
as a
single employer, with any Borrower, within the meaning of Section 414(b),
(c),
(m) or (o) of the Code.
“ERISA
Event”
means
any of the following: (a) a reportable event described in
Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been
duly waived under the applicable regulations, Section 4043(c) of ERISA) with
respect to a Title IV Plan, (b) the withdrawal of any ERISA Affiliate from
a Title IV Plan subject to Section 4063 of ERISA during a plan year in which
it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA,
(c) the complete or partial withdrawal of any ERISA Affiliate from any
Multiemployer Plan, (d) with respect to any Multiemployer Plan, the filing
of a notice of reorganization, insolvency or termination (or treatment of
a plan
amendment as termination) under Section 4041A of ERISA, (e) the filing of
a
notice of intent to terminate a Title IV Plan (or treatment of a plan amendment
as termination) under Section 4041 of ERISA, (f) the institution of proceedings
to terminate a Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure
to make any required contribution to any Title IV Plan or Multiemployer Plan
when due, (h) the imposition of a lien under Section 412 of the Code or Section
302 or 4068 of ERISA on any property (or rights to property, whether real
or
personal) of any ERISA Affiliate, (i) the failure of a Benefit Plan or any
trust
thereunder intended to qualify for tax exempt status under Section 401 or
501 of
the Code or
9
other
Requirements of Law to qualify thereunder and (j) any other event or condition
that might reasonably be expected to constitute grounds under Section 4042
of
ERISA for the termination of, or the appointment of a trustee to administer,
any
Title IV Plan or Multiemployer Plan or for the imposition of any liability
upon
any ERISA Affiliate under Title IV of ERISA other than for PBGC premiums
due but
not delinquent.
“Eurodollar
Base Rate”
means,
with respect to any Interest Period for any Eurodollar Rate Loan, the rate
determined by the Administrative Agent to be the offered rate for deposits
in
Dollars for the applicable Interest Period appearing on the Dow Xxxxx Markets
Telerate Page 3750 as of 11:00 a.m. (London time) on the second full
Business Day next preceding the first day of each Interest Period. In the
event
that such rate does not appear on the Dow Xxxxx Markets Telerate Page 3750
(or
otherwise on the Dow Xxxxx Markets screen) at such time, the “Eurodollar
Base Rate”
shall
be determined by reference to such other comparable publicly available service
for displaying the offered rate for deposit in Dollars in the London interbank
market as may be selected by the Administrative Agent and, in the absence
of
availability, such other method to determine such offered rate as may be
selected by the Administrative Agent in its sole discretion.
“Eurodollar
Rate”
means,
with respect to any Interest Period and for any Eurodollar Rate Loan, an
interest rate per annum determined as the ratio of (a) the Eurodollar Base
Rate
with respect to such Interest Period for such Eurodollar Rate Loan to (b)
the
difference between the number one and the Eurodollar Reserve Requirements
with
respect to such Interest Period and for such Eurodollar Rate Loan.
“Eurodollar
Rate Loan”
means
any Loan that bears interest based on the Eurodollar Rate.
“Eurodollar
Reserve Requirements”
means,
with respect to any Interest Period and for any Eurodollar Rate Loan, a rate
per
annum equal to the aggregate, without duplication, of the maximum rates
(expressed as a decimal number) of reserve requirements in effect 2 Business
Days prior to the first day of such Interest Period (including basic,
supplemental, marginal and emergency reserves) under any regulations of the
Federal Reserve Board or other Governmental Authority having jurisdiction
with
respect thereto dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as “eurocurrency liabilities” in Regulation D of
the Federal Reserve Board) maintained by a member bank of the United States
Federal Reserve System.
“Event
of Default”
has
the
meaning specified in Section 9.1.
“Excess
Cash Escrow”
has the
meaning specified in Section
2.2(a).
“Excess
Cash Flow”
means,
for any period, (a) Consolidated EBITDA for such period, minus
(b)
without duplication, (i) any principal payments made in cash on the Loans
during
such period other than any mandatory prepayment required pursuant to
Section 2.4(a)
because
of the existence of Excess Cash Flow paid during such period but applicable
to
the prior period, (ii) any scheduled or other cash principal payment made
by any Borrower during such period on any Indebtedness, (iii) any Capital
Expenditure made by any Borrower during such period to the extent permitted
by
this Agreement, excluding (A) any long-term Indebtedness other than the
Obligations and (B) any Capital Expenditure to the extent reimbursed from
the Capital Improvement Holdback, (iv) the Consolidated Interest Expense
for
such period, (v) any cash losses from extraordinary items, (vi) any cash
payment
made during such period by any Borrower
10
to
satisfy obligations for United States federal income taxes or other taxes
measured by net income and (vii) any increase in the Working Capital of Parent
during such period (measured on a Consolidated basis as the excess of such
Working Capital at the end of such period over such Working Capital at the
beginning of such period) and plus
(c)
without duplication, (i) to the extent included in the calculation of
Consolidated EBITDA pursuant to clause
(b)(i)
of the
definition thereof, any provision for United States federal income taxes
or
other taxes measured by net income, (ii) any decrease in the Working
Capital of Parent during such period (measured on a Consolidated basis as
the
excess of such Working Capital at the beginning of such period over such
Working
Capital at the end thereof), and (iii) provided no Event of Default as set
forth
in Section
9.1(a)
shall
have occurred and is continuing, management fees, which for the purposes
of this
definition shall be deemed to be an amount per annum equal to five percent
(5%)
of the aggregate total operating revenue generated from the Facilities for
the
full twelve (12) month period immediately preceding the date of
determination.
“Excluded
Property”
means
each healthcare facility (and its allocated loan amount) identified on
Schedule 8.7.
“Facilities”
means,
collectively, all long term care facilities, nursing homes, rehabilitation
facilities, assisted living facilities, independent living facilities, hospice
facilities or other healthcare facilities owned and operated by any Borrower,
as
listed on Schedule
4.16
hereto.
“Federal
Funds Rate”
means,
for any period, a fluctuating interest rate per annum equal for each day
during
such period to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as determined by the Administrative Agent in its sole
discretion.
“Federal
Reserve Board”
means
the Board of Governors of the United States Federal Reserve System and any
successor thereto.
“Fee
Letter”
means
the letter agreement, dated as of the date hereof, addressed to the Borrowers
from the Administrative Agent and accepted by the Borrowers, with respect
to
certain fees to be paid from time to time to the Administrative Agent and
its
Related Persons.
“Financial
Statement”
means
each financial statement delivered pursuant to Section 4.4
or
6.1.
“First
Extension Notice”
has
the
meaning specified in Section
2.2(b).
“First
Extension Period”
has
the
meaning specified in Section
2.2(b).
“Fiscal
Quarter”
means
each 3 calendar month period ending on March 31, June 30, September 30 or
December 31.
“Fiscal
Year”
means
the twelve month period ending on December 31.
“GAAP”
means
generally accepted accounting principles in the United States of America,
as in
effect from time to time, set forth in the opinions and pronouncements of
the
Accounting Principles Board and the American Institute of Certified Public
Accountants, in the statements and pronouncements of the Financial Accounting
Standards Board and in such other
11
statements
by such other entity as may be in general use by significant segments of
the
accounting profession that are applicable to the circumstances as of the
date of
determination. Subject to Section 1.3,
all
references to “GAAP”
shall
be to GAAP applied consistently with the principles used in the preparation
of
the Financial Statements described in Section 4.4(a).
“GE
Capital”
has
the
meaning specified in the preamble hereto.
“Governmental
Authority”
means
any nation, sovereign or government, any state or other political subdivision
thereof, any agency, authority or instrumentality thereof and any entity
or
authority lawfully exercising executive, legislative, taxing, judicial,
regulatory or administrative functions of or pertaining to government, including
any central bank, stock exchange, regulatory body, arbitrator, public sector
entity, supra-national entity (including the European Union and the European
Central Bank) and any self-regulatory organization (including the National
Association of Insurance Commissioners).
“Guaranty
Obligation”
means,
as applied to any Person, any direct or indirect liability, contingent or
otherwise, of such Person for any Indebtedness, lease, dividend or other
obligation (the “primary
obligation”)
of
another Person (the “primary
obligor”),
if
the purpose or intent of such Person in incurring such liability, or the
economic effect thereof, is to guarantee such primary obligation or provide
support, assurance or comfort to the holder of such primary obligation or
to
protect or indemnify such holder against loss with respect to such primary
obligation, including (a) the direct or indirect guaranty, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of any primary
obligation, (b) the incurrence of reimbursement obligations with respect
to any
letter of credit or bank guarantee in support of any primary obligation,
(c) the
existence of any Lien, or any right, contingent or otherwise, to receive
a Lien,
on the property of such Person securing any part of any primary obligation
and
(d) any liability of such Person for a primary obligation through any
Contractual Obligation (contingent or otherwise) or other arrangement (i)
to
purchase, repurchase or otherwise acquire such primary obligation or any
security therefor or to provide funds for the payment or discharge of such
primary obligation (whether in the form of a loan, advance, stock purchase,
capital contribution or otherwise), (ii) to maintain the solvency, working
capital, equity capital or any balance sheet item, level of income or cash
flow,
liquidity or financial condition of any primary obligor, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance
by
any other party to any Contractual Obligation, (iv) to purchase, sell or
lease
(as lessor or lessee) any property, or to purchase or sell services, primarily
for the purpose of enabling the primary obligor to satisfy such primary
obligation or to protect the holder of such primary obligation against loss
or
(v) to supply funds to or in any other manner invest in, such primary obligor
(including to pay for property or services irrespective of whether such property
is received or such services are rendered); provided,
however,
that
“Guaranty
Obligations”
shall
not include (x) endorsements for collection or deposit in the ordinary course
of
business and (y) product warranties given in the ordinary course of business.
The outstanding amount of any Guaranty Obligation shall equal the outstanding
amount of the primary obligation so guaranteed or otherwise supported or,
if
lower, the stated maximum amount for which such Person may be liable under
such
Guaranty Obligation.
“Hazardous
Material”
means
any substance, material or waste that is classified, regulated or otherwise
characterized under any Environmental Law as hazardous, toxic, a contaminant
or
a
12
pollutant
or by other words of similar meaning or regulatory effect, including petroleum
or any fraction thereof, asbestos, polychlorinated biphenyls and radioactive
substances.
“Healthcare
Laws”
has
the
meaning specified in Section
7.2.
“Hedging
Agreement”
means
any Interest Rate Contract, foreign exchange, swap, option or forward contract,
spot, cap, floor or collar transaction, any other derivative instrument and
any
other similar speculative transaction and any other similar agreement or
arrangement designed to alter the risks of any Person arising from fluctuations
in any underlying variable.
“HIPAA”
has
the
meaning specified in Section
7.2.
“HIPAA
Compliance Date”
has
the
meaning specified in Section
7.2.
“HIPAA
Compliance Plan”
has
the
meaning specified in Section
7.2.
“HIPAA
Compliant”
has
the
meaning specified in Section
7.2.
“Indebtedness”
of
any
Person means, without duplication, any of the following, whether or not matured:
(a) all indebtedness for borrowed money, (b) all obligations evidenced by
notes,
bonds, debentures or similar instruments, (c) all reimbursement and all
obligations with respect to (i) letters of credit, bank guarantees or bankers’
acceptances or (ii) surety, customs, reclamation or performance bonds (in
each
case not related to judgments or litigation) other than those entered into
in
the ordinary course of business, (d) all obligations to pay the deferred
purchase price of property or services, other than trade payables incurred
in
the ordinary course of business, (e) all obligations created or arising under
any conditional sale or other title retention agreement, regardless of whether
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property, (f)
all
obligations, whether or not contingent, to purchase, redeem, retire, defease
or
otherwise acquire for value any of its own Equity Interests or Equity
Equivalents (or any Equity Interest or Equity Equivalent of a direct or indirect
parent entity thereof) prior to the date that is 180 days after the Scheduled
Maturity Date, valued at, in the case of redeemable preferred Equity Interest,
the greater of the voluntary liquidation preference and the involuntary
liquidation preference of such Equity Interest plus accrued and unpaid
dividends, (g) all payments that would be required to be made in respect
of any
Hedging Agreement in the event of a termination (including an early termination)
on the date of determination and (h) all Guaranty Obligations for obligations
of
any other Person constituting Indebtedness of such other Person; provided,
however,
that
the items in each of clauses
(a)
through
(h)
above
shall constitute “Indebtedness”
of
such
Person solely to the extent, directly or indirectly, (x) such Person is liable
for any part of any such item, (y) any such item is secured by a Lien on
such
Person’s property or (z) any other Person has a right, contingent or otherwise,
to cause such Person to become liable for any part of any such item or to
grant
such a Lien.
“Indemnified
Matter”
has
the
meaning specified in Section 11.4.
“Indemnitee”
has
the
meaning specified in Section 11.4.
“Independent
Director”,
“Independent
Manager”,
or
“Independent
Member”
shall
mean a Person who is not and will not be while serving and has never been
(i) a member, Partner, Equity Interest holder, manager, director, employee,
attorney, or counsel of any Borrower or its
13
Affiliates,
(ii) a customer, supplier or other Person who derives more than 1% of its
purchases or revenues from its activities with any Borrower or its Affiliates,
(iii) a direct or indirect legal or beneficial owner in such entity or any
of its Affiliates, (iv) a member of the immediate family of any member,
manager, employee, attorney, customer, supplier or other Person referred
to
above, or (v) a person Controlling or under the Common Control of anyone
listed in (i) through (iv) above. A Person that otherwise satisfies
the foregoing shall not be disqualified from serving as an Independent Director
or Independent Manager or Independent Member if such individual is at the
time
of initial appointment, or at any time while serving as such, is an Independent
Director or Independent Manager or Independent Member, as applicable, of
a
Single Purpose Entity affiliated with any Borrower. Additionally, a natural
person who satisfies the foregoing definition other than clause (ii) above
shall
not be disqualified from serving as an Independent Director, Independent
Manager
or Independent Manager if such individual is an independent director, manager
or
member provided by a nationally-recognized company that provides professional
independent directors, managers and members and that also provides other
corporate services in the ordinary course of its business. For the purpose
of
this definition, “Control”
shall
mean (i) the possession, directly or indirectly, of the power to direct or
cause
the direction of the management and policies of a Person, whether through
ownership of voting interests, by contract or otherwise and (ii) the ownership,
direct or indirect, of no less than 51% of the voting interests of such Person,
and the terms Controlled, Controlling and Common Control shall have correlative
meanings.
“Initial
Projections”
means
those financial Projections, dated September 1, 2006, covering the Fiscal
Years
ending in 2006 through 2009 and delivered to the Administrative Agent by
the
Parent prior to the date hereof.
“Intellectual
Property”
means
all rights, title and interests in or relating to intellectual property and
industrial property arising under any Requirement of Law and all IP Ancillary
Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet
Domain Names, Trade Secrets and IP Licenses.
“Interest
Holdback”
has
the
meaning given such term in Section
2.1(b)(i).
“Interest
Period”
means,
with respect to any Eurodollar Rate Loan, the period commencing on the Closing
Date or on the day after the last day of the immediately preceding Interest
Period and, in each case, except with respect to clause (c) below, ending
on the
day before the 1 month anniversary of the applicable commencement date;
provided,
however,
that
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would be to extend such
Interest Period into the next calendar month, in which case such Interest
Period
shall end on the immediately preceding Business Day, (b) any Interest Period
that begins on the last Business Day of a calendar month (or on a day for
which
there is no numerically corresponding day in the calendar month at the end
of
such Interest Period) shall end on the last Business Day of the immediately
succeeding a calendar month, (c) no Interest Period shall end after the
Scheduled Maturity Date.
“Interest
Rate Contracts”
means
all interest rate swap agreements, interest rate cap agreements, interest
rate
collar agreements and interest rate insurance.
14
“Internet
Domain Names”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to Internet domain
names.
“Investment”
means,
with respect to any Person, directly or indirectly, (a) to own, purchase
or
otherwise acquire, in each case whether beneficially or otherwise, any
investment in, including any interest in, any Security of any other Person
(other than any evidence of any Obligation), (b) to purchase or otherwise
acquire, whether in one transaction or in a series of transactions, all or
a
significant part of the property of any other Person or a business conducted
by
any other Person or all or substantially all of the assets constituting the
business of a division, branch, brand or other unit operation of any other
Person, (c) to incur, or to remain liable under, any Guaranty Obligation
for
Indebtedness of any other Person, to assume the Indebtedness of any other
Person
or to make, hold, purchase or otherwise acquire, in each case directly or
indirectly, any deposit, loan, advance, commitment to lend or advance, or
other
extension of credit (including by deferring or extending the date of, in
each
case outside the ordinary course of business, the payment of the purchase
price
for Transfers of property or services to any other Person, to the extent
such
payment obligation constitutes Indebtedness of such other Person), excluding
deposits with financial institutions available for withdrawal on demand,
prepaid
expenses, accounts receivable and similar items created in the ordinary course
of business, (d) to make, directly or indirectly, any contribution to the
capital of any other Person or (e) to Transfer any property for less than
fair
market value (including a disposition of cash or Cash Equivalents in exchange
for consideration of lesser value); provided,
however,
that
such Investment shall be valued at the difference between the value of the
consideration for such Transfer and the fair market value of the property
Transferred.
“IP
Ancillary Rights”
means,
with respect to any other Intellectual Property, as applicable, all foreign
counterparts to, and all divisionals, reversions, continuations,
continuations-in-part, reissues, reexaminations, renewals and extensions
of,
such Intellectual Property and all income, royalties, proceeds and Liabilities
at any time due or payable or asserted under or with respect to any of the
foregoing or otherwise with respect to such Intellectual Property, including
all
rights to xxx or recover at law or in equity for any past, present or future
infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other IP Ancillary
Right.
“IP
License”
means
all Contractual Obligations (and all related IP Ancillary Rights), whether
written or oral, granting any right title and interest in or relating to
any
Intellectual Property.
“IRS”
means
the Internal Revenue Service of the United States and any successor
thereto.
“Leases”
means
all leases and subleases or similar document affecting the use, enjoyment
or
occupancy of the Real Property, including without limitation, resident care
agreements and service agreements that include an occupancy agreement, whether
now existing or hereafter arising.
“Lender”
means
any financial institution or other Person that (a) is listed on the
signature pages hereof as a “Lender”
or
(b)
from time to time becomes a party hereto by execution of an Assignment, in
each
case together with its successors.
15
“Liabilities”
means
all claims, actions, suits, judgments, actual damages (not consequential
damages), actual losses, liability, obligations, responsibilities, fines,
penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements
and expenses, in each case of any kind or nature (including interest accrued
thereon or as a result thereto and fees, charges and disbursements of financial,
legal and other advisors and consultants), whether joint or several, whether
or
not indirect, contingent, consequential, actual, punitive, treble or
otherwise.
“Licenses”
has
the
meaning specified in Section
7.2.
“Lien”
means
any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, easement (or other Agreement granting rights or
restricting the use of any Real Property or Facility), lien (statutory or
other), security interest or other security arrangement and any other
preference, priority or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic
or
other financing lease having substantially the same economic effect as any
of
the foregoing.
“Limited
Recourse Guaranty”
means
that certain Limited Guaranty, dated as of December 1, 2006, between Emeritus
and Administrative Agent, as it may be amended, restated or modified from
time
to time, pursuant to which the Loan is (i) fully recourse for losses
attributable to (A) fraud or intentional misrepresentation by Borrowers under
and in connection with the Loan Documents; (B) Borrowers’ misappropriation or
intentional misapplication of rents received by Borrowers in violation of
the
Loan Documents; (C) Borrowers’ intentional misapplication or misappropriation of
security deposits or rents collected in advance; (D) Borrowers’ misappropriation
or intentional misapplication of insurance proceeds or condemnation awards
in
violation of the Loan Documents; (E) Borrowers’ failure to pay real estate taxes
(except to the extent that sums sufficient to pay such amounts have been
deposited in escrow with Lender pursuant to the terms of the Loan Documents),
but only to the extent that the Facilities are generating income sufficient
to
permit Borrowers to pay the same when due; (F) any act of actual intentional
physical waste by Borrowers; (G) the failure of Borrowers to keep each Facility
insured in accordance with the terms of the Loan Documents; and (H) Borrowers’
failure to comply with the single purpose entity provisions contained in
the
Loan Documents; (ii) fully recourse for (x) any Borrower’s voluntary (or
involuntary that is not duly contested by the Borrower) bankruptcy or assignment
for the benefit of creditors, or similar event or proceedings; and (y)
Borrowers’ failure to comply with the transfer provisions contained in the Loan
Documents.
“Loan”
means
any loan made or deemed made by any Lender hereunder.
“Loan
Documents”
means,
collectively, this Agreement, any Notes, the Security Agreement, the Mortgages,
the Control Agreements, the Fee Letter, the Secured Hedging Agreements, the
Limited Recourse Guaranty, Environmental Indemnities and, when executed,
each
document executed by a Borrower and delivered to the Administrative Agent,
any
Lender in connection with or pursuant to any of the foregoing or the
Obligations, together with any modification of any term, or any waiver with
respect to, any of the foregoing.
“Management
Agreement”
means
each property management agreement, dated on or before the date hereof, between
the applicable SPE, as owner, and Emeritus or a replacement Qualified Manager
(or an interim manager with respect to any Facility acquired pursuant to
a
16
sale/leaseback
or similar temporary arrangement), as manager, in form and substance reasonably
acceptable to the Administrative Agent, as it may be amended, supplemented,
restated or otherwise modified from time to time with the prior consent of
the
Administrative Agent.
“Management
Fee”
means
any and all fees, expenses and other monies due and payable (other than
reimbursement of reasonable out-of-pocket third party expenses as contemplated
by the applicable Management Agreement), from time to time, by any Borrower
to
the manager under the applicable Management Agreement, which shall not, in
the
aggregate, exceed 5% of the gross operating revenue of the Facilities per
Fiscal
Year.
“Material
Adverse Effect”
means
an effect that results in or causes, or could reasonably be expected to result
in or cause, a material adverse change in any of (a) the condition (financial
or
otherwise), business, performance, prospects, operations or property of the
Borrowers, taken as a whole, (b) the ability of any Borrower to perform its
obligations in any material respect under any Loan Document and (c) the validity
or enforceability of any Loan Document or the rights and remedies of the
Administrative Agent, the Lenders and the other Secured Parties under any
Loan
Document.
“Material
Environmental Liabilities”
means
Environmental Liabilities exceeding $100,000 in the aggregate.
“Maturity
Date”
means,
subject to certain extension options set forth in Section
2.2(b),
the
earlier to occur of (i) Scheduled Maturity Date, (ii) the date on which the
Obligations otherwise become due as a result of acceleration of the Obligations
as provided for under this Agreement or any other Loan Document, and (iii)
the
effective date of any earlier termination of this Agreement in accordance
with
its terms.
“MLC”
means
Xxxxxxx Xxxxx Capital, a Division of Xxxxxxx Xxxxx Business Financial
Services Inc.
“Moody’s”
means
Xxxxx’x Investors Service, Inc.
“Mortgage”
means
any mortgage, deed of trust or other document executed or required herein
to be
executed by any Borrower and granting a security interest over real property
in
favor of the Administrative Agent as security for the Obligations.
“Mortgage
Supporting Documents”
means,
with respect to any Mortgage for a parcel of real property, each document
(including assignments of leases and rents, subordination agreements, title
policies or marked-up unconditional insurance binders (in each case, together
with copies of all documents referred to therein), maps, ALTA (or TLTA, if
applicable), environmental assessments, As-Built Surveys, and evidence regarding
recording and payment of fees, insurance premium and taxes) that the
Administrative Agent may reasonably request, to create, register, perfect,
maintain, evidence the existence, substance, form or validity of or enforce
a
valid lien on such parcel of real property in favor of the Administrative
Agent
for the benefit of the Secured Parties, subject only to such Liens as the
Administrative Agent may approve, provided that any Mortgage Supporting
Documents related to any Permitted Acquisition that are substantially similar
in
form and content to those delivered in connection with the initial funding
of
the Loan, modified to reflect the particulars of the applicable Facility,
shall
be deemed approved by Lender.
17
“Multiemployer
Plan”
means
any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to which
any ERISA Affiliate incurs or otherwise has any obligation or
liability.
“Net
Cash Proceeds”
means
proceeds received in cash from any Transfer of, or Property Loss Event with
respect to, any real or personal property, net of (a) actual third-party
out-of-pocket costs, fees and expenses paid or required to be paid in connection
therewith and (b) taxes paid or reasonably estimated to be payable as a result
thereof .
“Non-Funding
Lender”
has
the
meaning specified in Section 2.1(a).
“Non-U.S.
Lender Party”
means
each of the Administrative Agent, each Lender, each SPV and each participant,
in
each case that is not a Domestic Person.
“Note”
means
a
promissory note of the Borrowers, in substantially the form of Exhibit E, payable
to the order of a Lender in a principal amount equal to the amount of such
Lender’s Commitment.
“Notice
of Borrowing”
has
the
meaning specified in Section 2.1(a).
“Obligations”
means,
with respect to any Borrower, all amounts, obligations, liabilities, covenants
and duties of every type and description owing by such Borrower to the
Administrative Agent, any Lender, any other Indemnitee, any participant,
any SPV
or, in the case of any Secured Hedging Agreement, any Affiliate of any of
them
arising out of, under, or in connection with, any Loan Document, whether
direct
or indirect (regardless of whether acquired by assignment), absolute or
contingent, due or to become due, whether liquidated or not, now existing
or
hereafter arising and however acquired, and whether or not evidenced by any
instrument or for the payment of money, including, without duplication, (a)
if
such Borrower is the Borrower, all Loans, (b) all interest, whether or not
accruing after the filing of any petition in bankruptcy or after the
commencement of any insolvency, reorganization or similar proceeding, and
whether or not a claim for post-filing or post-petition interest is allowed
in
any such proceeding, and (c) all other fees, expenses (including fees, charges
and disbursement of counsel), interest, commissions, charges, costs,
disbursements, indemnities and reimbursement of amounts paid and other sums
chargeable to such Borrower under any Loan Document.
“Original
Credit Agreement”
has
the
meaning specified in the preamble hereto.
“Other
Taxes”
has
the
meaning specified in Section 2.11(c).
“Parent”
has
the
meaning specified in the preamble hereto.
“Patents”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to letters patent and applications
therefor.
“PBGC”
means
the United States Pension Benefit Guaranty Corporation and any successor
thereto.
“Permit”
means,
with respect to any Person, any permit, approval, authorization, license,
registration, certificate (including certificates of need and certificates
of
occupancy), concession, grant, franchise, variance or permission from, and
any
other Contractual Obligations with, any
18
Governmental
Authority, in each case whether or not having the force of law and applicable
to
or binding upon such Person or any of its property or to which such Person
or
any of its property is subject.
“Permitted
Acquisition”
means
any acquisition of any Excluded Property; provided
such
acquisition satisfies each of the following conditions: (a) the aggregate
amounts payable in connection with such acquisition (in each case, excluding
all
related transaction costs) shall not exceed the allocated purchase price
as set
forth on Schedule 8.7
for the
respective Excluded Property, (b) such acquisition shall occur on or before
the
earlier of (i) 30 days following the Westlake Facility Closing Date, as such
term is defined in the Acquisition Agreement and (ii) the six (6) month
anniversary of the Closing Date, (c) the Administrative Agent and MLC shall
have
received reasonable advance notice of such Permitted Acquisition including
a
reasonably detailed description thereof at least 5 Business Days prior to
the
consummation of such acquisition (or such later date as may be agreed by
the
Administrative Agent and MLC), (d) as of the date of consummation of any
transaction as part of such acquisition and after giving effect to all
transactions to occur on such date as part of such acquisition, all conditions
set forth in Section 3.1(a)
shall be
satisfied in all material respects or duly waived and, after giving effect
to
such Permitted Acquisition, Parent shall be in compliance with the financial
covenants set forth in Article V
on a Pro
Forma Basis as of the relevant period, and (e) there shall be no Event of
Default then existing under this Agreement. Upon the closing of such Permitted
Acquisition, Schedule
4.16
shall be
deemed updated to include such Excluded Facility.
“Permitted
Acquisition Closing Date”
has
the
meaning given such term in Section
2.1(a).
“Permitted
Investors”
means,
collectively Emeritus and Blackstone, or any direct or indirect Subsidiary
thereof.
“Permitted
Indebtedness”
means
any Indebtedness of any Borrower that is not prohibited by Section 8.1
or any
other provision of any Loan Document.
“Permitted
Investment”
means
any Investment of any Borrower that is not prohibited by Section 8.3
or any
other provision of any Loan Document.
“Permitted
Lien”
means
any Lien on or with respect to the property of any Borrower that is not
prohibited by Section 8.2
or any
other provision of any Loan Document.
“Permitted
Refinancing”
means
Indebtedness constituting a refinancing or extension of Permitted Indebtedness
that (a) has an aggregate outstanding principal amount not greater than the
aggregate principal amount of such Permitted Indebtedness outstanding at
the
time of such refinancing or extension, (b) has a weighted average maturity
(measured as of the date of such refinancing or extension) and maturity no
shorter than that of such Permitted Indebtedness, (c) is not secured by any
property or any Lien other than those securing such Permitted Indebtedness
and
(d) is otherwise on terms no less favorable to the Borrowers, taken as a
whole,
than those of such Permitted Indebtedness; provided,
however,
that,
notwithstanding the foregoing, (x) the terms of such Permitted Indebtedness
may
be modified as part of such Permitted Refinancing if such modification would
have been permitted pursuant to Section 8.11
and (y)
no Guaranty Obligation for such Indebtedness shall constitute part of such
Permitted Refinancing unless similar Guaranty Obligations with respect to
such
Permitted Indebtedness existed and constituted Permitted Indebtedness prior
to
such refinancing or extension.
19
“Permitted
Reinvestment”
means,
with respect to the Net Cash Proceeds of any Transfer or Property Loss Event,
to
acquire (or make Capital Expenditures to finance the acquisition, repair,
improvement or construction of), to the extent otherwise permitted hereunder,
property useful in the business of any Borrower (including through a Permitted
Acquisition) or, if such Property Loss Event involves loss or damage to
property, to repair such loss or damage.
“Person”
means
any individual, partnership, corporation (including a business trust and
a
public benefit corporation), joint stock company, estate, association, firm,
enterprise, trust, limited liability company, unincorporated association,
joint
venture and any other entity or Governmental Authority.
“Pro
Forma Basis”
means,
with respect to any determination for any period and any Pro Forma Transaction,
that such determination shall be made by giving pro
forma
effect
to each such Pro Forma Transaction, as if each such Pro Forma Transaction
had
been consummated on the first day of such period, based on historical results
accounted for in accordance with GAAP and, to the extent applicable, reasonable
assumptions that are specified in detail in the relevant Compliance Certificate,
Financial Statement or other document provided to the Administrative Agent
or
any Lender in connection herewith in accordance with Regulation S-X of the
Securities Act of 1933.
“Pro
Forma Transaction”
means
any transaction consummated as part of the Acquisition or any Permitted
Acquisition, together with each other transaction relating thereto and
consummated in connection therewith, including any incurrence or repayment
of
Indebtedness.
“Projections”
means,
collectively, the Initial Projections and any document delivered pursuant
to
Section 6.1(f).
“Property
Loss Event”
means,
with respect to any property, any loss of or damage to such property or any
taking of such property or condemnation thereof.
“Pro
Rata Outstandings”,
of any
Lender at any time, means the outstanding principal amount of the Term Loans
owing to such Lender.
“Pro
Rata Share”
means,
with respect to any Lender at any time, the percentage obtained by dividing
(a)
the sum of the Commitments (or, if such Commitments are terminated, the Pro
Rata
Outstandings therein) of such Lender then in effect by (b) the sum of the
Commitments (or, if such Commitments are terminated, the Pro Rata Outstandings
therein) of all Lenders then in effect; provided,
however,
that,
if there are no Commitments and no Pro Rata Outstandings, such Lender’s Pro Rata
Share shall be determined based on the Pro Rata Share most recently in effect,
after giving effect to any subsequent assignment and any subsequent non-pro
rata
payments of any Lender pursuant to Section 2.12.
“Qualified
Manager”
means
a
reputable and experienced professional management organization that (a) manages,
together with its affiliates, at least ten (10) senior housing facilities
and
with no less than an aggregate of 1500 units in such senior housing facilities
of similar quality to the applicable Facility in the State in which the
applicable Facility is located and (b) is approved by the Lenders in accordance
with their reasonable standards with respect to (i) previous relationships
between such Lender and the proposed manager and its principals, (ii) the
reputation for integrity, honesty and veracity of the proposed manager and
its
principals, owners, officers and directors, and (ii) OFAC, money-laundering,
anti-terrorism, SEC, healthcare laws
20
and
regulations, and other similar regulations and activities, which approval
shall
not be unreasonably withheld, conditioned or delayed (provided that the
Borrowers provide timely information reasonably requested by Lenders with
respect to such proposed manager), it being understood that Emeritus shall
be
deemed to be a Qualified Manager.
“Real
Property”
means
any “property” (including improvements thereon) subject to, and described in, a
Mortgage from any Borrower in favor of the Administrative Agent.
“Register”
has
the
meaning specified in Section 2.8(b).
“Reinvestment
Prepayment Amount”
means,
with respect to any Net Cash Proceeds on the Reinvestment Prepayment Date
therefor, the amount of such Net Cash Proceeds less
any
amount paid or required to be paid by any Borrower to make Permitted
Reinvestments with such Net Cash Proceeds pursuant to a Contractual Obligation
entered into prior to such Reinvestment Prepayment Date with any Person that
is
not an Affiliate of any Borrower.
“Reinvestment
Prepayment Date”
means,
with respect to any portion of any Net Cash Proceeds of any Transfer or Property
Loss Event, the earliest of (a) the 180th
day
after the completion of the portion of such Transfer or Property Loss Event
corresponding to such Net Cash Proceeds, (b) the date that is 5 Business
Days
after the date on which any Borrower shall have notified the Administrative
Agent of such Borrower’s determination not to make Permitted Reinvestments with
such Net Cash Proceeds, (c) the occurrence of any Event of Default set forth
in
Section 9.1(e)(ii)
and (d)
5 Business Days after the delivery of a notice by the Administrative Agent
to
the Parent during the continuance of any other Event of Default.
“Related
Documents”
means,
collectively, the Acquisition Agreement, each document executed in connection
with the Required Investors’ Equity Investment and each other document executed
with respect to the foregoing.
“Related
Person”
means,
with respect to any Person, each Affiliate of such Person and each director,
officer, employee, agent, trustee, representative, attorney, accountant and
each
insurance, environmental, legal, financial and other advisor (including those
retained in connection with the satisfaction or attempted satisfaction of
any
condition set forth in Article III)
and
other consultants and agents of or to such Person or any of its Affiliates,
together with, if such Person is the Administrative Agent, each other Person
or
individual designated, nominated or otherwise mandated by or helping the
Administrative Agent pursuant to and in accordance with Section 10.4
or any
comparable provision of any Loan Document.
“Related
Transactions”
means,
collectively, the consummation of the Acquisition, the consummation of the
Required Investors’ Equity Investment, the execution and delivery of all Related
Documents and the payment of all related fees, costs and expenses.
“Release”
means
any release, threatened release, spill, emission, leaking, pumping, pouring,
emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material into or through the
environment.
“Remedial
Action”
means
all actions required to (a) clean up, remove, treat or in any other way address
any Hazardous Material in the indoor or outdoor environment, (b) prevent
or
minimize any Release so that a Hazardous Material does not migrate or endanger
or threaten to
21
endanger
public health or welfare or the indoor or outdoor environment or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and
care
with respect to any Hazardous Material.
“Required
Investors’ Equity Investment”
means
the cash equity contribution from the Permitted Investors and certain
co-investors disclosed to the Administrative Agent and the Lenders to the
Borrowers in Dollars in an aggregate amount equal to $35,320,000.
“Required
Lenders”
means,
at any time, Lenders having at such time in excess of 66 2/3% of the
aggregate Term Loan Commitments (or, if such Commitments are terminated,
the Pro
Rata Outstandings) then in effect, ignoring, in such calculation, the
Commitments and Pro Rata Outstandings of any Non-Funding Lender.
“Requirements
of Law”
means,
with respect to any Person, collectively, the common law and all federal,
state,
local, foreign, multinational or international laws, statutes, codes, treaties,
standards, rules and regulations, guidelines, ordinances, orders, judgments,
writs, injunctions, decrees (including administrative or judicial precedents
or
authorities) and the interpretation or administration thereof by, and other
determinations, directives, requirements or requests of, any Governmental
Authority published or otherwise publicly-announced or of which Borrowers
have
received notice or have actual knowledge, in each case whether or not having
the
force of law and that are applicable to or binding upon such Person or any
of
its property or to which such Person or any of its property is
subject.
“Responsible
Officer”
means,
with respect to any Person, any of the president, chief executive officer,
treasurer, assistant treasurer, controller, managing member or general partner
of such Person, or its member or general partner, or its member’s or general
partner’s member or general partner, as the case may be, but, in any event, with
respect to financial matters, any such natural person that is responsible
for
preparing and approving the Financial Statements delivered hereunder and,
with
respect to the Corporate Chart and other documents delivered pursuant to
Section 6.1(e),
documents delivered on the Closing Date and documents delivered pursuant
to
Section 7.10,
the
secretary or assistant secretary of such Person or any other such natural
person
responsible for maintaining the corporate and similar records of such
Person.
“Restatement
Closing Date”
means
December 11, 2006.
“Restricted
Payment”
means
(a) any dividend, return of capital, distribution or any other payment or
Transfer of property for less than fair market value, whether direct or indirect
(including through the use of Hedging Agreements, the making, repayment,
cancellation or forgiveness of Indebtedness and similar Contractual Obligations)
and whether in cash, securities or other property, on account of any Equity
Interest or Equity Equivalent of any Borrower, in each case now or hereafter
outstanding, including with respect to a claim for rescission of a Transfer
of
such Equity Interest or Equity Equivalent and (b) any redemption, retirement,
termination, defeasance, cancellation, purchase or other acquisition for
value,
whether direct or indirect (including through the use of Hedging Agreements,
the
making, repayment, cancellation or forgiveness of Indebtedness and similar
Contractual Obligations), of any Equity Interest or Equity Equivalent of
any
Borrower, now or hereafter outstanding, and any payment or other transfer
setting aside funds for any such redemption, retirement, termination,
cancellation, purchase or other acquisition, whether directly or indirectly
and
whether to a sinking fund, a similar fund or otherwise.
22
“S&P”
means
Standard & Poor’s Rating Services.
“Scheduled
Maturity Date”
means
the 5th
anniversary of the Closing Date.
“Second
Extension Notice”
has
the
meaning specified in Section
2.2(b).
“Second
Extension Period”
has
the
meaning specified in Section
2.2(b).
“Secured
Hedging Agreements”
means
any Hedging Agreement that is entered into by any Borrower and any Person
that,
at the time such Person entered into such Hedging Agreement, was the
Administrative Agent, a Lender or an Affiliate of a Lender.
“Secured
Parties”
means
the Lenders, the Administrative Agent, each other Indemnitee and any other
holder of any Obligation of any Borrower.
“Security”
means
all Equity Interests, Equity Equivalents, voting trust certificates, bonds,
debentures, instruments and other evidence of Indebtedness, whether or not
secured, convertible or subordinated, all certificates of interest, share
or
participation in, all certificates for the acquisition of, and all warrants,
options and other rights to acquire, any Security.
“Security
Agreement”
means
that certain Pledge and Security Agreement, dated as of December 1, 2006,
among
the Administrative Agent and each Borrower from time to time party thereto
as it
may be amended, restated or otherwise modified from time to time.
“Seller”
means,
collectively, PITA General Corporation, a Illinois corporation, AHC Tenants,
Inc, a Delaware corporation, and their Affiliates.
“Single
Purpose Entity”
shall
mean a Person, other than an individual, which (i) is formed or organized
solely for the purpose of owning, holding, developing, using, operating and
financing, directly a Facility, or, in the case of Parent, indirectly, an
ownership interest in a Facility, (ii) does not engage in any business
unrelated to such Facility or with respect to the Parent, indirectly, all
of the
Facilities and the ownership, development, use, operation and financing thereof,
(iii) has not and will not have any assets other than those related to its
interest in such Facility or with respect to the Parent, indirectly, all
of the
Facilities or the operation, management and financing thereof or any
Indebtedness other than the Permitted Indebtedness, (iv) except if
Consolidated with other Borrowers, maintains its own separate books and records
and its own accounts, in each case, which are separate and apart from the
books
and records and accounts of any other Person, (v) holds itself out as being
a Person, separate and apart from any other Person, (vi) does not and will
not commingle its funds or assets with those of any other Person,
(vii) conducts its own business in its own name, (viii) except if
Consolidated with other Borrowers, maintains separate financial statements,
(ix) pays its own liabilities out of its own funds, (x) observes all
limited liability company formalities, (xi) pays the salaries of its own
employees, if any, and maintains a sufficient number of employees, if any,
in
light of its contemplated business operations, (xii) except
as
expressly permitted under the Loan Documents, or to the other Borrowers with
respect to the Loan, does not guarantee or otherwise obligate itself with
respect to the debts of any other Person (other than by endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business) or hold out its credit as being available to satisfy the obligations
of any other Person, (xiii) does not acquire obligations or securities of
its partners, members or shareholders, (xiv) allocates fairly and
reasonably shared
23
expenses,
including, without limitation, any overhead for shared office space, if any,
(xv) uses separate stationery, invoices, and checks, (xvi) maintains
an arm’s length relationship with its Affiliates, (xvii) other than
pursuant to the Loan Documents does not and will not pledge its assets for
the
benefit of any other Person or make any loans or advances to any other Person,
(xviii) does and will continue to use commercially reasonable efforts to
correct any known misunderstanding regarding its separate identity,
(xix) maintains adequate capital in light of its contemplated business
operations; provided,
however,
this
provision shall not require any member of any Borrower, or any other party,
to
make any capital contributions to any Borrower, and (xx) has not and will
not engage in, seek, or consent to the dissolution, winding up, liquidation,
consolidation or merger and except as otherwise permitted in this Agreement,
has
not and will not engage in, seek or consent to any asset sale, transfer or
partnership, membership or shareholder interests, or amendments of its
Constituent Documents. In addition, if such Person is a partnership,
(1) all general partners of such Person shall be Single Purpose Entities
(owning nothing other than its general partnership interests); and (2) if
such Person has more than one general partner, then the Constituent Documents
shall provide that such Person shall continue (and not dissolve) for so long
as
a solvent general partner exists. In addition, if such Person is a corporation,
then, at all times: (a) such Person shall have at least one (1) Independent
Director and (b) the board of directors of such Person may not take any
action requiring the unanimous affirmative vote of 100% of the members of
the
board of directors unless all of the directors, including the Independent
Directors, shall have participated in such vote. In addition, if such Person
is
a limited liability company, (A) such Person shall have at least one (1)
Independent Manager or Independent Member, (B) if such Person is managed by
a board of managers, the board of managers of such Person may not take any
action requiring the unanimous affirmative vote of 100% of the members of
the
board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (C) if such Person is not
managed by a board of managers, the members of such Person may not take any
action requiring the affirmative vote of 100% of the members of such Person
unless all of the members, including the Independent Members, shall have
participated in such vote, (D) except in the case of the Parent, each managing
member shall be a Single Purpose Entity and, in the case of the Parent, shall
own nothing other than the Equity Interests in the SPEs, and (E) its
Constituent Documents shall provide that until all of the Indebtedness and
Obligations are paid in full such entity will not dissolve. In addition,
the
Constituent Documents of such Person shall provide that such Person without
the
unanimous consent of all of the partners, managers, directors or members,
as
applicable, shall not with respect to itself or to any other Person in which
it
has a direct or indirect legal or beneficial interest (A) seek or consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or other similar official for the benefit of the creditors of such
Person or all or any portion of such Person’s properties, (B) take any
action that could reasonably be expected to cause such Person to become
insolvent, 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, “or” (C) take any action that would cause such
Person not to satisfy the requirements set forth herein for a Single Purpose
Entity.
“Solvent”
means,
with respect to any Person as of any date of determination, that, as of such
date, (a) the value of the assets of such Person (both at fair value and
present
fair saleable value) is greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person, (b) such Person
is able
to pay its aggregate liabilities of such Person, as such liabilities mature
and
(c) such Person does not have unreasonably small capital in light of its
intended operations. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities shall be computed at the amount
that,
in light of all the facts and
24
circumstances
existing at such time, represents the amount that can reasonably be expected
to
become an actual or matured liability.
“SPE”
has
the
meaning specified in the preamble hereto.
“SPV”
means
any special purpose funding vehicle identified as such in a writing by any
Lender to the Administrative Agent.
“Subordinated
Debt”
means
any Indebtedness that is subordinated to the payment in full of the Obligations
on terms and conditions satisfactory to the Administrative Agent.
“Subsidiary”
means,
with respect to any Person, any corporation, partnership, joint venture,
limited
liability company, association or other entity, the management of which is,
directly or indirectly, controlled by, or of which an aggregate of more than
50%
of the outstanding Voting Interest is, at the time, owned or controlled directly
or indirectly by, such Person or one or more Subsidiaries of such
Person.
“Substitute
Lender”
has
the
meaning specified in Section 2.12(a).
“SWDA”
means
the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.).
“Tax
Affiliate”
means,
(a) any Borrower and (b) any Affiliate of any Borrower with which any Borrower
files or is eligible to file consolidated, combined or unitary tax
returns.
“Tax
Return”
has
the
meaning specified in Section 4.8.
“Taxes”
has
the
meaning specified in Section 2.11(a).
“Term
Loan”
has
the
meaning specified in Section 2.1(a).
“Terrorism”
has
the
meaning specified in Section
7.5(b).
“Third-Party
Payor Program”
has
the
meaning specified in Section 4.1(b).
“Title
IV Plan”
means
a
pension plan subject to Title IV of ERISA, other than a Multiemployer Plan,
to
which any ERISA Affiliate incurs or otherwise has any obligation or
liability.
“Trademarks”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade
styles, service marks, logos and other source or business identifiers and,
in
each case, all goodwill associated therewith, all registrations and recordations
thereof and all applications in connection therewith.
“Trade
Secrets”
means
all right, title and interest (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to trade secrets.
“Transfer”
means,
with respect to any property, to sell, convey, transfer, assign, license,
lease
or otherwise dispose of, any interest therein or to permit any Person to
acquire
any such interest, including, in each case, through a sale, factoring at
maturity, collection of or other
25
disposal,
with or without recourse, of any notes or accounts receivable. Conjugated
forms
thereof and the noun “Transfer”
have
correlative meanings.
“UCC”
means
the Uniform Commercial Code of any applicable jurisdiction and, if the
applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform
Commercial Code as in effect in the State of New York.
“United
States”
means
the United States of America.
“U.S.
Lender Party”
means
each of the Administrative Agent, each Lender, each SPV and each participant,
in
each case that is a Domestic Person.
“Voting
Interest”
means
Equity Interests of any Person having ordinary power to vote in the election
of
members of the board of directors, managers, trustees or other controlling
Persons, of such Person (irrespective of whether, at the time, Equity Interests
of any other class or classes of such entity shall have or might have voting
power by reason of the occurrence of any contingency).
“Westlake”
means
that certain healthcare facility known as The Gardens at Westlake and formerly
known as Cypress Gardens at Westlake and located at 00000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx.
“Whittier
Residence”
means
that certain single family home located at the Facility known as The Gardens
at
Whittier and formerly known as Cypress Gardens at Whittier located in Whittier
California.
“Withdrawal
Liability”
means,
at any time, any liability incurred (whether or not assessed) by any ERISA
Affiliate and not yet satisfied or paid in full at such time with respect
to any
Multiemployer Plan pursuant to Section 4201 of ERISA.
“Working
Capital”
means,
for any Person at any date, its Consolidated Current Assets at such date
minus
its
Consolidated Current Liabilities at such date.
Section
1.2 UCC
Terms.
The
following terms have the meanings given to them in the applicable UCC:
“commodity account”, “commodity contract”, “commodity intermediary”, “deposit
account”, “entitlement holder”, “entitlement order”, “equipment”, “financial
asset”, “general intangible”, “goods”, “instruments”, “inventory”, “securities
account”, “securities intermediary” and “security entitlement”.
Section
1.3 Accounting
Terms and Principles.
(a)
GAAP. All accounting determinations required to be made pursuant hereto shall,
unless expressly otherwise provided herein, be made in accordance with
GAAP.
No
change in the accounting principles used in the preparation of any Financial
Statement hereafter adopted by Parent shall be given effect if such change
would
affect a calculation that measures compliance with any provision of
Article V or VIII unless the Borrowers, the Administrative Agent and the
Required Lenders agree to modify such provisions to reflect such changes
in GAAP
and, unless such provisions are modified, all Financial Statements, Compliance
Certificates and similar documents provided hereunder shall be provided together
with a reconciliation between the calculations and amounts set forth therein
before and after giving effect to such change in GAAP.
26
Section
1.4 Payments.
The
Administrative Agent may set up standards and procedures to determine or
redetermine the equivalent in Dollars of any amount expressed in any currency
other than Dollars and otherwise may, but shall not be obligated to, rely
on any
determination made by any Borrower. Any such determination or redetermination
by
the Administrative Agent shall be conclusive and binding for all purposes,
absent manifest error. No determination or redetermination by any Secured
Party
or Borrower and no other currency conversion shall change or release any
obligation of any Borrower or of any Secured Party (other than the
Administrative Agent and its Related Persons) under any Loan Document, each
of
which agrees to pay separately for any shortfall remaining after any conversion
and payment of the amount as converted. The Administrative Agent may round
up or
down to the nearest 1,000th,
and may
set up appropriate mechanisms to round up or down to the nearest
1,000th.
Section
1.5 Interpretation.
(a)
Certain Terms. Except as set forth in any Loan Document, all accounting terms
not specifically defined herein shall be construed in accordance with GAAP
(except for the term “property”, which shall be interpreted as broadly as
possible, including, in any case, cash, securities, other assets, rights
under
Contractual Obligations and Permits and any right or interest in any property).
The terms “herein”, “hereof” and similar terms refer to this Agreement as a
whole. In the computation of periods of time from a specified date to a later
specified date in any Loan Document, the terms “from” means “from and including”
and the words “to” and “until” each mean “to but excluding” and the word
“through” means “to and including.” In any other case, the term “including” when
used in any Loan Document means “including without limitation.” The term
“documents” means all writings, however evidenced and whether in physical or
electronic form, including all documents, instruments, agreements, notices,
demands, certificates, forms, financial statements, opinions and reports.
The
term “incur” means incur, create, make, issue, assume or otherwise become
directly or indirectly liable in respect of or responsible for, in each case
whether directly or indirectly, and the terms “incurrence” and “incurred” and
similar derivatives shall have correlative meanings.
The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. The definitions in this Agreement shall apply equally to singular and
plural forms of the defined terms and, whenever the context may require,
any
pronoun shall include the corresponding masculine feminine and neuter
forms.
(b) Certain
References.
Unless
otherwise expressly indicated, references (i) in this Agreement to an
Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit
or Schedule to, or Article, Section or clause in, this Agreement and (ii)
in any
Loan Document, to (A) any agreement shall include, without limitation, all
exhibits, schedules, appendixes and annexes to such agreement and, unless
the
prior consent of any Secured Party required therefor is not obtained, any
modification to any term of such agreement, (B) any statute shall be to such
statute as modified from time to time and to any successor legislation thereto,
in each case as in effect at the time any such reference is operative and
(C) any time of day shall be a reference to New York time. Titles of
articles, sections, clauses, exhibits, schedules and annexes contained in
any
Loan Document are without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto. Unless otherwise
expressly indicated, the meaning of any term defined (including by reference)
in
any Loan Document shall be equally applicable to both the singular and plural
forms of such term.
27
ARTICLE
II
THE
FACILITIES
Section
2.1 Term
Loan Commitment, Borrowing Procedures and Escrow Requirement.
(a)
Term Loan Commitment and Borrowing Procedures. (i) On the terms and subject
to the conditions contained in this Agreement, each Lender severally, but
not
jointly, agrees to make loans (each a “Term Loan”) in Dollars to the Borrowers
in a maximum amount not to exceed such Lender’s Term Loan Commitment, and the
aggregate of all Commitments in a maximum aggregate amount not to exceed
$167,000,000. An initial advance was made by Administrative Agent on the
Closing
Date in an amount equal to $139,940,000. Upon any Permitted Acquisition,
subject
to the Interest Holdback and the Capital Improvement Holdback, advances shall
be
made in an amount not to exceed the amount set forth on Schedule 8.7 for
each
respective healthcare facility being acquired.
Advances related to the Interest Holdback and the Capital Improvement Holdback
shall be made pursuant to Section 2.1(b)(i). Amounts of Term Loans repaid
may
not be reborrowed.
Amounts
over-advance shall be immediately repaid by Borrowers.
(ii) Borrowing
Procedures.
Each
advance under the Term Loan shall be made on notice given by the Borrowers
to
the Administrative Agent not later than 11:00 a.m. on the third Business
Day prior to the date of the proposed advance. Each such notice may be made
in a
writing substantially in the form of Exhibit F
(a
“Notice
of Borrowing”)
duly
completed or by telephone if confirmed promptly. Loans shall be made as
Eurodollar Rate Loans.
The
Administrative Agent shall give to each Lender prompt notice of the
Administrative Agent’s receipt of a Notice of Borrowing and including the
applicable interest rate not later than 11:00 a.m. on the second Business
Day prior to the proposed advance. Each Lender shall, before 11:00 a.m. on
the date of the proposed Borrowing, make available to the Administrative
Agent
at its address referred to in Section 11.11,
such
Lender’s Pro Rata Share of such proposed Borrowing. Upon fulfillment or due
waiver (i) on the Closing Date, or (ii) on the date of the closing of any
Permitted Acquisition (a “Permitted
Acquisition Closing Date”),
of
the applicable conditions set forth in Section 3.1,
the
Administrative Agent shall make such funds available to the
Borrower.
Non-Funding
Lenders.
Unless
the Administrative Agent shall have received notice from any Lender prior
to the
date such Lender is required to make any payment hereunder with respect to
any
Loan that such Lender will not make such payment (or any portion thereof)
available to the Administrative Agent, the Administrative Agent may assume
that
such Lender has made such payment available to the Administrative Agent on
the
date such payment is required to be made in accordance with this Article II
and the
Administrative Agent may, in reliance upon such assumption, make available
to
the Borrower on such date a corresponding amount. Any Lender that shall not
have
made available to the Administrative Agent any portion of any payment described
above (any such Lender, a “Non-Funding
Lender”)
agrees
to pay such amount to the Administrative Agent on demand together with interest
thereon (such amount plus such interest, the “Non-Funded
Amount”),
for
each day from the date such amount is made available to the Borrower until
the
date such amount is repaid to the Administrative Agent (either by such
Non-Funding Lender or by a Substitute Lender under Section
2.12),
at the
Federal Funds
28
Rate
for
the first Business Day and thereafter at the interest rate applicable at
the
time to such Term Loan. Such repayment shall then constitute the funding
of the
corresponding Term Loan (including any Loan deemed to have been made hereunder
with such payment) or participation. In the event a Non-Funding Lender fails
to
pay the Non-Funded Amount, the Administrative Agent shall have the right,
but
not the obligation, to become a Substitute Lender pursuant to Section
2.12
and
increase its Commitment by the Non-Funded Amount, in which case such Non-Funded
Amount shall constitute a funding by Administrative Agent of the corresponding
Term Loan. If Administrative Agent chooses not to become a Substitute Lender
for
the Non-Funded Amount, it shall notify Borrowers of such Lender’s failure to
make payment hereunder. Borrower agrees to repay to the Administrative Agent
the
Non-Funded Amount together with interest thereon for each day from the date
such
amount is made available to the Borrower until the date such amount is repaid
to
the Administrative Agent, at the interest rate applicable to the Obligation
that
would have been created when the Administrative Agent made available such
amount
to the Borrower had such Lender made a corresponding payment available;
provided,
however,
that
such payment shall not relieve such Lender of any obligation it may have
to the
Borrower. Such
repayment by Borrower shall be made not later than 30 days following the
receipt
of such notice. The existence of any Non-Funding Lender shall not relieve
any
other Lender of its obligations under any Loan Document, but no other Lender
shall be responsible for the failure of any Non-Funding Lender to make any
payment required under any Loan Document.
(b) Holdbacks,
Reserves and Escrows.
(i) Holdbacks.
(A) A
portion of the proceeds of the Term Loan in an amount equal to Three Million
Two
Hundred Thousand Dollars and No/100 Dollars ($3,200,000) (the “Interest
Holdback”)
shall
be retained by the Administrative Agent as a holdback, which amount shall
be
advanced by Administrative Agent to pay any shortfall in the interest due
hereunder that cannot be paid out of Consolidated EBITDA; provided,
however,
at such
time as the Consolidated Interest Coverage Ratio on any date of documentation
shall be greater than or equal 1.10 to 1.00 for each of the immediately
preceding twelve (12) months, the Interest Holdback shall no longer be required
and, provided no Event of Default has occurred and is continuing, the balance
of
the Interest Holdback shall be refunded to Borrowers. Absent the existence
of
any Event of Default hereunder or under any of the other Loan Documents,
to the
extent any such shortfall exists, Administrative Agent shall make disbursements
on the applicable due date for the payment of interest due on the Loan, in
accordance with Sections
2.2(b).
Such
disbursements under the Interest Holdback shall not exceed, in the aggregate,
the amount of the Interest Holdback set forth above and shall be deemed to
be a
Term Loan made hereunder. Nothing in this Section
2.1(b)(i)(A)
shall be
deemed to relieve Borrowers of their obligation to timely pay all principal
and
interest which comes due.
(B)
A
portion of the proceeds of the Term Loan in an amount equal to Five Million
One
Hundred Thirty Thousand Dollars and No/100 Dollars ($5,130,000) (the
“Capital
Improvement Holdback”)
shall
be retained by the Administrative Agent, which amount shall be advanced by
Administrative Agent to pay costs and expenses related to the repairs,
improvements, and replacements identified on Schedule
2.1.
Absent
the existence of any Event of Default hereunder or under any of the other
Loan
Documents, upon evidence of the completion of, and verification of the cost
associated with, such repair, improvement or replacement (whether authorized
for
29
payment
or actually paid by Borrowers), Administrative Agent shall make disbursements
under the Term Loan in an amount not to exceed 82.5% of such cost to reimburse
Borrowers for such repair, improvement or replacement. To the extent any
payment
is authorized for payment or actually paid by Borrowers prior to completion
of
any repair, improvement or replacement, upon submittal of invoices associated
with such partial payments and absent the existence of any Event of Default
hereunder, Administrative Agent shall reimburse Borrowers no more frequently
than on time per month, in an amount not to exceed 82.5% (less customary
holdbacks to ensure completion) of such partial cost to reimburse Borrowers
for
such repair, improvement or replacement. Disbursements under the Capital
Improvement Holdback shall not exceed, in the aggregate, the amount of the
Capital Improvement Holdback set forth above and shall be deemed to be a
Term
Loan made hereunder. To the extent funds are advanced for invoices not already
paid by Borrowers, (i) Borrowers shall provide Administrative Agent with
evidence that each such invoice was paid in full and (ii) until such time
as the
paid invoices are received by Administrative Agent, Administrative Agent
shall
only, upon Borrowers’ request, reimburse Borrowers for invoices actually paid.
Borrowers shall be obligated to make the repairs, improvements and replacements
identified on Schedule
2.1
on the
respective dates set forth therein. Upon completion of all items on Schedule
2.1,
the
balance of the Capital Improvement Holdback shall be refunded to
Borrowers.
(ii) Replacement
Reserve.
At or
before the initial advance under the Term Loan, the Borrowers shall deposit
with
the Administrative Agent a sum of money in an amount equal to TWENTY FIVE
DOLLARS ($25) per bed (the “Monthly
Replacement Reserve Deposit”),
and
shall thereafter make a deposit equal to the Monthly Replacement Reserve
Deposit
each month, contemporaneously with its payment of interest due hereunder,
provided,
however,
at such
time as the amount in such replacement reserve is equal to or greater than
12
times the Monthly Replacement Reserve Deposit (the “Maximum
Reserve Amount”),
the
Borrowers shall not be obligated to make any further Monthly Replacement
Reserve
Deposits until such time as the amount in such reserve is less than the Maximum
Reserve Amount. Administrative Agent shall release funds from this reserve
to
reimburse the Borrowers, or pay directly if a request is made for an amount
in
excess of $20,000, for capital expenditures for, and replacement of furniture,
fixtures and equipment used in connection with, the Facilities, promptly
following the Borrowers’ request therefore, which request shall be accompanied
by invoices or other reasonable evidence of the payment or obligations for
which
a release is being requested.
(iii) Tax
Escrow.
The
Borrowers shall deposit monthly with the Administrative Agent or the
Administrative Agent’s designee, a sum of money equal to equal to one-twelfth
(1/12th) of the annual charges for real estate taxes, assessments and
impositions relating to the Facilities as reasonably estimated by Administrative
Agent. At or before the initial advance under the Term Loan, the Borrowers
shall
deposit with the Administrative Agent a sum of money which together with
such
monthly installments will be sufficient to make such tax payments thirty
(30)
days prior to the date any delinquency or penalty becomes due. Provided
sufficient funds are available in the foregoing tax reserve, Administrative
Agent shall use such funds to pay real estate taxes, assessments and impositions
relating to the Facilities prior to the date same are due, and
30
any
obligations of the Borrowers hereunder to pay same shall be deemed satisfied
if
sufficient funds to pay same are in such reserve.
(iv) Insurance
Escrow.
To the
extent non-captive insurance is utilized and a third party collects a premium
for such insurance coverage, the Borrowers shall deposit monthly with the
Administrative Agent or Administrative Agent’s designee, a sum of money equal to
equal to one-twelfth (1/12th) of the annual charges for insurance premiums
relating to the insurance coverages required by this Agreement as reasonably
estimated by Administrative Agent. At or before the initial advance under
the
Loan, the Borrowers shall deposit with the Administrative Agent a sum of
money
which together with such monthly installments will be sufficient to make
such
insurance payments thirty (30) days prior to the date any delinquency or
penalty
becomes due. Provided sufficient funds are available in the foregoing insurance
reserve, Administrative Agent shall use such funds to pay insurance premiums
relating to the Facilities prior to the date same are due, and any obligations
of the Borrowers hereunder to pay same shall be deemed satisfied if sufficient
funds to pay same are in such reserve.
(v) Disbursement
and Interest.
After
the Closing Date, deposits in respect of the escrows described in clauses
(iii) - (iv)
above
shall be made on the basis of the Administrative Agent’s reasonable estimate
from time to time of the charges for the current year (or other applicable
period). All funds deposited pursuant to clause
(iii) - (iv)
shall be
held by the Administrative Agent. These sums may be commingled with the general
funds of the Administrative Agent and shall not be deemed to be held in trust
for the benefit of the Borrowers. So long as no Event of Default exists
hereunder, the Administrative Agent shall credit for the Borrowers’ account
interest on such funds held by the Administrative Agent from time to time
at the
money market account rate announced from time to time by The Northern Trust
Company or any other national banking association selected by the Administrative
Agent in its sole discretion (the “Money
Market Rate”).
All
interest paid on such funds shall be deemed to be a part of the respective
escrow and shall be applied in accordance with this Section
2.1(b).
The
Borrowers hereby grant to the Administrative Agent for the benefit of Lender
and
the Administrative Agent a security interest in all funds so deposited with
the
Administrative Agent for the purpose of securing the Obligations. While an
Event
of Default exists, the funds deposited may be applied in payment of the charges
for which such funds have been deposited, or to the payment of the Obligations
or any other charges affecting the security of the Administrative Agent,
as the
Administrative Agent may elect, but no such application shall be deemed to
have
been made by operation of law or otherwise until actually made by the
Administrative Agent. The Borrowers shall furnish the Administrative Agent
with
bills for the charges for which such escrows are required promptly upon the
Borrowers’ receipt thereof. If at any time the amount in escrow with the
Administrative Agent, together with amounts to be deposited by the Borrowers
before such charges are payable, is insufficient to pay such charges, the
Borrowers shall deposit any deficiency with the Administrative Agent immediately
upon demand. The Administrative Agent shall promptly pay such charges, when
the
amount in escrow with the Administrative Agent is sufficient to pay such
charges
and the Administrative Agent has received a xxxx for such charges, if
applicable.
31
Section
2.2 Termination
of the Commitments, Maturity Date and Repayment of Loans.
(a)Termination
of Term Loan Commitments.
Outstanding Term Loan Commitments in an amount equal to the amount of any
Term
Loan actually advanced shall terminate on the date of such advance (after
giving
effect to the Term Loan occurring on such date). The balance of all outstanding
Term Loan Commitments shall terminate on the six (6) month anniversary of
the
Closing Date.
(b) Maturity
Date and Repayment of the Term Loans.
Commencing on January 2, 2007, the Borrowers shall pay interest in arrears
on
the first day of each month until all amounts due under the Loan Documents
are
paid in full. If the first day of the month is not a Business Day, then the
applicable payment due hereunder shall be made on the first Business Day
of such
month. The Borrowers promise to repay all outstanding principal and accrued
but
unpaid interest, costs, expenses and fees under or related to the Term Loans
on
the Maturity Date.
The
Borrowers may extend the Maturity Date to the first anniversary of the Scheduled
Maturity Date (the “First
Extension Period”)
provided the following conditions are satisfied: (i) Borrowers have given
the Administrative Agent written notice (the “First
Extension Notice”)
of
such extension not less than thirty (30) days nor more than ninety (90) days
prior to the Scheduled Maturity Date; (ii) no Event of Default has occurred
and is continuing at the time of, or at any time after the delivery of, the
First Extension Notice; (iii) if the Consolidated Project Yield as of the
commencement of the First Extension Period would not be greater than or equal
to
10%, the Borrowers shall, prior to the commencement of the First Extension
Period, deposit with Administrative Agent, to be held in escrow (the
“Cash
Collateral Escrow”),
an
amount which, if applied against to the outstanding principal balance of
the
Term Loan would cause the Consolidated Project Yield as of the commencement
of
the First Extension Period to be equal to 10%; (iv) an Interest Rate Contract,
reasonably acceptable to the Administrative Agent, shall be in full force
and
effect and (v) there shall have been no material adverse change in the business
or financial condition of the Borrowers taken as a whole, which determination
shall be made in the sole and absolute discretion of the Administrative
Agent.
In
addition to the First Extension Period, the Borrowers may further extend
the
Loan for the twelve (12) month period ending on the second anniversary of
the
Scheduled Maturity Date (the “Second
Extension Period”),
provided the following conditions are satisfied: (i) Borrowers has given
the Administrative Agent written notice (the “Second
Extension Notice”)
of
such extension not less than thirty (30) days nor more than ninety (90) days
prior to the expiration of First Extension Period; (ii) no Event of
Default has occurred and is continuing at the time of, or at any time after
the
delivery of, the Second Extension Notice; (iii) if the Consolidated Project
Yield as of the commencement of the Second Extension Period would not be
greater
than or equal to 10%, the Borrowers shall, prior to the commencement of the
Second Extension Period, deposit into the Cash Collateral Escrow, an amount
which, if applied against to the outstanding principal balance of the Term
Loan
would cause the Consolidated Project Yield as of the commencement of the
Second
Extension Period to be equal to 10%; and (iv) an Interest Rate Contract,
reasonably acceptable to the Administrative Agent, shall be in full force
and
effect and (v) there shall have been no material adverse change in the business
or financial condition of the Borrowers taken as a whole, which determination
shall be made in the sole and absolute discretion of the Administrative
Agent.
Section
2.3 Optional
Prepayments.
The
Borrowers may not prepay any of the outstanding principal balance of the
Term
Loans in whole or in part prior to the 1st
anniversary of the
Closing Date other than as may be permitted pursuant to Section 8.4(d) in
respect of the sale of Westlake or Boynton or the Whittier Residence. From
and
after the first anniversary
of
32
the
Closing Date, the Borrowers may
prepay the outstanding principal amount of the Term Loans and other Obligations
in whole but not in part at any time,
without
premium or penalty, other than as set forth in Section
2.10(a).
Section
2.4 Mandatory
Payments.
(a)
Excess
Cash Flow. For any quarter ending after the 2nd
anniversary of the Closing Date, if the Consolidated Project Yield shall
be less
than 10% (for the relevant period as set forth in Section 5.1), the Borrowers
shall pay or cause to be paid to the Administrative Agent, within five (5)
Business Days after the last date Financial Statements can be delivered pursuant
to Section 6.1(b)
for such
quarter, an amount equal to 100% of the Excess Cash Flow for such quarter
and
continuing thereafter on the last Business Day of each calendar month, which
amount shall be held in the Cash Collateral Escrow; provided, however, if
the
Consolidated Project Yield shall, for two (2) consecutive quarters, be equal
to
or greater than 10% (for the relevant period as set forth in Section 5.1),
the
mandatory payment of Excess Cash Flow required pursuant to this Section 2.4
shall be suspended, but only for so long as the Consolidated Project Yield
shall
remain equal to or greater than 10% (for the relevant period as set forth
in
Section 5.1).
(c) Cash
Collateral Escrow.
All
funds held in the Cash Collateral Escrow shall be additional collateral to
secure the Borrowers Obligations hereunder. Notwithstanding the other provisions
of this Agreement, the Borrowers shall have the right, but not the obligation,
at any time when there shall exist a positive balance in the Cash Collateral
Escrow, to repay a portion of the outstanding principal balance of the Term
Loan, subject to Section
2.3,
up to
the amount held in the Cash Collateral Escrow. In such event, within ten
(10)
days of such repayment, Administrative Agent shall cause an amount equal
to the
amount so repaid to be released to the Borrowers from the Cash Collateral
Escrow.
(d) Asset
Sales and Property Loss Events. Upon
receipt on or after the Closing Date by any Borrower of Net Cash Proceeds
arising from (i) any
Transfer by any Borrower of any of its property other than Transfers of its
own
Equity Interests and Transfers of property permitted hereunder in reliance
upon
any of clauses
(a)
through
(c)
of
Section 8.4
or
(ii) any
Property Loss Event with respect to any property of any Borrower to the extent
resulting, in the aggregate with all other such Property Loss Events, in
the
receipt by any of them of Net Cash Proceeds in excess of $50,000,
such Borrower shall immediately pay or cause to be paid to the Administrative
Agent an amount equal to 100% of such Net Cash Proceeds; provided,
however,
that,
in the case of clause
(ii)
above,
upon any such receipt, as long as no Event of Default shall be continuing,
any
Borrower may make Permitted Reinvestments with such Net Cash Proceeds and
such
Borrower shall not be required to make or cause such payment to the extent
(x)
such Net Cash Proceeds are intended to be or are actually used to make Permitted
Reinvestments and (y) on each Reinvestment Prepayment Date for such Net Cash
Proceeds, such Borrower shall pay or cause to be paid to the Administrative
Agent an amount equal to the Reinvestment Prepayment Amount applicable to
such
Reinvestment Prepayment Date.
(e) Application
of Payments.
Any
payments made to the Administrative Agent pursuant to this Section 2.4
shall be
applied to the Obligations in accordance with Section 2.6(b).
33
Section
2.5 Interest.
(a)
Rate. The Term Loans and the outstanding amount of all other Obligations
(other
than pursuant to Secured Hedging Agreements) shall bear interest, in the
case of
the Term Loans, on the unpaid principal amount thereof from the date such
Term
Loan is made, and, in the case of such other Obligations, from the date such
other Obligations are due and payable until, in each case, paid in full,
except
as otherwise provided in clause (c) below,
as
follows: (i) in the case of Eurodollar Rate Loans, at a rate per annum equal
to
the sum of the Eurodollar Rate plus the Applicable Margin, each as in effect
for
the applicable Interest Period, and (iii) in the case of other Obligations,
at a
rate per annum equal to the Base Rate as in effect from time to
time.
(b) Default
Interest.
Notwithstanding the rates of interest specified in clause (a)
above or
elsewhere in any Loan Document, effective immediately upon (A) the occurrence
of
any Event of Default under Section 9.1(e)(ii)
or (B)
the delivery of a notice by the Administrative Agent at the direction of
the
Required Lenders to any Borrower during the continuance of any other Event
of
Default and, in each case, for as long as such Event of Default shall be
continuing, the principal balance of all Obligations (including any Obligation
that bears interest by reference to the rate applicable to any other Obligation)
then due and payable shall bear interest at a rate that is 4% per annum in
excess of the interest rate applicable to such Obligations from time to time,
payable on demand or, in the absence of demand, on the date that would otherwise
be applicable.
(c) Additional
Fees.
The
Borrowers shall pay to the Administrative Agent and its Related Persons its
reasonable and customary fees and expenses in connection with any payments
made
pursuant to Section 2.10(a)
(Breakage
Costs)
and
have agreed to pay the additional fees described in the Fee Letter.
Section
2.6 Application
of Payments.
(a)
Application
of Voluntary Prepayments. Unless otherwise provided in this Section 2.6 or
elsewhere in any Loan Document, all payments and any other amounts received
by
the Administrative Agent from or for the benefit of the Borrowers shall be
applied to repay the Obligations the Borrowers designate, and shall be paid
pro
rata by the Administrative Agent to the Lenders.
(b) Application
of Mandatory Prepayments.
Subject
to the provisions of clause
(c)
below
with respect to the application of payments during the continuance of an
Event
of Default, any payment made by any Borrower to the Administrative Agent
pursuant to Section 2.4
or any
other prepayment of the Obligations required to be applied in accordance
with
this clause
(b)
shall be
applied to repay the outstanding principal balance of the Term
Loans.
(c) Application
of Payments During an Event of Default.
Each
Borrower hereby irrevocably waives, and agrees to cause each other Borrower
and
each other Borrower to waive, the right to direct the application during
the
continuance of an Event of Default of any and all payments in respect of
any
Obligation and any proceeds of Collateral and agrees that, during the
continuance of an Event of Default, notwithstanding the provisions of
clause (a)
above,
the Administrative Agent may, and, upon either (A) the direction of the Required
Lenders or (B) the termination of any Commitment or the acceleration of any
Obligation pursuant to Section 9.2
as a
result of such Event of Default, shall, apply all payments in respect of
any
Obligation, all funds on deposit in any escrow established pursuant to
Section
2.1(b)
and all
other proceeds of Collateral (i)
first,
to pay
Obligations in respect of any cost or expense reimbursements, fees or
indemnities then due to the Administrative Agent,
(ii)
second,
to pay
Obligations in respect of
34
any
cost
or expense reimbursements, fees or indemnities then due to the
Lenders,
(iii)
third,
to pay
interest then due and payable in respect of the Loans,
and
(iv) fourth,
to
repay the outstanding principal amounts of the Loans, (v) fifth,
to pay
amounts owing with respect to Secured Hedging Agreements and
(vi)
sixth,
to the
ratable payment of all other Obligations.
(d) Application
of Payments Generally.
All
repayments of Term Loans shall be applied first,
to
repay such Loans outstanding as Base Rate Loans and then,
to
repay such Loans outstanding as Eurodollar Rate Loans. All repayments of
Term
Loans shall be applied to reduce the remaining installments of such outstanding
principal amounts of the Term Loans in the order of their maturities. Any
priority level set forth in this Section 2.6
that
includes interest shall include all such interest, whether or not accruing
after
the filing of any petition in bankruptcy or the commencement of any insolvency,
reorganization or similar proceeding, and whether or not a claim for post-filing
or post-petition interest is allowed in any such proceeding.
Section
2.7 Payments
and Computations.
(a)
Procedure. The Borrowers shall make each payment under any Loan Document
not
later than 2:00 p.m. on the day when due to the Administrative Agent by
wire transfer to the following account (or at such other account or by such
other means to such other address as the Administrative Agent shall have
notified the Borrowers in writing within a reasonable time prior to such
payment) in immediately available Dollars and without setoff or
counterclaim:
ABA
No.
000-000-000
Account
Number 000-000-00
Account
Name: GECC/Healthcare Financial Collections Depository,
Reference:
BREA Emeritus LLC
The
Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest
or
fees to the Lenders, in accordance with the application of payments set forth
in
Section 2.6.
The
Lenders shall make any payment under any Loan Document in immediately available
Dollars and without setoff or counterclaim.
(b) Computations
of Interests and Fees.
All
computations of interest and of fees shall be made by the Administrative
Agent
on the basis of a year of 360 days (or, in the case of Base Rate Loans whose
interest rate is calculated based on the rate set forth in clause
(a)
of the
definition of “Base Rate”, 365/366 days), in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest and fees are payable. Each determination of
an
interest rate or the amount of a fee hereunder shall be made by the
Administrative Agent (including determinations of a Eurodollar Rate or Base
Rate
in accordance with the definitions of “Eurodollar Rate” and “Base Rate”,
respectively) and shall be conclusive, binding and final for all purposes,
absent manifest error.
(c) Payment
Dates.
Whenever any payment hereunder shall be stated to be due on a day other than
a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day without any increase in such payment as a result
of
additional interest or fees; provided,
however,
that
such interest and fees shall continue accruing as a result of such extension
of
time.
35
(d) Advancing
Payments.
Unless
the Administrative Agent shall have received notice from the Borrowers to
the
Lenders prior to the date on which any payment is due hereunder that such
Borrower will not make such payment in full, the Administrative Agent may
assume
that the Borrowers has made such payment in full to the Administrative Agent
on
such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to
the
amount then due such Lender. If and to the extent that the Borrowers shall
not
have made such payment in full to the Administrative Agent, each Lender shall
repay to the Administrative Agent on demand such amount distributed to such
Lender together with interest thereon (at the Federal Funds Rate for the
first
Business Day and thereafter, at the rate applicable to Base Rate Loans) for
each
day from the date such amount is distributed to such Lender until the date
such
Lender repays such amount to the Administrative Agent.
Section
2.8 Evidence
of Debt.
(a)
Records of Lenders. Each Lender shall maintain in accordance with its usual
practice accounts evidencing Indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the
amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
In
addition, each Lender having sold a participation in any of its Obligations
or
having identified an SPV as such to the Administrative Agent, acting as agent
of
the Borrowers solely for this purpose and solely for tax purposes, shall
establish and maintain at its address referred to in Section 11.11 (or at
such other address as such Lender shall notify the Borrowers) a record of
ownership, in which such Lender shall register by book entry (A) the name
and
address of each such participant and SPV (and each change thereto, whether
by
assignment or otherwise) and (B) the rights, interest or obligation of each
such participant and SPV in any Obligation, in any Commitment and in any
right
to receive any payment hereunder.
(b) Records
of Administrative Agent.
The
Administrative Agent, acting as agent of the Borrowers solely for tax purposes
and solely with respect to the actions described in this Section 2.8,
shall
establish and maintain at its address referred to in Section 11.11
(or at
such other address as the Administrative Agent may notify the Borrowers)
(A) a
record of ownership (the “Register”)
in
which the Administrative Agent agrees to register by book entry the interests
(including any rights to receive payment hereunder) of the Administrative
Agent,
each Lender and any assignment of any such interest, obligation or right
and
(B) accounts in the Register in accordance with its usual practice in which
it shall record (1) the names and addresses of the Lenders (and each change
thereto pursuant to Section 2.12
(Substitution
of Lenders)
and
Section 11.2
(Assignments
and Participations; Binding Effect)),
(2)
the Commitments of each Lender, (3) the amount of each Loan and each funding
of
any participation described in clause
(A)
above,
for Eurodollar Rate Loans, the Interest Period applicable thereto, (4) the
amount of any principal or interest due and payable or paid, and (5) any
other
payment received by the Administrative Agent from the Borrowers and its
application to the Obligations.
(c) Registered
Obligations.
Notwithstanding anything to the contrary contained in this Agreement, the
Loans
(including any Notes evidencing such Loans) are registered obligations, the
right, title and interest of the Lenders and their assignees in and to such
Loans shall be transferable only upon notation of such transfer in the Register
and no assignment thereof shall be effective until recorded therein. This
Section 2.8
and
Section 11.2
shall be
construed so that the Loans are at all times maintained in “registered
form”
within
the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any
related regulations (and any successor provisions).
36
(d) Prima
Facie Evidence.
The
entries made in the Register and in the accounts maintained pursuant to
clauses
(a)
and
(b)
above
shall, to the extent permitted by applicable Requirements of Law, be prima
facie
evidence of the existence and amounts of the obligations recorded therein;
provided,
however,
that no
error in such account and no failure of any Lender or the Administrative
Agent
to maintain any such account shall affect the obligations of any Borrower
to
repay the Loans in accordance with their terms. In addition, the Borrowers,
the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender, as applicable, for all purposes of
this
Agreement. Information contained in the Register with respect to any Lender
shall be available for access by each Borrower, the Administrative Agent,
and
such Lender at any reasonable time and from time to time upon reasonable
prior
notice. No Lender shall, in such capacity, have access to or be otherwise
permitted to review any information in the Register other than information
with
respect to such Lender unless otherwise agreed by the Administrative
Agent.
(e) Notes.
Upon
any Lender’s request, made through the Administrative Agent, the Borrowers shall
promptly execute and deliver Notes to such Lender evidencing the Loans of
such
Lender and substantially in the form of Exhibit E;
provided,
however,
that
only one Note shall be issued to each Lender, except (i) to an existing Lender
exchanging existing Notes to reflect changes in the Register relating to
such
Lender, in which case the new Notes delivered to such Lender shall be dated
the
date of the original Notes and the Note being replaced shall be voided and
returned to the Borrowers, and (ii) in the case of loss, destruction or
mutilation of existing Notes and similar circumstances, provided that such
Lender provides Borrowers with a lost note affidavit and indemnity related
thereto.
Each
Note, if issued, shall only be issued as means to evidence the right, title
or
interest of a Lender or a registered assignee in and to the related Loan,
as set
forth in the Register, and in no event shall any Note be considered a bearer
instrument or obligation.
Section
2.9 Suspension
of Eurodollar Rate.
Notwithstanding any provision to the contrary in this Article II, the
following shall apply:
(a) Interest
Rate Unascertainable, Inadequate or Unfair.
In the
event that (A) the Administrative Agent determines that adequate and fair
means
do not exist for ascertaining the applicable interest rates by reference
to
which the Eurodollar Rate is determined or (B) the Required Lenders notify
the
Administrative Agent that the Eurodollar Rate for any Interest Period will
not
adequately reflect the cost to the Lenders of making or maintaining such
Loans
for such Interest Period, the Administrative Agent shall promptly so notify
the
Parent and the Lenders, whereupon the obligation of each Lender to make or
to
continue Eurodollar Rate Loans shall be suspended as provided in clause
(c)
below
until
the
Administrative Agent shall notify the Parent that the Required Lenders have
reasonably determined that the circumstances causing such suspension no longer
exist.
(b) Illegality.
If any
Lender determines that the introduction of, or any change in or in the
interpretation of, any Requirement of Law after the date of this Agreement
shall
make it unlawful, or any Governmental Authority shall assert that it is
unlawful, for any Lender or its applicable lending office to make Eurodollar
Rate Loans or to continue to fund or maintain Eurodollar Rate Loans, then,
on
notice thereof and demand therefor by such Lender to the Borrowers through
the
Administrative Agent, the obligation of such Lender to make or to continue
Eurodollar Rate Loans shall be suspended as provided in clause
(c)
below
until such
37
Lender
shall, through the Administrative Agent, notify the Borrowers that it has
determined that it may lawfully make Eurodollar Rate Loans.
(c) Effect
of Suspension.
If the
obligation of any Lender to make or to continue Eurodollar Rate Loans is
suspended, (A) such Lender shall make a Base Rate Loan at any time such Lender
would otherwise be obligated to make a Eurodollar Rate Loan, (B) the Borrowers
may revoke any pending Notice of Borrowing to make any Eurodollar Rate Loan
and
(C) each existing Eurodollar Rate Loan of such Lender shall automatically
and
immediately (or, in the case of any suspension pursuant to clause
(a)
above,
on the last day of the current Interest Period thereof) be converted into
a Base
Rate Loan.
Section
2.10 Breakage
Costs; Increased Costs; Capital Requirements.
(a)
Breakage Costs.
The
Borrowers shall compensate each Lender, upon demand from such Lender to the
Borrowers (with copy to the Administrative Agent), for all Liabilities
(including, in each case, those incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to prepare
to
fund, to fund or to maintain the Eurodollar Rate Loans of such Lender to
the
Borrowers but excluding any loss of the Applicable Margin on the relevant
Loans)
that such Lender may incur (A) to the extent any Eurodollar Rate Loan is
paid
(whether through a scheduled, optional or mandatory prepayment) or converted
to
a Base Rate Loan (including because of Section 2.09) on a date that is not
the last day of the applicable Interest Period or (B) as a consequence of
any failure by the Borrowers to repay Eurodollar Rate Loans when required
by the
terms hereof.
For
purposes of this
clause
(a), each Lender shall be deemed to have funded each Eurodollar Rate Loan
made
by it using a matching deposit or other borrowing in the London interbank
market.
(b) Increased
Costs.
If at
any time any Lender reasonably determines that, after the date hereof, the
adoption of, or any change in or in the interpretation, application or
administration of, or compliance with, any Requirement of Law (other than
any
imposition or increase of Eurodollar Reserve Requirements) from any Governmental
Authority shall have the effect of (i) increasing the cost to such Lender
of
making, funding or maintaining any Eurodollar Rate Loan or to agree to do
so or
of participating, or agreeing to participate, in extensions of credit or
(ii)
imposing any other cost to such Lender with respect to compliance with its
obligations under any Loan Document, then, upon demand by such Lender (with
copy
to the Administrative Agent), the Borrowers shall pay to the Administrative
Agent for the account of such Lender amounts sufficient to compensate such
Lender for such increased cost.
(c) Increased
Capital Requirements.
If at
any time any Lender determines that, after the date hereof, the adoption
of, or
any change in or in the interpretation, application or administration of,
or
compliance with, any Requirement of Law (other than any imposition or increase
of Eurodollar Reserve Requirements) from any Governmental Authority, regarding
capital adequacy, reserves, special deposits, compulsory loans, insurance
charges against property of, deposits with or for the account of, Obligations
owing to, or other credit extended or participated in by, any Lender or any
similar requirement (in each case other than any imposition or increase of
Eurodollar Reserve Requirements) shall have the effect of reducing the rate
of
return on the capital of such Lender as a consequence of its obligations
under
or with respect to any Loan Document to a level below that which, taking
into
account the capital adequacy policies of such Lender, such Lender could have
reasonably achieved but for such adoption or change, then, upon demand from
time
to time by such Lender (with a copy of such demand to the
38
Administrative
Agent), the Borrowers shall pay to the Administrative Agent for the account
of
such Lender amounts sufficient to compensate such Lender for such
reduction.
(d) Compensation
Certificate.
Each
demand for compensation under this Section 2.10
shall be
accompanied by a certificate of the Lender claiming such compensation, setting
forth the amounts to be paid hereunder, which certificate shall be conclusive,
binding and final for all purposes, absent manifest error. In determining
such
amount, such Lender may use any reasonable averaging and attribution
methods.
Section
2.11 Taxes.
(a)
Payments Free and Clear of Taxes. Except as otherwise provided in this
Section 2.11, each payment by any Borrower under any Loan Document shall be
made free and clear of all present or future taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto (and without
deduction for any of them) (collectively, but excluding the taxes set forth
in
clauses (i) and (ii) below, the “Taxes”) other than for (i) taxes measured by
net income (including branch profits taxes) and franchise taxes imposed in
lieu
of net income taxes, in each case imposed on any Secured Party as a result
of a
present or former connection between such Secured Party and the jurisdiction
of
the Governmental Authority imposing such tax or any political subdivision
or
taxing authority thereof or therein (other than such connection arising solely
from any Secured Party having executed, delivered or performed its obligations
or received a payment under, or enforced, any Loan Document) or (ii) taxes
that
are directly attributable to either (a) the failure (other than as a result
of a
change in any Requirement of Law that occurs after the date a Secured Party
becomes a “Secured Party” under this Agreement) by any Secured Party to deliver
the documentation required to be delivered by a Non-U.S. Lending Party claiming
to be exempt from, or subject to a reduced rate for, United States withholding
tax, pursuant to clause (f) below or (b) if the Non-U.S. Lender indicates
in the
documentation that they are only claiming a reduced rate for United States
withholding, taxes up to the claimed rate of withholding with respect to
the
type of income for which the reduced rate is claimed.
(b) Gross-Up.
If any
Taxes shall be required by law to be deducted from or in respect of any amount
payable under any Loan Document (other than any Secured Hedging Agreement)
to
any Secured Party (i) such amount shall be increased as necessary to ensure
that, after all required deductions for Taxes are made (including deductions
applicable to any increases to any amount under this Section 2.11),
such
Secured Party receives the amount it would have received had no such deductions
been made, (ii) the Borrowers shall make such deductions, (iii) the Borrowers
shall timely pay the full amount deducted to the relevant taxing authority
or
other authority in accordance with applicable Requirements of Law and
(iv) within thirty (30) days after such payment is made, the Borrowers
shall deliver to the Administrative Agent an original or certified copy of
a
receipt evidencing such payment; provided,
however,
that no
such increase shall be made with respect to, and no Borrower shall be required
to indemnify any such Secured Party pursuant to clause
(d)
below for,
withholding taxes to the extent that the obligation to withhold amounts existed
on the date that such Secured Party became a “Secured Party” under this
Agreement in the capacity under which such Secured Party makes a claim under
this clause
(b),
except
in each case to the extent such Secured Party is a direct or indirect assignee
(other than pursuant to Section 2.12
(Substitution
of Lenders))
of any
other Secured Party that was entitled, at the time the assignment of such
other
Secured Party became effective, to receive additional amounts under this
clause
(b).
39
(c) Other
Taxes.
In
addition, the Borrowers agree to pay, and authorize the Administrative Agent
to
pay in their names, any stamp, documentary, excise or property tax, transfer,
mortgage, recording charges or similar levies imposed by any applicable
Requirement of Law or Governmental Authority and all Liabilities with respect
thereto (including by reason of any delay in payment thereof), in each case
arising from the execution, delivery or registration of, or otherwise with
respect to, any Loan Document or any transaction contemplated therein
(collectively, “Other
Taxes”).
Within 30 days after the date of any payment of Taxes or Other Taxes by any
Borrower, such Borrower shall furnish to the Administrative Agent, at its
address referred to in Section 11.11,
the
original or a certified copy of a receipt evidencing payment
thereof.
(d) Indemnification.
The
Borrowers shall reimburse and indemnify, within thirty (30) days after receipt
of demand therefor from the Administrative Agent, each Secured Party for
all
Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.11)
actually paid by such Secured Party and any Liabilities arising therefrom
or
with respect thereto.
A
certificate of the Secured Party (or of the Administrative Agent on behalf
of
such Secured Party) claiming any compensation under this clause
(d),
setting
forth the amounts to be paid thereunder and delivered to the Borrowers with
copy
to the Administrative Agent, shall be conclusive, binding and final for all
purposes, absent manifest error.
(e) Mitigation.
Any
Lender claiming any additional amounts payable pursuant to this Section 2.11
shall
use its reasonable efforts (consistent with its internal policies and
Requirements of Law) to change the jurisdiction of its lending office if
such a
change would reduce any such additional amounts (or any similar amount that
may
thereafter accrue) and would not, in the reasonable determination of such
Lender, be otherwise disadvantageous to such Lender.
(f) Tax
Forms.
(i)
Each Non-U.S. Lender Party shall (w) on or prior to the date such Non-U.S.
Lender Party becomes a “Non-U.S. Lender Party” hereunder, (x) on or prior
to the date on which any such form or certification expires or becomes obsolete,
(y) after the occurrence of any event requiring a change in the most recent
form
or certification previously delivered by it pursuant to this clause (i)
and
(z)
from
time to time if requested by any Borrower or the Administrative Agent (or,
in
the case of a participant or SPV, the relevant Lender), provide the
Administrative Agent and the Borrowers (or, in the case of a participant
or SPV,
the relevant Lender) with two completed originals of each of the following,
as
applicable:
(A)
Forms W-8ECI (claiming exemption from U.S. withholding tax because the income
is
effectively connected with a U.S. trade or business), W-8BEN (claiming exemption
from U.S. withholding tax under an income tax treaty) and/or W-8IMY (claiming
exemption from U.S. withholding tax for any portion of any sums paid or payable
to such Non-U.S. Lender Party under any of the Loan Documents for which it
does
not act or ceases to act for its own account with respect to thereto) or
any
successor forms,
(B) in
the case of a Non-U.S. Lender Party claiming exemption under Sections 871(h)
or
881(c) of the Code, Form W-8BEN (claiming exemption from U.S. withholding
tax
under the portfolio interest exemption) or any successor form
and a
certificate in form and substance acceptable to the Administrative Agent
and the
Borrowers that such Non-U.S. Lender Party is not (1) a “bank” within the meaning
of Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of any
Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
or (C) any other applicable document prescribed by the IRS certifying as
to the
entitlement of such
40
Non-U.S.
Lender Party to such exemption from United States withholding tax with respect
to all payments to be made to such Non-U.S. Lender Party under the Loan
Documents. Unless the Borrowers and the Administrative Agent have received
forms
or other documents satisfactory to them indicating that payments under any
Loan
Document to or for a Non-U.S. Lender Party are not subject to United States
withholding tax, the Borrowers and the Administrative Agent shall withhold
amounts required to be withheld by applicable Requirements of Law from such
payments at the applicable statutory rate.
(i) Each
U.S.
Lender Party shall (A) on or prior to the date such U.S. Lender Party becomes
a
“U.S. Lender Party” hereunder, (B) on or prior to the date on which any such
form or certification expires or becomes obsolete, (C) after the occurrence
of
any event requiring a change in the most recent form or certification previously
delivered by it pursuant to this clause
(f)
and (D)
from time to time if requested by any Borrower or the Administrative Agent
(or,
in the case of a participant or SPV, the relevant Lender), provide the
Administrative Agent and the Borrowers (or, in the case of a participant
or SPV,
the relevant Lender) with two completed originals of Form W-9 (certifying
that
such U.S. Lender Party is entitled to an exemption from U.S. backup withholding
tax) or any successor form.
(ii) Each
Lender having sold a participation in any of its Obligations or identified
an
SPV as such to the Administrative Agent shall collect from such participant
or
SPV the documents described in this clause
(f)
and
provide them to the Administrative Agent.
Section
2.12 Substitution
of Lenders.
(a)
Substitution Right. In the event that any Lender that is not an Affiliate
of the
Administrative Agent (an “Affected Lender”) (i) makes a claim under clause (b)
(Increased Costs) or (c) (Increased Capital Requirements) of Section 2.10,
(ii) notifies the Parent pursuant to Section 2.9(b) (Illegality) that it
becomes illegal for such Lender to continue to fund or make any Eurodollar
Rate
Loan, (iii) makes a claim for payment pursuant to Section 2.11(b) (Taxes),
(iv) becomes a Non-Funding Lender or (v) does not consent to any amendment,
waiver or consent to any Loan Document for which the consent of the Required
Lenders is obtained but that requires the consent of other Lenders, the
Borrowers may either pay in full such Affected Lender without premium or
penalty
with respect to amounts due with the consent of the Administrative Agent
or
substitute for such Affected Lender any Lender or any Affiliate or Approved
Fund
of any Lender or any other Person acceptable (which acceptance shall not
be
unreasonably withheld or delayed) to the Administrative Agent (in each case,
a
“Substitute Lender”).
Upon
Borrowers’ request, the Administrative Agent shall solicit and obtain a
Substitute Lender.
(b) Procedure.
To
substitute such Affected Lender or pay in full the Obligations owed to such
Affected Lender, the Borrowers shall deliver a notice to the Administrative
Agent and such Affected Lender.
The
effectiveness of such payment or substitution shall be subject to the delivery
to the Administrative Agent by the Borrowers (or, as may be applicable in
the
case of a substitution, by the Substitute Lender) of (i) payment for the
account
of such Affected Lender, of, to the extent accrued through, and outstanding
on,
the effective date for such payment or substitution, all Obligations owing
to
such Affected Lender (including interest through the end of the applicable
Interest Period that will be owed because of such payment), and (ii) in the
case
of a substitution, (A) except in the event the Affected Lender
41
is
a
Non-Funding Lender, payment of the assignment fee set forth in Section 11.2(c)
and (B)
an assumption agreement in form and substance reasonably satisfactory to
the
Administrative Agent whereby the Substitute Lender shall, among other things,
agree to be bound by the terms of the Loan Documents and assume the Commitment
of the Affected Lender.
(c) Effectiveness.
Upon
satisfaction of the conditions set forth in clause
(b)
above,
the Administrative Agent shall record such substitution or payment in the
Register, whereupon (i) in the case of any payment in full, such Affected
Lender’s Commitments shall be terminated and (ii) in the case of any
substitution, (A) the Affected Lender shall sell and be relieved of, and
the
Substitute Lender shall purchase and assume, all rights and claims of such
Affected Lender under the Loan Documents, except that the Affected Lender
shall
retain such rights expressly providing that they survive the repayment of
the
Obligations and the termination of the Commitments, (B) the Substitute
Lender shall become a “Lender”
hereunder having a Commitment in the amount of such Affected Lender’s Commitment
and (C) the Affected Lender shall execute and deliver to the Administrative
Agent an Assignment to evidence such substitution and deliver any Note in
its
possession; provided,
however,
that
the failure of any Affected Lender to execute any such Assignment or deliver
any
such Note shall not render such sale and purchase (or the corresponding
assignment) invalid.
ARTICLE
III
CONDITIONS
TO LOANS
Section
3.1 Conditions
Precedent to Funding.
The
obligation of each Lender to make any advance under the Term Loan is subject
to
the satisfaction or due waiver by Administrative Agent and each Lender of
each
of the following conditions precedent on or before the Closing Date and on
each
Permitted Acquisition Closing Date, as applicable:
(a) Certain
Documents.
The
Administrative Agent and MLC shall have received on or prior to the Closing
Date
or the applicable Permitted Acquisition Closing Date, each of the following,
each dated the Closing Date or the applicable Permitted Acquisition Closing
Date, unless otherwise agreed by the Administrative Agent and MLC, in form
and
substance satisfactory to the Administrative Agent and each Lender:
(i) this
Agreement duly executed by each Borrower and, for the account of each Lender
having requested the same by notice to the Administrative Agent and the
Borrowers received by each at least 1 Business Days prior to the Closing
Date
(or such later date as may be agreed to by the Borrowers), Notes conforming
to
the requirements set forth in Section 2.8(e);
(ii) the
Security Agreement, duly executed by each Borrower, together with (A) copies
of
UCC, Intellectual Property and other appropriate search reports and of all
effective prior filings listed therein, together with evidence of the
termination of such prior filings and other documents with respect to the
priority of the security interest of the Administrative Agent in the Collateral,
in each case as may be reasonably requested by the Administrative Agent,
(B) all
documents representing all Equity Interests being pledged pursuant to such
Security Agreement and related undated powers or endorsements duly executed
in
blank and (C) all Control Agreements that, in the reasonable judgment of
the
Administrative Agent, are required for the Borrowers to
42
comply
with the Loan Documents as of the Closing Date, each duly executed by, in
addition to the applicable Borrower, the applicable financial institution;
(iii) Mortgages,
duly executed by each respective Borrower, for each Facility (except as may
be
otherwise agreed to by the Administrative Agent), together with all Mortgage
Supporting Documents relating thereto;
(iv) The
Limited Recourse Guaranty, duly executed by Emeritus;
(v) One
or
more Environmental Indemnities, duly executed by Emeritus and the
Borrowers;
(vi) The
state
of title to the Real Property shall be satisfactory to the Administrative
Agent
and the Mortgages shall be insured by a mortgagee title insurance policy
(or
binding commitment therefor) in form and substance and from a title insurer,
all
reasonably acceptable to the Administrative Agent.
Except
for variances approved by the Administrative Agent prior to the Closing Date
(which approval shall be evidenced by the Administrative Agent’s execution and
delivery of this Agreement), on or before the Closing Date, such title insurance
policy shall be on an American Land Title Association (“ALTA”)
form
designated by the
Administrative
Agent, but subject to the local customs in the jurisdiction in which such
Real
Property exists, shall specifically contain no exception as to survey matters
or
creditors rights, must contain affirmative coverage against mechanics’,
contractors’, suppliers’ and/or materialmen’s liens, filed or unfiled, must
affirmatively insure that the security instrument is a valid first lien against
the fee simple, marketable estate, insuring the
Administrative
Agent for the benefit of Lenders for a sum not less than the maximum principal
amount of all financing hereunder and must contain such endorsements as may
be
required by the
Administrative
Agent (including, but not limited to and subject to availability in the
jurisdiction in which the Real Property is located, endorsements covering
zoning
(ALTA 3.1 with parking), variable interest rates, no violations of covenants,
conditions and restrictions of record, street address, no usury violation,
environmental liens, tie-in, access, contiguity, encroachment, tax parcel,
doing
business, mortgage tax, first loss and last dollar). Fee simple title to
the
Real Property and to the fixtures, equipment, furniture and personal property
encumbered by the Loan Documents shall be marketable, and free and clear
of all
defects, liens, encumbrances, security interests, assessments, restrictions
and
easements which are not acceptable to the
Administrative
Agent, in the
Administrative
Agent’s reasonable discretion. If access to the Real Property is by means of
easements or leases, said easements or leases shall be reasonably satisfactory
in form and substance to the
Administrative
Agent, shall be insured under the mortgagee’s title insurance policy issued to
the
Administrative
Agent as part of the insured estate and shall not be subject to any prior
liens
or encumbrances. A search of the state and local public records shall disclose
no conditional sales contracts, chattel mortgages, leases of personalty,
financing statements or title retention agreements filed and/or recorded
against
any Borrower or the property other than liens which are expressly permitted
under this Agreement.
(vii) The
Administrative Agent shall have received the following, all in form and
substance reasonably satisfactory to the Administrative Agent and MLC in
its
sole and absolute discretion:
43
(A) such
property appraisals, property As-Built Surveys, environmental reports, physical
and structural inspection reports and other third party reports as the
Administrative Agent shall deem necessary or appropriate;
(B) evidence,
in the form of letters from municipalities, if available, As-Built Surveys,
or
other reasonable evidence , that the Real Property and all improvements thereon
comply in all material respects with applicable codes, regulations and
ordinances, are zoned for their current use, are adequately served by public
utilities, are completed free of mechanics and materialmen’s liens, are not the
subject to any pending litigation, are not the subject of any pending
condemnation proceeding and have not been materially damaged by fire or other
casualty;
(C) copies
of
all Leases pertaining to the Real Property;
(D) copies
of
all recent real estate tax bills, with proof of payment if due, together
with
evidence that each parcel of Real Property is a separately identifiable tax
lot;
and
(E) evidence,
which evidence may be provided in the form of surveys required under
clause
(A)
above,
reasonably satisfactory to the
Administrative
Agent that the improvements on the Real Property are not within a special
flood
hazard area and is not eligible for flood insurance under the U. S. Flood
Disaster Protection Act of 1973, as amended.
(viii) duly
executed favorable opinions of counsel to the Borrowers in New York and in
each
state in which a Facility being acquired is located, each addressed to the
Administrative Agent and the Lenders and addressing such matters as the
Administrative Agent may reasonably request including a non-consolidation
opinion;
(ix) a
copy of
each Constituent Document of each Borrower that is on file with any Governmental
Authority in any jurisdiction, certified as of a recent date by such
Governmental Authority or a Responsible Officer, together with, if applicable,
certificates from such Governmental Authority attesting to the good standing
of
such Borrower in such jurisdiction and each other jurisdiction where such
Borrower is qualified to do business as a foreign entity or where such
qualification is necessary (and, if appropriate in any such jurisdiction,
related tax certificates);
(x) a
certificate of a Responsible Officer of each Borrower in charge of maintaining
books and records of such Borrower certifying as to (A) the names and signatures
of each Responsible Officer of such Borrower authorized to execute and deliver
any Loan Document, (B) the Constituent Documents of such Borrower attached
to
such certificate are complete and correct copies of such Constituent Documents
as in effect on the date of such certification (or, for any such Constituent
Document delivered pursuant to clause
(v)
above,
that there have been no changes from such Constituent Document so delivered)
and
(C) if applicable, the resolutions of such Borrower’s board
44
of
directors or other appropriate governing body approving and authorizing the
execution, delivery and performance of each Loan Document to which such Borrower
is a party;
(xi) a
certificate of a Responsible Officer of each Borrower to the effect that
(A)
after giving effect to the Term Loan, (1) the representations and warranties
set
forth in any Loan Document are true and correct in all material respects
as of
the Closing Date or the Permitted Acquisition Closing Date, and (2) no Event
of
Default shall be continuing, and (B) the Borrowers taken as a whole are
Solvent after giving effect to the Term Loans, the application of the proceeds
thereof in accordance with Section 7.9
and the
payment of all estimated legal, accounting and other fees and expenses related
hereto and thereto; and
(xii) insurance
certificates in form and substance satisfactory to the Administrative Agent
demonstrating that the insurance policies required by Section 7.5
are in
full force and effect and have all endorsements required by such Section 7.5.
(xiii) such
other documents and information with respect to the Facilities or the Borrowers
as any Lender through the Administrative Agent may reasonably
request.
(b) Escrows,
Reserves, Fees and Expenses.
Borrowers shall have funded all escrows and reserves and paid to the
Administrative Agent, for the account of the Administrative Agent, its Related
Persons or any Lender, as the case may be, all fees and all reimbursements
of
costs or expenses, in each case due and payable under any Loan
Document.
(c) Consents.
Each
Borrower shall have received all consents and authorizations required pursuant
to any material Contractual Obligation with any other Person and shall have
obtained all Permits of, and effected all notices to and filings with, any
Governmental Authority, in each case, as may be necessary in connection with
the
consummation of the transactions contemplated in any Loan Document or Related
Document.
(d) Related
Transactions.
The
Administrative Agent shall be satisfied that, (i) subject only the funding
of
the Term Loans hereunder and the use of proceeds thereof, (A) as certified
to
the Administrative Agent, all conditions precedent to the consummation of
the
applicable Acquisition will have been satisfied or duly waived with the consent
of the Administrative Agent and such Acquisition will have been consummated
in
accordance with the Acquisition Agreement and (B) the applicable Collateral
shall be free and clear of all Liens other than Liens permitted pursuant
to
Section
8.2,
and
(ii) the Required Investors’ Equity Investment will have been made.
Section
3.2 Determinations
of Initial Borrowing Conditions.
For
purposes of determining compliance with the conditions specified in
Section 3.1, each Lender shall be deemed to be satisfied with each document
and each other matter required to be satisfactory to such Lender unless,
prior
to the Closing Date, the Permitted Acquisition Closing Date, or any subsequent
advance under the Term Loan, the Administrative Agent receives notice from
such
Lender specifying such Lender’s objections and such Lender has not made
available its Pro Rata Share of the Term Loan to be made on such
date.
45
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
To
induce
the Lenders and the Administrative Agent to enter into the Loan Documents,
each
Borrower represents and warrants to each of them each of the following on
and as
of the Closing Date, on the Restatement Closing Date and on and as of each
date
on which a Permitted Acquisition shall occur, the following:
Section
4.1 Corporate
Existence; Compliance with Law.
(a) Each
Borrower (i) is duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its organization, (ii) is duly qualified to do
business as a foreign entity and in good standing under the laws of each
jurisdiction where such qualification is necessary, except where the failure
to
be so qualified or in good standing would not, in the aggregate, have a Material
Adverse Effect, (iii) has all requisite power and authority and the legal
right to own, pledge, mortgage and operate its property, to lease or sublease
any property it operates under lease or sublease and to conduct its business
as
now or currently proposed to be conducted, (iv) is in compliance with its
Constituent Documents, (v) is in compliance with all applicable Requirements
of
Law, except, in each case, where the failure to be in compliance would not
have
a Material Adverse Effect, (vi) with respect to any Facility then being
acquired, has, or upon completion of the Acquisition and completion of any
required post closing procedures which are preconditions thereto shall have,
all
necessary Permits from or by, has made all necessary filings with, and has
given
all necessary notices to, each Governmental Authority having jurisdiction,
to
the extent required for such ownership, lease, sublease, operation, occupation
or conduct of business, except where the failure to obtain such Permits,
make
such filings or give such notices would not, in the aggregate, have a Material
Adverse Effect, and (vii) is not a foreign person within the meaning of
§ 1445(f)(3) of the Code.
(b) With
respect to any Facility then being acquired, each Facility (i) is being operated
as an assisted living, skilled nursing, independent senior housing or
Alzheimer’s facility, having the number of licensed beds/units as set forth on
Schedule
4.16,
attached hereto (as modified from time to time with Administrative Agent’s
consent), (ii) is in conformance in all material respects with all insurance,
reimbursement and cost reporting requirements, and, if applicable, has a
current
provider agreement that is in full force and effect under Medicare and Medicaid,
and (iii) is in compliance with all applicable Requirements of Law, except,
in
each case, where the failure to be in compliance would not materially (x)
impair
the value or marketability of such Facility or (y) interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such Facility.
There is no threatened in writing, existing or pending revocation, suspension,
termination, probation, restriction, limitation, or nonrenewal proceeding
by any
third-party payor, including Medicare, Medicaid, Blue Cross, Blue Shield
or any
other private commercial insurance managed care and employee assistance program
(such programs, the “Third-Party
Payor Programs”),
to
which any Borrower may presently be subject with respect to any
Facility.
(c) With
respect to any Facility then being acquired, all Licenses necessary or desirable
for using and operating the Facilities for the uses described in clause
(a),
above,
are held by, or will be held by, Borrowers, in the name of the applicable
Borrower, as required under applicable law, and are in full force and effect,
or
upon completion of the Acquisition and completion of any required post closing
procedures which are preconditions to the issuance of
46
such
Licenses, provided,
however,
that if
such Facility is being acquired pursuant to a sale/leaseback or similar
arrangement, such Licenses may be held in the names of the prior owners or
operators of the Facility and used by the Borrowers pursuant to such
sale/leaseback or similar arrangement.
(d) To
the
Borrowers’ knowledge, with respect to any Facility then being acquired, there
are no proceedings by any Governmental Authority or notices thereof that
would,
directly or indirectly, or with the passage of time (i) have a
material adverse impact on Borrowers’ ability
to accept and/or retain patients or residents or operate such Facility for
its
current use or result in the imposition of a fine, a sanction, a lower rate
certification or a lower reimbursement rate for services rendered to eligible
patients or residents, (ii) modify, limit or result in the transfer, suspension,
revocation or imposition of probationary use of any of the Licenses, other
than
a transfer of such License to the Borrowers if such License is not already
held
by such Borrowers; or (iii) affect any Borrower’s continued participation in the
Medicaid or Medicare programs or any other Third-Party Payors Programs, or
any
successor programs thereto.
(e) With
respect to any Facility then being acquired, except as reviewed and approved
by
Administrative Agent, no Facility has received a violation, and no statement
of
charges or deficiencies has been made or penalty enforcement action has been
undertaken against any Facility, Borrower or against any officer, director,
partner, member or stockholder of any Borrower, by any Governmental Authority
during the last five calendar years, and there have been no violations over
the
past five years which have threatened any Facility’s, or any Borrower’s
certification for participation in Medicare or Medicaid or the other Third-Party
Payor Programs.
(f) With
respect to any Facility then being acquired, there are no current, pending
or
outstanding Third-Party Payor Programs reimbursement audits, appeals or
recoupment efforts pending at any Facility, and there are no years that are
subject to audit in respect of any Third-Party Payor Program that would,
in each
case, adversely affect any Borrower, other than audit rights pursuant to
Medicare and Medicaid programs.
(g) No
Borrower 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 those authorized under the Xxxx-Xxxxxx Act (42 U.S.C.
291, et
seq.),
as it
may be amended.
(h) With
respect to any Facility then being acquired, substantially all of the patient
and resident care agreements conform in all material respects with the form
patient or resident care agreements that have been delivered to Administrative
Agent.
Section
4.2 Loan
and Related Documents.
(a)
Power and Authority. The execution, delivery and performance by each Borrower
of
the Loan Documents and Related Documents to which it is a party
(i) are
within such Borrower’s corporate or similar powers and, at the time of execution
thereof, have been duly authorized by all necessary corporate and similar
action
(including, if applicable, consent of holders of its Equity Interests), (ii)
do
not (A) contravene such Borrower’s Constituent Documents, (B) violate any
applicable Requirement of Law, (C) conflict with, contravene, constitute a
default or breach under, or result in or permit the termination or acceleration
of, any material Contractual Obligation of any Borrower (including other
Related
Documents or Loan Documents) other than those that would not, in the aggregate,
47
have
a
Material Adverse Effect and are not created or caused by, or constitute a
conflict, breach, default or termination or acceleration event under, any
Loan
Document or (D) result in the imposition of any Lien (other than a
Permitted Lien) upon any property of any Borrower or any of its Subsidiaries
and
(iii) to any Borrower’s knowledge, do not require any Permit of, or filing with,
any Governmental Authority or any consent of, or notice to, any Person, other
than (A) with respect to the Loan Documents, the filings required to perfect
the
Liens created by the Loan Documents, (B) those listed on Schedule 4.2 and
that have been, or will be prior to the Closing Date, obtained or made, copies
of which have been, or will be prior to the Closing Date, delivered to the
Administrative Agent, and each of which on the Closing Date will be in full
force and effect and (C) with respect to the Acquisition, those that,
(1) if not obtained, would not, in the aggregate, have a Material Adverse
Effect, or (2) will be obtained upon completion of the Acquisition and
completion of any required post closing procedures or undertakings that are
preconditions thereto.
(b) Due
Execution, Delivery and Enforceability.
From
and after its delivery to the Administrative Agent, each Loan Document and
Related Document has been duly executed and delivered to the other parties
thereto by each Borrower party thereto, is the legal, valid and binding
obligation of such Borrower and is enforceable against such Borrower in
accordance with its terms.
(c) Related
Documents.
Each
representation and warranty in each Related Document is true and correct
in all
material respects and no default, or event that, with the giving of notice
or
lapse of time or both, would constitute a default, has occurred thereunder.
As
of the Closing Date, all applicable waiting periods in connection with the
Acquisition have expired or have been terminated without any action being
taken
by any Governmental Authority (including any requisite waiting period (and
any
extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of
1976).
Section
4.3 Ownership
of the Borrowers.
The
information set forth on the Corporate Chart is complete and accurate as
of the
Closing Date. All outstanding Equity Interests of each Person listed thereon
have been validly issued, are fully paid and non-assessable (to the extent
applicable). The Equity Interests of each Borrower are free and clear of
all
Liens other than the security interests created by the Loan Documents and,
in
the case of joint ventures, Permitted Liens. There are no Equity Equivalents
with respect to the Equity Interests of any Borrower (other than the Parent),
as
of the Closing Date, except as set forth on Schedule 4.3. There are no
Equity Equivalents with respect to the Equity Interests of Parent. There
are no
Contractual Obligations or other understandings to which any Borrower is
a party
with respect to (including any restriction on) the issuance, voting, Transfer
or
pledge of any Equity Interest or Equity Equivalent of any
Borrower.
Section
4.4 Financial
Statements.
(a)
To Borrowers’ knowledge each of (i) the audited Consolidated balance sheet of
the Seller as at December 31, 2005 and the related Consolidated statements
of
income, retained earnings and cash flows of the Seller for the Fiscal Year
then
ended and (ii) subject to the absence of footnote disclosure and normal
recurring year end audit adjustments, the unaudited Consolidated balance
sheets
of the Seller as at September 30, 2006 and the related Consolidated statements
of income, retained earnings and cash flows of the Seller for the 3 months
then
ended, copies of each of which have been furnished to the Administrative
Agent,
fairly present in all material respects the Consolidated financial position,
48
results
of operations and cash flow of the Seller as at the dates indicated and for
the
periods indicated in accordance with GAAP.
(b) Prior
to
the Closing Date, the Borrowers had no property (other than, in the case
of
Parent, the Equity Interests of the SPEs), liabilities or Contractual
Obligations other than the Loan Documents and the Related Documents and no
Borrower had any Subsidiary (other than, in the case of Parent, the Equity
Interests of the SPEs).
(c) The
Initial Projections have been prepared by the Borrowers in light of the past
operations of the business of the Seller and its Subsidiaries and reflect
Projections for the 3 year period beginning December, 2006 on a quarterly
basis
for the first year and on a year by year basis thereafter. As of the Closing
Date, the Initial Projections are based upon estimates and assumptions stated
therein, all of which the Borrowers believe to be reasonable and fair in
light
of conditions and facts known to the Borrowers as of the Closing Date and
reflect the good faith, reasonable and fair estimates by the Borrowers of
the
future Consolidated financial performance of the Parent and the other
information Projections therein for the periods set forth therein.
Section
4.5 Material
Adverse Effect. Since
the
Closing Date, to any Borrower’s knowledge, there have been no events,
circumstances, developments or other changes in facts with respect to the
Facilities or Borrowers that would, in the aggregate, have a Material Adverse
Effect.
Section
4.6 Solvency.
Both
before and after giving effect to (a) the Term Loan made on or prior to the
date
this representation and warranty is made, (b) the disbursement of the proceeds
of such Term Loan, (c) the consummation of the Related Transactions, and
(d) the
payment and accrual of all transaction costs in connection with the foregoing,
the Borrowers, taken as a whole, are Solvent.
Section
4.7 Litigation.
There
are no pending (or, to the knowledge of any Borrower, threatened) actions,
investigations, suits, proceedings, audits, claims, demands, orders or disputes
affecting any Borrower with, by or before any Governmental Authority other
than
those that cannot reasonably be expected to affect the Obligations, the Loan
Documents, the Related Documents and would not, in the aggregate, have a
Material Adverse Effect.
Section
4.8 Taxes.
All
federal, state, local and foreign income and franchise and other material
tax
returns, reports and statements (collectively, the “Tax Returns”) required to be
filed by any Tax Affiliate have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to
be
filed, all such Tax Returns are true and correct in all material respects,
and
all taxes, charges and other impositions reflected therein or otherwise due
and
payable have been paid prior to the date on which any Liability may be added
thereto for non-payment thereof except for those contested in good faith
by
appropriate proceedings diligently conducted and for which adequate reserves
are
maintained on the books of the appropriate Tax Affiliate in accordance with
GAAP. No Tax Return is under audit or examination by any Governmental Authority
and no notice of such an audit or examination or any assertion of any claim
for
Taxes has been given or made by any Governmental Authority. Proper and accurate
amounts have been withheld by each Tax Affiliate from their respective employees
for all periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable Requirements of Law
and
such withholdings have been timely paid to the respective Governmental
Authorities.
No Tax
Affiliate has
49
participated
in a “reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b) or has been a member of an affiliated, combined or
unitary group other than the group of which a Tax Affiliate is the common
parent.
All
Other
Taxes required to be paid in connection with the transfer of the Real Property
to Borrower and the granting of the security interest under the Loan Documents
(including recording of the Mortgage, Mortgage Supporting Documents, and
other
Loan Documents required to be filed in connection with the Loan) have been
paid
or will be paid on the Closing Date or the Permitted Acquisition Closing
Date,
as applicable.
Section
4.9 Margin
Regulations.
Other than in the Related Documents, no Borrower is engaged in the business
of
extending credit for the purpose of, and no proceeds of any Loan or other
extensions of credit hereunder will be used for the purpose of, buying or
carrying margin stock (within the meaning of Regulation U of the Federal
Reserve
Board) or extending credit to others for the purpose of purchasing or carrying
any such margin stock, in each case in contravention of Regulation T, U or
X of
the Federal Reserve Board.
Section
4.10 No
Burdensome Obligations; No Defaults.
No
Borrower is a party to any Contractual Obligation, no Borrower has Constituent
Documents containing obligations, and, to the knowledge of any Borrower,
there
are no applicable Requirements of Law, in each case the compliance with which
would have, in the aggregate, a Material Adverse Effect. No Borrower (and,
to
the knowledge of each Borrower, no other party thereto) is in default under
or
with respect to any Contractual Obligation of any Borrower, other than those
that would not, in the aggregate, have a Material Adverse
Effect.
Section
4.11 Single
Purpose Entity. Each
Borrower is and has at all times since its formation been a Single Purpose
Entity. All
of
the assumptions made in the non-consolidation opinion delivered on the Closing
Date, including, but not limited to, any exhibits attached thereto, are true
and
correct in all respects. Each Borrower has complied with all of the assumptions
made with respect to it in such non-consolidation opinion.
Section
4.12 Labor
Matters.
There
are no strikes, work stoppages, slowdowns or lockouts existing, pending (or,
to
the knowledge of any Borrower, threatened) against or involving any Borrower,
except, for those that would not, in the aggregate, have a Material Adverse
Effect. Except
as
set forth on Schedule 4.12, as of the Closing Date, (a) there is no
collective bargaining or similar agreement with any union, labor organization,
works council or similar representative covering any employee of any
Borrower, (b) no petition for certification or election of any such
representative is existing or pending with respect to any employee of any
Borrower and (c) no such representative has sought certification or recognition
with respect to any employee of any Borrower.
Section
4.13 ERISA.
Except
for those that would not, in the aggregate, have a Material Adverse Effect,
each
Benefit Plan, and each trust thereunder, intended to qualify for tax exempt
status under Section 401 or
501 of
the Code has been maintained in compliance with the requirements thereof.
Except
for those that would not, in the aggregate, have a Material Adverse Effect,
(x)
each Benefit Plan is in compliance with applicable provisions of ERISA, the
Code
and other Requirements of Law, (y) there are no existing or pending (or to
the
knowledge of any Borrower, threatened) claims (other than routine claims
for
benefits in the normal course), sanctions, actions, lawsuits or other
proceedings or investigation involving any Benefit Plan to
50
which
any
Borrower incurs or otherwise has or could have an obligation or any Liability
and (z) no ERISA Event is reasonably expected to occur. On the Closing Date,
no
ERISA Event has occurred in connection with which obligations and liabilities
remain outstanding that could reasonably be expected to have a Material Adverse
Effect. No
ERISA
Affiliate would have any Withdrawal Liability as a result of a complete
withdrawal from any Multiemployer Plan on the date this representation is
made
that could reasonably be expected to have a Material Adverse
Effect.
Section
4.14 Environmental
Matters.
Except
as
set forth on Schedule 4.14,
(a)
the operations of each Borrower are and have been in compliance with all
applicable Environmental Laws, including obtaining, maintaining and complying
with all Permits required by any applicable Environmental Law, other than
non-compliances that, in the aggregate, would not have a reasonable likelihood
of resulting in Material Environmental Liabilities, (b) no Borrower is party
to,
and no Borrower and no real property currently (or to the knowledge of any
Borrower previously) owned, leased, subleased, operated or otherwise occupied
by
or for any Borrower is subject to or the subject of, any pending (or, to
the
knowledge of any Borrower, threatened) order, action, investigation, suit,
proceeding, audit, claim, demand, dispute or notice of violation or of potential
liability or similar notice under or pursuant to any Environmental Law other
than those that, in the aggregate, are not reasonably likely to result in
Material Environmental Liabilities, (c) no Lien in favor of any Governmental
Authority securing, in whole or in part, Environmental Liabilities has attached
to any property of any Borrower and, to the knowledge of any Borrower, no
facts,
circumstances or conditions exist that could reasonably be expected to result
in
any such Lien attaching to any such property, (d) no Borrower has caused
or
suffered to occur a Release of Hazardous Materials at, to or from any real
property of any Borrower and, to the knowledge of any Borrower, each such
real
property is free of contamination by any Hazardous Materials except for such
Release or contamination that could not reasonably be expected to result,
in the
aggregate, in Material Environmental Liabilities, (e) no Borrower (i) is
or has
been engaged in, or has permitted any current or former tenant to engage
in,
operations, or (ii) knows of any facts, circumstances or conditions, including
receipt of any information request or notice of potential responsibility
under
CERCLA or similar Environmental Laws, that, in the aggregate, would have
a
reasonable likelihood of resulting in Material Environmental Liabilities
and (f)
each Borrower has made available to the Administrative Agent copies of all
existing environmental reports, reviews and audits and all documents pertaining
to actual or potential Environmental Liabilities, in each case to the extent
such reports, reviews, audits and documents are in their possession, custody
or
control.
Section
4.15 Intellectual
Property.
Each
Borrower owns or licenses, or uses pursuant to a Management Agreement, all
Intellectual Property that is necessary for the operations of its businesses.
To
the knowledge of each Borrower, (a) the conduct and operations of the businesses
of each Borrower does not infringe, misappropriate, dilute, violate or otherwise
impair any Intellectual Property owned by any other Person and (b) no other
Person has contested any right, title or interest of any Borrower in, or
relating to, any Intellectual Property, other than, in each case, as cannot
reasonably be expected to affect the Loan Documents and the transactions
contemplated therein and would not, in the aggregate, have a Material Adverse
Effect. In addition, (x) there are no pending (or, to the knowledge of any
Borrower, threatened) actions, investigations, suits, proceedings, audits,
claims, demands, orders or disputes affecting any Borrower with respect to,
(y)
no judgment or order regarding any such claim has been rendered by any competent
Governmental Authority, no settlement agreement or similar Contractual
Obligation has been entered into by any Borrower, with respect to
and (z)
no Borrower knows or
51
has
any
reason to know of any valid basis for any claim based on, any such infringement,
misappropriation, dilution, violation or impairment or contest, other than,
in
each case, as cannot reasonably be expected to affect the Loan Documents
and the
transactions contemplated therein and would not, in the aggregate, have a
Material Adverse Effect.
Section
4.16 Title;
Real Property.
(a)
Set
forth on Schedule 4.16 is, as of the Closing Date, (i) a complete and
accurate list of all real property owned in fee simple by any Borrower or
in
which any Borrower owns a leasehold interest setting forth, for each such
real
property, the current street address (including, where applicable, county,
state
and other relevant jurisdictions), the record owner thereof and, where
applicable, each lessee and sublessee thereof, (ii) any lease, sublease,
license
or sublicense of such real property by any Borrower and (iii) for each such
real
property that the Administrative Agent has requested be subject to a Mortgage
or
that is otherwise material to the business of any Borrower, each Contractual
Obligation by any Borrower, whether contingent or otherwise, to Transfer
such
real property.
(b) Each
Borrower has good and marketable fee simple title to all owned real property
and
valid leasehold interests in all leased real property, and owns all personal
property, in each case that is purported to be owned or leased by it, including
those reflected on the most recent Financial Statements delivered by the
Borrower, and none of such property is subject to any Lien except Permitted
Liens.
All such
real and personal property represents all of the property used in the operation
of the business located on the Real Property.
(c) No
condemnation has been commenced or, to the Borrowers’ knowledge, is contemplated
with respect to all or any portion of any Facility or for the relocation
of
roadways providing access to any Facility.
(d) Each
Facility has adequate rights of access to public ways and is served by adequate
water, sewer sanitary sewer and storm drain facilities. All public utilities
necessary or convenient to the full use and enjoyment of each Facility is
located in the public right-of-way abutting each Facility or in a duly recorded
easement, and all such utilities are connected so as to serve such Facility
without passing over other property, except to the extent such other property
is
subject to a recorded easement for such utility. Except as shown on the As-Built
Surveys, all roads necessary for the full utilization of each Facility for
its
current purpose have been completed and dedicated to public use and accepted
by
all government authorities.
(e) All
real
estate taxes and assessments, special or otherwise, which are due and payable
with respect to each parcel of Real Property has been paid in full and there
are
no pending or, to Borrowers’ knowledge, proposed special or other assessments
for public improvements or otherwise affecting the Real Property, nor are
there
any contemplated improvements to the Real Property that may result in such
special or other assessments.
(f) No
improvements on any parcel of Real Property is within a special flood hazard
area nor is eligible for flood insurance under the U. S. Flood Disaster
Protection Act of 1973, as amended or as a wetlands area by any governmental
entity having jurisdiction over any Real Property.
(g) The
Real
Property for each Facility is comprised of one (1) or more contiguous parcels
that constitute a separate tax lot or lots and does not constitute or include
a
portion of any other tax lot not a part of such Real Property.
52
(h) To
Borrower’s knowledge and except as expressly disclosed in any report addressing
the physical condition of the Real Property, such Real Property, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to Borrower’s knowledge
and except as disclosed in such report, there exists no structural or other
material defects or damages in or to the Real Property, whether latent or
otherwise, and Borrower has not received any written notice from any insurance
company or bonding company of any defects or inadequacies in the Property,
or
any part thereof, which would adversely affect the insurability of the same
or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.
(i) Each
Lease associated with a Facility, other than any resident care agreement
or any
Lease pursuant to which the Facility is leased back to its prior owner after
purchase by the Borrower, is terminable upon 30 days’ notice by Borrower to the
tenant thereunder.
Section
4.17 Full
Disclosure.
The
information prepared or furnished by or on behalf of any Borrower in connection
with any Loan Document or Related Document (including the information contained
in any Financial Statement or Disclosure Document), does not contain any
untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements contained therein, in light of the circumstances when made,
not
misleading; provided, however, that Projections contained therein are not
to be
viewed as factual and that actual results during the periods covered thereby
may
differ from the results set forth in such Projections by a material amount.
All
Projections that are part of such information (including those set forth
in any
Projections delivered subsequent to the Closing Date) are based upon good
faith
estimates and stated assumptions believed to be reasonable and fair as of
the
date made in light of conditions and facts then known and, as of such date,
reflect good faith, reasonable and fair estimates of the information projected
for the periods set forth therein. All facts known to any Borrower and material
to an understanding of the financial condition, business, property or prospects
of the Borrower taken as one enterprise have been disclosed to the
Lenders.
The
foregoing representation shall be limited to the Borrowers’ knowledge with
respect to any reports or information furnished by a third party unless such
third party has been engaged by the Borrowers to prepare such information
for or
on behalf of the Borrowers.
Section
4.18 Operation.
Each
Borrower shall, and shall cause the manager under any Management Agreement
to,
(i) promptly perform and/or observe all of the covenants and agreements required
to be performed and observed by it under the applicable Management Agreement
in
all material respects and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify the
Administrative Agent of any “event of default” under the applicable Management
Agreement of which it is aware; (iii) promptly deliver to the Administrative
Agent a copy of each financial statement, capital expenditures plan, property
improvement plan and any other accounting report received by it under the
applicable Management Agreement; and (iv) enforce in a commercially reasonable
manner the performance and observance of all of the material covenants and
agreements required to be performed and/or observed by such Manager under
the
applicable Management Agreement.
53
Section
4.19 Estoppel
Certificates
.
Borrowers shall, from time to time, upon thirty (30) days’ prior written request
from the Administrative Agent, execute, acknowledge and deliver to the
Administrative Agent, an Officer’s Certificate, stating that this Agreement and
the other Loan Documents are unmodified and in full force and effect (or,
if
there have been modifications, that this Agreement and the other Loan Documents
are in full force and effect as modified and setting forth such modifications),
stating the amount of accrued and unpaid interest and the outstanding principal
amount of the Note and containing such other information with respect to
the
Borrowers, the Property and the Loan as the Administrative Agent shall
reasonably request. The estoppel certificate shall also state either that
to any
Borrower’s knowledge no Default exists hereunder or, if any Default shall exist
hereunder, specify such Default and the steps being taken to cure such
Default.
ARTICLE
V
FINANCIAL
COVENANTS
Each
Borrower agrees with the Lenders and the Administrative Agent to the following,
as long as any Obligation or any Commitment remains outstanding:
Section
5.1 Minimum
Consolidated Project Yield
.
Parent
shall not have, on the last day of each period set forth below, a Consolidated
Project Yield less than the minimum ratio set forth opposite such
period:
PERIOD
|
MINIMUM
FACILITY YIELD
|
The
three (3) month period ending
December
31, 2008
|
10.00%
|
The
six (6) month period ending
March
31, 2009
|
10.00%
|
The
nine (9) month period ending
June
30, 2009
|
10.00%
|
The
twelve (12) month period ending
September
30, 2009 and each twelve (12) month period ending each Fiscal Quarter
thereafter
|
10.00%
|
ARTICLE
VI
REPORTING
COVENANTS
Each
Borrower agrees with the Lenders and the Administrative Agent to each of
the
following, as long as any Obligation or any Commitment remains
outstanding:
54
Section
6.1 Financial
Statements.
The
Borrowers shall deliver to the Administrative Agent and MLC each of the
following:
(a) Monthly
Reports.
(i) As
soon as available, and in any event within 30 days after the end of each
of the
first two fiscal months in each Fiscal Quarter, the Consolidated and
consolidating unaudited balance sheet of Parent as of the close of such fiscal
month and related Consolidated and consolidating statements of income and
cash
flow for such fiscal month and that portion of the Fiscal Year ending as
of the
close of such fiscal month, setting forth in comparative form the figures
for
the corresponding period in the prior Fiscal Year, in each case certified
by a
Responsible Officer of the Parent as fairly presenting in all material respects
the Consolidated financial position, results of operations and cash flow
of
Parent as at the dates indicated and for the periods indicated in accordance
with GAAP (subject to the absence of footnote disclosure and normal year-end
audit adjustments).
(ii)
As
soon as available, and in any event within 30 days after the end of each
calendar month, for such calendar month, statements of the operations of
each
Facility (including a current occupancy report, operating statement) as of
the
last day of such calendar month; and aged accounts receivable.
(b) Quarterly
Reports.
As soon
as available, and in any event within 45 days after the end of each of the
first
three Fiscal Quarters of each Fiscal Year, (i) the Consolidated and
consolidating unaudited balance sheet of Parent as of the close of such Fiscal
Quarter and related Consolidated and consolidating statements of income and
cash
flow for such Fiscal Quarter and that portion of the Fiscal Year ending as
of
the close of such Fiscal Quarter, setting forth in comparative form the figures
for the corresponding period in the prior Fiscal Year and the figures contained
in the latest Projections, in each case certified by a Responsible Officer
of
the Parent as fairly presenting in all material respects the Consolidated
financial position, results of operations and cash flow of Parent as at the
dates indicated and for the periods indicated in accordance with GAAP (subject
to the absence of footnote disclosure and normal year-end audit
adjustments).
(c) Annual
Reports.
As soon
as available, and in any event within 90 days after the end of each Fiscal
Year,
the Consolidated and consolidating balance sheet of the Parent as of the
end of
such year and related Consolidated and consolidating statements of income,
stockholders’ equity and cash flow for such Fiscal Year, each prepared in
accordance with GAAP, together with a certification by the Borrowers’
Accountants that (i) such Consolidated Financial Statements fairly present
in
all material respects the Consolidated financial position, results of operations
and cash flow of the Parent as the dates indicated and for the periods indicated
therein in accordance with GAAP without qualification as to the scope of
the
audit or as to going concern and without any other similar qualification
and
(ii) in the course of the regular audit of the businesses of the Borrowers,
which audit was conducted in accordance with the standards of the United
States’
Public Company Accounting Oversight Board (or any successor entity), such
Borrowers’ Accountants have obtained no knowledge that a Default in respect of
any financial covenant contained in Article V
is
continuing or, if in the opinion of the Borrowers’ Accountants such a Default is
continuing, a statement as to the nature thereof.
(d) Compliance
Certificate.
Together with each delivery of any Financial Statement pursuant to clause
(b)
or
(c)
above, a
Compliance Certificate duly executed by a Responsible Officer of the
Parent
that, among other things, (i) shows in reasonable detail the
55
calculations
used in determining the Consolidated Project Yield and, if delivered together
with any Financial Statement pursuant to clause
(c)
above,
the calculations used in determining Excess Cash Flow, (ii) demonstrates
compliance, or failure to comply, if applicable, with each financial covenant
contained in Article V
that is
tested at least on a quarterly basis and (iii) states that no Event of Default
is continuing as of the date of delivery of such Compliance Certificate or,
if a
Event of Default is continuing, states the nature thereof and the action
that
the relevant Borrower proposes to take with respect thereto.
(e) Corporate
Chart and Other Collateral Updates.
As part
of the Compliance Certificate delivered pursuant to clause
(d)
above,
each in form and substance reasonably satisfactory to the Administrative
Agent,
a certificate by a Responsible Officer of the Parent that (i) the Corporate
Chart attached thereto (or the last Corporate Chart delivered pursuant to
this
clause
(e))
is
correct and complete as of the date of such Compliance Certificate, (ii)
the
Borrowers have delivered all documents (including updated schedules as to
locations of Collateral and acquisition of Intellectual Property or real
property) they are required to deliver pursuant to any Loan Document on or
prior
to the date of delivery of such Compliance Certificate and (iii) complete
and correct copies of all documents modifying any term of any Constituent
Document of any Borrower or any Subsidiary or joint venture thereof on or
prior
to the date of delivery of such Compliance Certificate have been delivered
to
the Administrative Agent or are attached to such certificate.
(f) Additional
Projections.
As soon
as available and in any event not later than 30 days after the end of each
Fiscal Year, any significant revisions to, (i) the annual business plan of
the
Borrowers for the Fiscal Year next succeeding such Fiscal Year and
(ii) forecasts prepared by management of the Parent (A) for each Fiscal
Quarter in such next succeeding Fiscal Year and (B) for each other succeeding
Fiscal Year through the Fiscal Year containing the Scheduled Maturity Date,
in
each case including in such forecasts (x) a projected year-end Consolidated
balance sheet, income statement and statement of cash flows, (y) a statement
of
all of the material assumptions on which such forecasts are based and
(z) substantially the same type of financial information as that contained
in the Initial Projections.
(g) Management
Discussion and Analysis.
Together with each delivery of any Compliance Certificate pursuant to
clause
(d)
above, a
discussion and analysis of the financial condition and results of operations
of
the Borrowers for the portion of the Fiscal Year then elapsed and discussing
the
reasons for any significant variations from the Projections for such period
and
the figures for the corresponding period in the previous Fiscal
Year.
(h) Intercompany
Loan Balances.
Together with each delivery of any Compliance Certificate pursuant to
clause
(d)
above, a
summary of the outstanding balances of all significant intercompany Indebtedness
as of the last day of the Fiscal Quarter covered by such Financial Statement,
certified as complete and correct by a Responsible Officer of the Parent
as part
of the Compliance Certificate delivered in connection with such Financial
Statements.
(i) Audit
Reports, Management Letters, Etc.
Together with each delivery of any Financial Statement for any Fiscal Year
pursuant to clause
(c)
above,
copies of each management letter, audit report or similar letter or report
received by any Borrower from any independent registered certified public
accountant (including the Borrowers’ Accountants) in connection with such
Financial Statements or any audit thereof, each certified to be complete
and
56
correct
copies by a Responsible Officer of the Parent as part of the Compliance
Certificate delivered in connection with such Financial Statements.
(j) Insurance.
Together with each delivery of any Financial Statement for any Fiscal Year
pursuant to clause
(c)
above,
each in form and substance satisfactory to the Administrative Agent and
certified as complete and correct by a Responsible Officer of the Parent
as part
of the Compliance Certificate delivered in connection with such Financial
Statements, to the extent that there have been changes in any such material
insurance coverage since last delivered to the Administrative Agent, a summary
of all changes to any material insurance coverage maintained as of the date
thereof by any Borrower, together with such other related documents and
information as the Administrative Agent may reasonably require.
Section
6.2 Other
Events.
The
Borrowers shall give the Administrative Agent and MLC notice of each of the
following (which may be made by telephone if promptly confirmed in writing)
promptly after any Responsible Officer of any Borrower knows or has reason
to
know of it: (a)(i) any Default and (ii) any event that would have a
material adverse impact on any Borrower or any Facility, specifying, in each
case, the nature and anticipated effect thereof and any action proposed to
be
taken in connection therewith, (b) any event (other than any event involving
loss or damage to property) and any material Property Loss Event reasonably
expected to result in a mandatory payment of the Obligations pursuant to
Section 2.4, stating the material terms and conditions of such transaction
and estimating the Net Cash Proceeds thereof, (c) the commencement of, or
any
material developments in, any action, investigation, suit, proceeding, audit,
claim, demand, order or dispute with, by or before any Governmental Authority
affecting any Borrower or any property of any Borrower that (i) seeks
injunctive or similar relief, (ii) in the reasonable judgment of such
Borrower, exposes any Borrower to liability in an aggregate amount in excess
of
$100,000 or (iii) if adversely determined would have a material adverse impact
on any Borrower or any Facility, and (d) the acquisition of any material
real
property or the entering into any material lease (and for purposes hereof,
resident care agreements shall not be deemed to be material
leases).
Section
6.3 Copies
of Notices and Reports.
The
Borrowers shall promptly deliver to the Administrative Agent and MLC copies
of
each of the following: (a) all reports that Parent transmits to its security
holders generally, (b) all documents that any Borrower files with the Securities
and Exchange Commission, the National Association of Securities Dealers,
Inc.,
any securities exchange or any Governmental Authority exercising similar
functions, (c) all press releases not made available directly to the general
public, and (d) any material document transmitted or received pursuant to,
or in
connection with, the Related Transaction or any Contractual Obligation governing
Indebtedness of any Borrower.
Section
6.4 Taxes.
The
Borrowers shall give the Administrative Agent and MLC notice of each of the
following (which may be made by telephone if promptly confirmed in writing)
promptly after any Responsible Officer of any Borrower knows or has reason
to
know of it: (a) the creation, or filing with the IRS or any other Governmental
Authority, of any Contractual Obligation or other document extending, or
having
the effect of extending, the period for assessment or collection of any taxes
with respect to any Tax Affiliate and (b) the creation of any Contractual
Obligation of any Tax Affiliate, or the receipt of any request directed to
any
Tax Affiliate, to make any adjustment under Section 481(a) of the Code, by
reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.
57
Section
6.5 Labor
Matters.
The
Borrowers shall give the Administrative Agent and MLC notice of each of the
following (which may be made by telephone if promptly confirmed in writing),
promptly after, and in any event within 30 days after any Responsible Officer
of
any Borrower knows or has reason to know of it: (a) the commencement of any
material labor dispute to which any Borrower is or may become a party, including
any strikes, lockouts or other disputes relating to any of such Person’s plants
and other facilities and (b) the incurrence by any Borrower of any Worker
Adjustment and Retraining Notification Act or related or similar liability
incurred with respect to the closing of any plant or other facility of any
such
Borrower (other than, in the case of this clause (b), those that would not,
in
the aggregate, have a material adverse impact on any Borrower or any
Facility).
Section
6.6 ERISA
Matters.
In
the event a Borrower knows or has reason to know thereof, such Borrower shall
give the Administrative Agent and MLC (a) on or prior to any filing by any
ERISA Affiliate of any notice of intent to terminate any Title IV Plan, a
copy of such notice and (b) promptly, and in any event within 30 days, after
any
Responsible Officer of any ERISA Affiliate knows or has reason to know that
a
request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a notice
(which may be made by telephone if promptly confirmed in writing) describing
such waiver request and any action that any ERISA Affiliate proposes to take
with respect thereto, together with a copy of any notice filed with the PBGC
or
the IRS pertaining thereto.
Section
6.7 Environmental
Matters.
(a)The
Borrowers shall provide the Administrative Agent and MLC notice of each of
the
following (which may be made by telephone if promptly confirmed by the
Administrative Agent in writing) promptly after any Responsible Officer of
any
Borrower knows or has reason to know of it (and, upon reasonable request
of the
Administrative Agent, documents and information in connection
therewith):
(i)(A) unpermitted
Releases, (B) the receipt by any Borrower of any notice of violation of or
potential liability or similar notice under, or the existence of any condition
that could reasonably be expected to result in violations of or liabilities
under, any Environmental Law or (C) the commencement of, or any material
change
to, any action, investigation, suit, proceeding, audit, claim, demand, dispute
alleging a violation of or liability under any Environmental Law, that, for
each
of clauses (A), (B) and (C) above (and, in the case of clause (C), if
adversely determined), could reasonably be expected to result in Material
Environmental Liabilities, and (ii) the receipt by any Borrower of
notification that
any
property of any Borrower is subject to any Lien in favor of any Governmental
Authority securing, in whole or in part, Environmental Liabilities.
(b) Upon
request of the Administrative Agent, each Borrower, as applicable, shall
provide
the Administrative Agent a report containing an update as to the status of
any
environmental, health or safety compliance, hazard or liability issue identified
in any document, in each case, delivered to any Secured Party pursuant to
any
Loan Document or as to any condition reasonably believed by the Administrative
Agent to result in Material Environmental
Liabilities.
Section
6.8 Other
Information.
Each
Borrower, as applicable, shall provide the Administrative Agent and MLC with
such other documents and information with respect to the business, property,
condition (financial or otherwise), financial or corporate or similar affairs
or
operations of such Borrower as the Administrative Agent or such Lender through
the Administrative Agent may from time to time reasonably request; provided,
however, Borrower shall have no obligation to provide any Constituent Documents
or financial reports of any Person
58
owning
any Equity Interests in the Parent, except to the extent required to evidence
compliance with Article VIII.
ARTICLE
VII
AFFIRMATIVE
COVENANTS
Each
Borrower agrees with the Lenders and the Administrative Agent to each of
the
following, as long as any Obligation or any Commitment remains
outstanding:
Section
7.1 Maintenance
of Corporate Existence.
Each
Borrower shall
(a) preserve and maintain its legal existence as a Single Purpose Entity,
except in the consummation of transactions expressly permitted by Sections
8.4
and 8.7, and (b) preserve and maintain it rights (charter and statutory),
privileges, franchises and Permits necessary or desirable in the conduct
of its
business, except, in the case of this clause (b), where the failure to do
so
would not have a Material Adverse Effect on any Borrower or any
Facility.
Section
7.2 Compliance
with Laws and Healthcare Matters, Etc.
(a) Each
Borrower shall comply with all applicable Requirements of Law, Contractual
Obligations and Permits, except for such failures to comply that would not
have
a material adverse impact on any Borrower or any Facility.
(b) Without
limiting the generality of the forgoing or any other provision of this
Agreement, each Borrower and their employees and contractors (other than
contracted agencies) in the exercise of their duties on behalf of any Borrower
(with respect to its operation of the Facilities) shall be in compliance
with
all applicable Requirements of Law relating to patient healthcare and/or
patient
healthcare information, including without limitation (to the extent that
any
Borrower is a “covered entity” as defined therein) the Health Insurance
Portability and Accountability Act of 1996, as amended, and the rules and
regulations promulgated thereunder (“HIPAA”)
(collectively, “Healthcare
Laws”)).
Each
Borrower shall maintain in all material respects all records required to
be
maintained by any Governmental Authority or otherwise under the Healthcare
Laws.
Each Borrower shall maintain all Governmental Approvals necessary under
applicable Requirements of Law to own and/or operate the Facilities, as
applicable (including such Governmental Approvals as are required under such
the
Healthcare Laws).
(c) Intentionally
Omitted.
(d) If
required under applicable Requirements of Law, each Borrower shall maintain
in
full force and effect a valid certificate of need or similar certificate,
license, or approval issued by the State Regulator for the requisite number
of
licensed beds and units in the Facilities (as shown on Schedule
4.16,
attached hereto), and a provider agreement or other required documentation
of
approved provider status for each provider payment or reimbursement program
listed in Schedule
7.2,
attached hereto. All required Government Approvals necessary for operation
of
the Facilities are listed on Schedule
7.2
hereto
(collectively with all certificates of need, if applicable, the “Licenses”).
Each
Borrower shall operate the Facilities in accordance with and shall maintain
in
full force and effect, all Licenses. True and complete copies of the Licenses
have been delivered to Administrative Agent.
59
(e) Each
Facility has in full force and effect all necessary Medicare and Medicaid
provider agreements and similar agreements with other third party payors
and
shall be operated in compliance with all requirements for participation in
all
Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other private
commercial insurance managed care and employee assistance program (such
programs, the “Third-Party
Payor Programs”)
Third-Party Payor Programs.
(f) No
Borrower, other than in the normal course of business, shall change the terms
of
any Third-Party Payor Program now or hereinafter in effect or their normal
billing payment or reimbursement policies and procedures with respect thereto
(including the amount and timing of finance charges, fees and write-offs).
All
cost reports and financial reports submitted by any Borrower to any third
party
payor will be materially accurate and complete and have not been and will
not be
misleading in any material respects and all patient or resident records,
including patient or resident trust fund accounts, will remain true and correct
in all material respects.
(g) Intentionally
Omitted.
(h) No
patient or resident care agreements entered into after the Permitted Acquisition
Closing Date for such Facility, shall deviate in any material adverse respect
from the form patient or resident care agreements which have been delivered
to
Administrative Agent, except to the extent necessary to comply with applicable
law.
Section
7.3 Payment
of Obligations.
Each
Borrower shall pay or discharge before they become delinquent (a) all material
claims, taxes, assessments, charges and levies imposed by any Governmental
Authority and (b) all other lawful claims that if unpaid would, by the operation
of applicable Requirements of Law, become a Lien upon any property of any
Borrower, except, in each case, for those whose amount or validity is being
contested in good faith by proper proceedings diligently conducted and for
which
adequate reserves are maintained by the appropriate Borrower.
Section
7.4 Maintenance
of Property.
Each
Borrower shall maintain and preserve, in compliance with all Requirements
of
Law, (a) in good working order and condition all of its property necessary
in
the conduct of its business and (b) all rights, permits, licenses, approvals
and
privileges (including all Permits) necessary, used or useful, whether because
of
its ownership, lease, sublease or other operation or occupation of property
or
other conduct of its business, and shall make all necessary or appropriate
filings with, and give all required notices to, Government Authorities, except
for such failures to maintain and preserve the items set forth in clauses
(a)
and (b) above for each Facility, that would not materially (x) impair the
value
or marketability of such Facility or (y) interfere with the ordinary conduct
of
the business conducted and proposed to be conducted at such
Facility.
Section
7.5 Maintenance
of Insurance.
(a)
Property.
The
Borrowers shall keep the Real Properties insured against damage by fire and
the
other hazards covered by a standard extended coverage and “special perils”
insurance policy (including a separate policy for broad form boiler and
machinery coverage (without exclusion for explosion)) for the full insurable
value thereof, the
term
“full insurable value” to mean the actual replacement cost of the improvements
and the personal property (without taking into account depreciation or
co-insurance), and shall maintain such other casualty insurance as reasonably
required by the
60
Administrative
Agent, including, without limitation, ordinance or law coverage, in amounts
and
in form approved by the Administrative Agent as of the Closing Date which
amounts and form shall not be changed without the prior written consent of
the
Administrative Agent. The Borrowers shall keep the Facilities insured against
loss by flood if any Facility is located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards and in
which
flood insurance has been made available under the National Flood Insurance
Act
of 1968, the Flood Disaster Protection Act of 1973 and the National Flood
Insurance Reform Act of 1994 (and any successor acts thereto) in an amount
at
least equal to the amount approved by the Administrative Agent as of the
Closing
Date. The proceeds of insurance paid on account of any damage or destruction
to
any Facility shall be paid to the Administrative Agent to be applied as provided
in Section 2.6(b).
(b) Liability.
The
Borrowers shall maintain (i) commercial general liability insurance with
respect to the Facilities; (ii) worker’s compensation insurance and
employer’s liability insurance covering employees at the Facilities employed by
the Borrowers (to the extent required, and in the amounts required by applicable
laws); (iii) business interruption insurance, including use and occupancy,
rental income loss and extra expense, against all periods covered by the
Borrowers’ property insurance; (iv) umbrella liability, (v) builder’s
risk insurance, as applicable, and (vi) Terrorism insurance (subject to the
requirements of this Section
7.5).
All of
the above shall be maintained at all times during the term of the Loan with
coverages, in the amounts and forms and with limits approved by the
Administrative Agent as of the Closing Date which amounts, limits and form
shall
not be changed or reduced without the prior written consent of the
Administrative Agent. Without limiting the foregoing and notwithstanding
anything to the contrary contained in this Agreement, if on the Closing Date,
Terrorism is an exclusion from coverage in any such insurance policy with
respect to any Facility, then the Borrowers shall, upon the Administrative
Agent’s request, obtain a separate policy insuring specifically against
Terrorism; provided, that such coverage is (A) customarily obtained by owners
of
property of similar size and quality of such Facility and (B) readily available
at a cost that, in Administrative Agent’s reasonable opinion, is commercially
reasonable.
(d) Form
and Quality.
All
insurance policies shall be endorsed in form and substance acceptable to
the
Administrative Agent to name the Administrative Agent as an additional insured,
loss payee or mortgagee thereunder, as its interest may appear, with loss
payable to the Administrative Agent, without contribution, under a standard
New
York (or local equivalent) mortgagee clause. All such insurance policies
and
endorsements shall be fully paid for and contain such provisions and expiration
dates and be in such form and issued by such insurance companies licensed
to do
business in the State where each Facility is located, with a rating of “A-IX” or
better as established by Best’s Rating Guide (or an equivalent rating approved
in writing by the Administrative Agent). Each policy shall provide that such
policy may not be cancelled or materially changed except upon thirty (30)
days’
prior written notice (or ten (10) days’ prior written notice if for non-payment)
of intention of non-renewal, cancellation or material change to the
Administrative Agent and that no act or thing done by the Borrowers shall
invalidate any policy as against the Administrative Agent. The Borrowers
shall
deliver copies of all original policies certified to the Administrative Agent
by
the insurance company or authorized agent as being true copies, together
with
the endorsements required hereunder. The proceeds of insurance policies coming
into the possession of the Administrative Agent shall be deemed trust funds,
and
the Administrative Agent shall be entitled to apply such proceeds as herein
provided.
61
The
Borrowers shall not maintain any separate or additional property insurance
which
is contributing in the event of loss unless it is properly endorsed and
otherwise satisfactory to the Administrative Agent in all respects.
(f) The
Administrative Agent’s Right to Purchase Insurance.
In the
event the Borrowers fail to provide the Administrative Agent with evidence
of
the insurance coverage required by this Agreement, upon notice to Borrowers,
the
Administrative Agent may purchase insurance at the Borrowers’ expense to protect
the Administrative Agent’s interests in the Facilities. This insurance may, but
need not, protect the Borrowers’ interests. The coverage purchased by the
Administrative Agent may not pay any claim made by any Borrower or any claim
that is made against any Borrower in connection with the Facilities. The
Borrowers may later cancel, or request the Administrative Agent to cancel,
which
the Administrative Agent shall promptly do, any insurance purchased by the
Administrative Agent, but only after providing the Administrative Agent with
evidence that the Borrowers have obtained insurance as required by this
Agreement. If the Administrative Agent purchases insurance for the Facilities,
the Borrowers will be responsible for all out-of-pocket costs of such insurance
(regardless of whether or not Borrower is able to procure insurance at a
lower
cost), including interest and other charges imposed by the Administrative
Agent
in connection with the placement of the insurance, until the effective date
of
the cancellation or expiration of the insurance. The costs of the insurance
may
be added to the Loan, and the Administrative Agent shall provide a copy of
the
policy to the Borrowers.
Section
7.6 Keeping
of Books.
The
Borrowers shall keep proper books of record and account, in which full, true
and
correct entries shall be made in accordance with GAAP and all other applicable
Requirements of Law of all financial transactions and the assets and business
of
each Borrower.
Section
7.7 Access
to
Books and Property.
Each
Borrower shall permit the Administrative Agent and MLC, at any reasonable
time
during normal business hours and with reasonable advance notice (except that,
during the continuance of an Event of Default, no such notice shall be required)
to (a) visit and, subject to the rights of the tenants under the Leases,
inspect
the property of each Borrower including, without limitation, each Facility,
and
examine and make copies of and abstracts from, the corporate (and similar),
financial, operating and other books and records of each Borrower, and (b)
discuss the affairs, finances and accounts of each Borrower with any officer
or
director of any Borrower;
provided, however, so long as no Default then exists, the combined total
of such
visits and inspections by Administrative Agent and MLC shall not exceed more
than two (2) such visits or inspections in any 12 month period.
62
Section
7.8 Environmental.
Each
Borrower shall comply with, and maintain its real
property, whether owned, leased, subleased or otherwise operated or occupied,
in
compliance with, all applicable Environmental Laws (including by implementing
any Remedial Action necessary to achieve such compliance or that is required
by
orders and directives of any Governmental Authority) except for failures
to
comply that would not, in the aggregate, have a material adverse impact on
any
Borrower or any Facility. Without limiting the foregoing, if an Event of
Default
is continuing or if the Administrative Agent at any time has a reasonable
basis
to believe that there exist violations of Environmental Laws by any Borrower
or
that there exist any Environmental Liabilities, in each case, that would
have a
material adverse impact on any Borrower or any Facility, then such Borrower
shall, promptly upon receipt of request from the Administrative Agent, cause
the
performance of, and allow the Administrative Agent and its Related Persons
access to such Real Property for the purpose of conducting, by reputable
environmental consulting firms, such environmental audits and assessments,
including, if recommended by a phase I environmental assessment, subsurface
sampling of soil and groundwater, and cause the preparation of such reports,
in
each case as the Administrative Agent may from time to time reasonably request.
Such audits, assessments and reports shall be conducted and prepared only
by
reputable environmental consulting firms reasonably acceptable to the
Administrative Agent and shall be in form and substance reasonably acceptable
to
the Administrative Agent.
Section
7.9 Use
of
Proceeds.
The
proceeds of the Loans shall be used by the Borrowers (and, to the extent
distributed to them by the Borrowers, each other Borrower) solely (a) to
consummate the Acquisitions and for the payment of related transaction costs,
fees and expenses, (b) for the payment of transaction costs, fees and expenses
incurred in connection with the Loan Documents and the transactions contemplated
therein, and (c) for the reserves and distribution thereof as contemplated
by
Section 2.1(b).
Section
7.10 Additional
Collateral,
Subsidiaries and Further Assurances.
To the
extent not delivered to the Administrative Agent on or before the Closing
Date
(including in respect of any Permitted Acquisition or after-acquired property
and Persons that become Subsidiaries of any Borrower after the Closing Date),
each Borrower shall, promptly, do each of the following, unless otherwise
agreed
by the Administrative Agent:
(a) deliver
to the Administrative Agent such modifications to the terms of the Loan
Documents (or, to the extent applicable as determined by the Administrative
Agent, such other documents), in each case in form and substance reasonably
satisfactory to the Administrative Agent and as the Administrative Agent
deems
necessary or advisable in order to ensure the following:
(i) each
Subsidiary of any Borrower shall become a Borrower under this Agreement and
shall assume all of the Obligations hereunder and be bound as if it had been
an
original signatory hereto;
and
(ii) each
Borrower (including any Person required to become a Borrower pursuant to
clause
(i)
above)
shall effectively grant to the Administrative Agent, for the benefit of the
Secured Parties, a valid and enforceable security interest in all of its
real
and personal property, including all of its Equity Interests and Equity
Equivalents and other securities, as security for the Obligations of such
Borrower.
63
(b) deliver
to the Administrative Agent all documents, if any, representing all Equity
Interests, Equity Equivalents and other securities pledged pursuant to the
documents delivered pursuant to clause
(a)
above,
together with undated powers or endorsements duly executed in
blank;
(c) deliver
to the Administrative Agent a Mortgage on any real property owned or leased
by
any Borrower, together with all Mortgage Supporting Documents relating thereto
and shall comply with the conditions set forth in Sections
3.1(a)
with
respect thereto;
(d) to
take
all other actions, or cause the Permitted Investors to take all actions,
reasonably necessary or advisable to ensure the validity or continuing validity
of any guaranty for any Obligation or any Lien securing any Obligation, to
perfect, maintain, evidence or enforce any Lien securing any Obligation or
to
ensure such Liens have the same priority as that of the Liens on similar
Collateral set forth in the Loan Documents executed on the Closing Date,
including the filing of UCC financing statements in such jurisdictions as
may be
required by the Loan Documents or applicable Requirements of Law or as the
Administrative Agent may otherwise reasonably request; and
(e) deliver
to the Administrative Agent legal opinions similar to those delivered to
the
Administrative Agent on the Closing Date.
Section
7.11 Deposit
Accounts; Securities Accounts.
Each
Borrower shall (i) deposit all of its cash in deposit accounts that are
Controlled Deposit Accounts, provided, however, that each Borrower may maintain
zero-balance accounts for the purpose of managing local disbursements and
may
maintain payroll, withholding tax and other fiduciary accounts,
(ii) deposit all of its Cash Equivalents in securities accounts that are
Controlled Securities Accounts.
Section
7.12 Interest
Rate Contracts.
Each
Borrower shall, within 30 days after the Closing Date, enter into and thereafter
maintain Interest Rate Contracts on terms and with counterparties reasonably
satisfactory to the Administrative Agent, to provide protection against
fluctuation of interest rates until the Scheduled Maturity Date for a notional
amount that, when added to the aggregate principal amount of Consolidated
Total
Debt of Parent bearing interest at a fixed rate, equals at least 75% of the
aggregate principal amount of the Consolidated Total Debt of Parent.
ARTICLE
VIII
NEGATIVE
COVENANTS
Each
Borrower agrees with the Lenders and the Administrative Agent to each of
the
following, as long as any Obligation or any Commitment remains
outstanding:
Section
8.1 Indebtedness
.
No
Borrower shall, directly or indirectly, incur or otherwise remain liable
with
respect to or responsible for, any Indebtedness except for the
following:
(a) the
Obligations;
64
(b) Indebtedness
existing on the date hereof and set forth on Schedule 8.1,
together with any Permitted Refinancing of any Indebtedness permitted hereunder
in reliance upon this clause
(b);
(c) intercompany
loans owing to any Borrower and constituting Permitted Investments of such
Borrower;
(d) obligations
under Interest Rate Contracts entered into to comply with Section 7.12;
(e) unsecured
trade payables and operational debt not evidenced by a note, and equipment
and
vehicle lease obligations, and in an aggregate amount per Borrower not exceeding
$100,000; and
(f) Guaranty
Obligations of any Borrower with respect to Indebtedness of any other Borrower
(other than Indebtedness permitted hereunder in reliance upon clause
(b)
above,
for which Guaranty Obligations may be permitted to the extent set forth in
such
clauses).
Section
8.2 Liens.
No
Borrower shall incur, maintain or otherwise suffer to exist any Lien upon
or
with respect to any of its real or personal property including all Licenses,
whether now owned or hereafter acquired, or assign any right to receive income
or profits, except for the following:
(a) Liens
created pursuant to any Loan Document;
(b) Customary
Permitted Liens of the Borrowers;
(c) Liens
existing on the date hereof and set forth on Schedule 8.2;
and
(d) Liens
on
the property of any Borrower securing the Permitted Refinancing of any
Indebtedness secured by any Lien on such property permitted hereunder in
reliance upon clause
(c)
or this
clause
(d)
without
any change in the property subject to such Liens.
Section
8.3 Investments.
No
Borrower shall make or maintain, directly or indirectly, any Investment except
for the following:
(a) Investments
existing on the date hereof and set forth on Schedule 8.3;
(b) Investments
in cash and Cash Equivalents;
(c) endorsements
for collection or deposit in the ordinary course of business; and
(d) Investments
made as part of a Permitted Acquisition.
65
Section
8.4 Transfers.
No
Borrower shall Transfer any of its real or personal property or issue or
cause
or permit a direct or indirect Transfer or Lien upon its own direct or indirect
Equity Interests, except for the following:
(a) In
each
case to the extent entered into in the ordinary course of business and made
to a
Person that is not an Affiliate of any Borrower, (i) Transfers of Cash
Equivalents for property or services of equivalent value, (ii) inventory
or
property that has become obsolete or worn out and (iii) non-exclusive licenses
of Intellectual Property;
(b) (i)
any
Transfer of any personal property (other than their own Equity Interests
or
Equity Equivalents) by any Borrower to any other Borrower to the extent any
resulting Investment constitutes a Permitted Investment, (ii) any Restricted
Payment by any Borrower permitted pursuant to Section 8.5,
(iii)
any distribution by Parent of the proceeds of Restricted Payments from any
other
Borrower to the extent permitted in Section 8.5,
and
(iv) any transaction permitted pursuant to Section
8.9;
(c) so
long
as no (x) monetary Default or other Event of Default has occurred and is
continuing, (y) no Change of Control shall result therefrom and (z) upon
at
least thirty (30) days’ prior written notice to the Administrative Agent, (i)
Transfer by any Borrower (other than Parent) of its own Equity Interests
to
Parent, (ii) any direct or indirect Transfer by Parent of its own Equity
Interests or Transfer of Parent’s Equity Interests among the Permitted
Investors, (iii) any direct or indirect Transfer by Parent of its own Equity
Interests to any Person other than the Permitted Investors; provided,
however,
in
the
case of this clause
(iii),
if such
Transfer consists of the Transfer of greater than 20% of such interests of
Parent (with the express understanding that no Transfer is permitted if a
Change
of Control shall result therefrom), such Transfer shall be subject to the
approval of the Lenders in accordance with their reasonable standards with
respect to (A) previous relationships between such Lender and the proposed
transferee, (B) the reputation for integrity, honesty and veracity of the
proposed transferee and its principals, owners, officers and directors, and
(C)
OFAC, money-laundering, anti-terrorism, SEC, healthcare laws and regulations,
and other similar regulations and activities, which approval shall not be
unreasonably withheld, conditioned or delayed (provided that the Borrowers
provide timely information reasonably requested by Lenders with respect to
such
proposed manager). Notwithstanding anything in any Loan Document to the
contrary, the following Transfers are permitted: (i) the trading or issuance
of
Equity Interests of Emeritus or Blackstone in the public or private markets,
(ii) issuance, transfer or sale of Equity Interests of Emeritus or Blackstone
in
connection with the merger, reorganization or consolidation of Emeritus or
Blackstone, (iii) transfers of the limited partnership interests of Blackstone
and its Affiliates, and (iv) any merger or consolidation of Emeritus or
Blackstone into or with, or a sale of substantially all of the asset of Emeritus
or Blackstone to any Person; provided,
however,
the
managing member or manager, as the case may be, shall not be
transferred.
(d) the
Transfer for value of Westlake or Boynton, or the Parent’s interest in the
related Borrowers, or the Whittier Residence; provided that all Net Cash
Proceeds of such Transfer be applied to the outstanding principal of the
Term
Loans in accordance with Section
2.6(b);
(e) entering
into, modifying, amending, renewing, terminating in the ordinary course of
business any resident care agreement or service agreement for ancillary
services; and
66
(f) entering
into, modifying or amending any Lease (other than resident care agreements
and
service agreements for ancillary services) in the ordinary course on market
terms; provided,
however,
the
total square footage of all such leases shall not exceed 2,500 square feet
at
any Facility without Lender’s consent.
Section
8.5 Restricted
Payments.
No
Borrower shall directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Payment except for the following:
(a) Restricted
Payments by any Borrower to any other Borrower;
(b) dividends
and distributions declared and paid on the common
(or common equivalent) Equity Interests
of the
Parent ratably to the holders of such common (or common equivalent) Equity
Interests and payable only in common (or common equivalent) Equity Interests
of
Parent; and
(c) cash
dividends on the Equity Interests of the Parent to its members paid and declared
solely for the purpose of funding,
subject
to the requirements of Section
2.4,
Excess
Cash Flow.
(d) Term
Loan
proceeds actually advanced in respect of any Permitted Acquisition, to the
extent not paid to Seller for such Permitted Acquisition.
Section
8.6 Prepayment
of Indebtedness.
Subject to Section 2.3, no Borrower shall (x) prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof any Indebtedness,
(y) set apart any property for such purpose, whether directly or indirectly
and
whether to a sinking fund, a similar fund or otherwise, or (z) make any payment
in violation of any subordination terms of any Indebtedness; provided, however,
that each Borrower may, to the extent otherwise permitted by the Loan Documents,
do each of the following:
(a) (i)
prepay the Obligations, and (ii) consummate a Permitted
Refinancing;
(b) prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof (or set apart any property for such purpose) any Indebtedness owing
to
any other Borrower; and
(c) make
regularly scheduled or otherwise required repayments or redemptions of
Indebtedness but only, in the case of Subordinated Debt, to the extent permitted
by the subordination provisions thereof.
Section
8.7 Fundamental
Changes.
Except as set forth in Section 8.4(c), no Borrower shall (a) merge, consolidate
or amalgamate with any Person, (b) acquire all or substantially all of the
Equity Interests or Equity Equivalents of any Person or (c) acquire any brand
or
all or substantially all of the assets of any Person or all or substantially
all
of the assets constituting any line of business, division, branch, operating
division or other unit operation of any Person, in each case, except for
the
following: (i) any Permitted Acquisition, (ii) the merger, consolidation or
amalgamation of any Borrower into any other Borrower and (iii) the merger,
consolidation or amalgamation of any Borrower for the sole purpose, and with
the
sole material effect, of changing its State of organization within the United
States; provided, however, that in the case of any merger, consolidation
or
amalgamation involving any Borrower for the purpose of
67
changing
its State of organization, all actions required to maintain the perfection
of
the Lien of the Administrative Agent on the Equity Interests, or other real
or
personal property of such Borrower shall have been made.
Section
8.8 Change
in
Nature of Business.
No
Borrower shall carry on any business, operations or activities (whether
directly, through a joint venture, in connection with a Permitted Acquisition
or
otherwise) substantially different from those carried on, or intended to
be
carried on, by such Borrowers as of the date hereof and business, operations
and
activities reasonably related thereto.
Section
8.9 Transactions
with Affiliates.
No
Borrower shall, except as otherwise expressly permitted herein, enter into
any
other transaction directly or indirectly with, or for the benefit of, any
Affiliate of any Borrower that is not a Borrower (including Guaranty Obligations
with respect to any obligation of any such Affiliate), except for
(a) transactions in the ordinary course of business on a basis no less
favorable to such Borrower as would be obtained in a comparable arm’s length
transaction with a Person not an Affiliate of any Borrower, (b) Restricted
Payments, the proceeds of which, if received by any Person other than any
Borrower, are used as required by Section 8.5, (c) reasonable salaries and
other reasonable director or employee compensation to officers and directors
of
any Borrower, and (d) Management Fees, provided that, in the case of this
clause
(d), such Management Fees shall be paid last in priority and only after the
payment of all other current operating expenses of the Borrowers and the
Facilities (including, all current debt service and other interest payments
on
any Indebtedness permitted hereunder and the funding of all escrows and reserved
required hereunder).
Section
8.10 Third-Party
Restrictions on Indebtedness, Liens, Investments or Restricted
Payments.
No
Borrower shall incur or otherwise suffer to exist or become effective or
remain
liable on or responsible for any Contractual Obligation limiting the ability
of
(a) any Borrower to make Restricted Payments to, or Investments in, or repay
Indebtedness to or otherwise Transfer property to, any other Borrower or
(b) any
Borrower to incur or suffer to exist any Lien upon any property of any Borrower,
whether now owned or hereafter acquired, securing any of its Obligations
(including any “equal and ratable” clause and any similar Contractual Obligation
requiring, when a Lien is granted on any property, another Lien to be granted
on
such property or any other property), except, in each case (x) pursuant to
the
Loan Documents and (y) limitations on Liens (other than those securing any
Obligation) on any property whose acquisition or repair is financed by purchase
money Indebtedness or Permitted Refinancings permitted hereunder in reliance
upon Section (b) set forth in the Contractual Obligations governing such
Indebtedness or Permitted Refinancing or Guaranty Obligations with respect
thereto.
Section
8.11 Modification
of Certain Documents.
No
Borrower shall do any of the following:
(a) waive
or
otherwise modify any term of any Related Document (other than the terms of
any
Subordinated Debt) or any Constituent Document of, or otherwise change the
capital structure of, any Borrower (including the terms of any of their
outstanding Equity Interests or Equity Equivalents), in each case except
for
those modifications and waivers that (x) do not elect, or permit the election,
to treat the Equity Interests or Equity Equivalents of any limited liability
company (or similar entity) as certificated, (y) do not materially affect
the
rights and privileges of any Borrower and (z) do not materially affect the
interests of any Secured Party under the Loan Documents or in the
Collateral;
68
(b) waive
or
otherwise modify any term of any Subordinated Debt if the effect thereof
on such
Subordinated Debt is to (i) increase the interest rate, (ii) change the due
dates for principal or interest, other than to extend such dates, (iii) modify
any default or event of default, other than to delete it or make it less
restrictive, (iv) add any covenant with respect thereto, (v) modify any
subordination provision, (vi) modify any redemption or prepayment provision,
other than to extend the dates therefor or to reduce the premiums payable
in
connection therewith or (vii) materially increase any obligation of any Borrower
or confer additional material rights to the holder of such Subordinated Debt
in
a manner adverse to any Borrower or any Secured Party.
Section
8.12 Accounting
Changes; Fiscal Year.
No
Borrower shall change its (a) accounting treatment or reporting practices,
except as required by GAAP or any Requirement of Law, or (b) its fiscal year
or
its method for determining fiscal quarters or fiscal months.
Section
8.13 Margin
Regulations.
No
Borrower shall use all or any portion of the proceeds of any credit extended
hereunder to purchase or carry margin stock (within the meaning of Regulation
U
of the Federal Reserve Board) in contravention of Regulation U of the Federal
Reserve Board.
Section
8.14 Compliance
with ERISA.
No
ERISA Affiliate shall cause or suffer to exist (a) any event that could result
in the imposition of a Lien on any asset of any Borrower with respect to
any
Title IV Plan or Multiemployer Plan or (b) any other ERISA
Event, that would, in the aggregate, have a Material Adverse Effect.
Section
8.15 Hazardous
Materials.
No
Borrower shall cause or suffer to exist any Release of any Hazardous Material
at, to or from any real property owned, leased, subleased or otherwise operated
or occupied by any Borrower that would violate any Environmental Law, form
the
basis for any Environmental Liabilities or otherwise adversely affect the
value
or marketability of any real property (whether or not owned by any Borrower),
other than such violations, Environmental Liabilities and effects that would
not, in the aggregate, have a material adverse impact on any Borrower or
any
Facility.
ARTICLE
IX
EVENTS
OF
DEFAULT
Section
9.1 Definition.
Each
of the following shall be an “Event of Default”:
(a) The
Borrowers shall fail to pay (i) any principal of any Loan when the same becomes
due and payable
or (ii)
any interest on any Loan, any fee under any Loan Document or any other
Obligation (other than those set forth in clause
(i)
above)
and, in the case of this clause
(ii),
such
non-payment continues for a period of 5 Business Days after the due date
therefor; or
(b) any
representation, warranty or certification made or deemed made by or on behalf
of
any Borrower (or any Responsible Officer thereof) in, or in connection with,
any
Loan Document (including in any document delivered in connection with any
Loan
Document) shall prove to have been incorrect in any material respect when
made
or deemed made; or
69
(c) any
Borrower shall fail to comply with (i) any provision of Article VI,
Sections 7.1
(Maintenance
of Corporate Existence),
7.5
(Insurance),
7.7
(Access
to Books and Property),
7.9
(Use
of
Proceeds),
7.11
(Deposit
Accounts)
or
Article VIII
(Negative
Covenants)
or (ii)
any other provision of any Loan Document (other than Section
5.1 (Minimum
Consolidated Project Yield))
if, in
the case of this clause
(ii),
such
failure shall remain unremedied for thirty (30) days after the earlier of
(A)
the date on which a Responsible Officer of such Borrower becomes aware of
such
failure and (B) the date on which notice thereof shall have been given to
such
Borrower by the Administrative Agent, provided, that in the case of clause
(ii),
if such
failure cannot be cured within such 30 day period but during such 30 day
period
Borrowers have commenced to cure such failure and thereafter have demonstrated
to Administrative Agent that they have diligently pursued same to completion,
such 30 day period shall be extended for an additional 30 days; or
(d) (i)
any
Borrower shall fail to make any payment when due (whether due because of
scheduled maturity, required prepayment provisions, acceleration, demand
or
otherwise) on any Indebtedness of any Borrower (other than the Obligations
or
any Hedging Agreement) and, in each case, such failure relates to Indebtedness
having a principal amount of $100,000 or more, (ii) any other event shall
occur
or condition shall exist under any Contractual Obligation relating to any
such
Indebtedness, if the effect of such event or condition is to accelerate,
or to
permit the acceleration of, the maturity of such Indebtedness or (iii) any
such
Indebtedness shall become or be declared to be due and payable, or be required
to be prepaid, redeemed, defeased or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
or
(e) (i)
any
Borrower shall generally not pay its debts as such debts become due, shall
admit
in writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors, (ii) any proceeding shall be instituted
by or against (without contest) any Borrower seeking to adjudicate it a bankrupt
or insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, composition of it or its debts or any similar
order, in each case under any Requirement of Law relating to bankruptcy,
insolvency or reorganization or relief of debtors or seeking the entry of
an
order for relief or the appointment of a custodian, receiver, trustee,
conservator, liquidating agent, liquidator, other similar official or other
official with similar powers, in each case for it or for any substantial
part of
its property and, in the case of any such proceedings instituted against
(but
not by or with the consent of) any Borrower, either such proceedings shall
remain undismissed or unstayed for a period of 60 days or more or any
action sought in such proceedings shall occur or (iii) any Borrower shall
take
any corporate or similar action or any other action to authorize any action
described in clause
(i)
or
(ii)
above;
or
(f) one
or
more judgments, orders or decrees (or other similar process) shall be rendered
against any Borrower (i)(A) in the case of money judgments, orders and decrees,
involving an aggregate amount (excluding amounts adequately covered by insurance
payable to any Borrower, to the extent the relevant insurer has not denied
coverage therefore or for with Borrowers have set aside adequate reserves)
in
excess of $250,000 or (B) otherwise, that would have, in the aggregate, a
Material Adverse Effect and (ii)(A) enforcement proceedings shall have been
commenced by any creditor upon any such judgment, order or decree or (B)
such
judgment, order or decree shall not have been vacated or discharged for a
period
of 60 consecutive days and there shall not be in effect (by reason of a pending
appeal or otherwise) any stay of enforcement thereof; or
70
(g) except
pursuant to a valid, binding and enforceable termination or release permitted
under the Loan Documents and executed by the Administrative Agent or as
otherwise expressly permitted under any Loan Document, (i) any provision
of any
Loan Document shall, at any time after the delivery of such Loan Document,
fail
to be valid and binding on, or enforceable against, any Borrower party thereto
or (ii) any Loan Document purporting to xxxxx x Xxxx to secure any Obligation
shall, at any time after the delivery of such Loan Document, fail to create
a
valid and enforceable Lien on any Collateral purported to be covered thereby
or
such Lien shall fail or cease to be a perfected Lien with the priority required
in the relevant Loan Document, or any Borrower shall state in writing that
any
of the events described in clause
(i)
or
(ii)
above
shall have occurred; or
(h) there
shall occur any Change of Control; or
(i) there
shall occur any uninsured damage to or loss, theft or destruction of any
Facility or portion of the Collateral that exceeds $250,000 in the aggregate;
or
(j) intentionally
omitted
(k) with
respect to three (3) or more Facilities, any state or federal regulatory
agency
shall have either revoked the licenses or, in the case of any skilled nursing
facility, has issued a denial of payment for new admissions, at such Facilities
and all applicable appeal periods related to such revocation shall have
expired.
Section
9.2 Remedies.
During the continuance of any Event of Default, the Administrative Agent
may,
and, at the request of the Required Lenders, shall, in each case by notice
to
the Parent and in addition to any other right or remedy provided under any
Loan
Document or by any applicable Requirement of Law, do each of the following:
(a)
declare all or any portion of the Commitments terminated, whereupon the
Commitments shall immediately be reduced by such portion or, in the case
of a
termination in whole, shall terminate together with any obligation any Lender
may have hereunder to make any Loan or (b) declare immediately due and payable
all or part of any Obligation (including any accrued but unpaid interest
thereon), whereupon the same shall become immediately due and payable, without
presentment, demand, protest or further notice or other requirements of any
kind, all of which are hereby expressly waived by the Parent and the other
Borrowers (and, to the extent provided in any other Loan Document, other
Borrowers); provided, however, that, effective immediately upon the occurrence
of the Events of Default specified in Section 9.1(e)(ii), (x) the
Commitments of each Lender to make Loans shall each automatically be terminated
and (y) each Obligation (including in each case any accrued all accrued but
unpaid interest thereon) shall automatically become and be due and payable,
without presentment, demand, protest or further notice or other requirement
of
any kind, all of which are hereby expressly waived by Parent and the other
Borrowers (and, to the extent provided in any other Loan Document, any other
Borrower).
ARTICLE
X
THE
ADMINISTRATIVE AGENT
Section
10.1 Appointment
and Duties.
(a)
Appointment of Administrative Agent. Each Lender hereby appoints GE Capital
(together with any successor Administrative Agent pursuant to Section 10.9)
as the Administrative Agent hereunder and authorizes the
71
Administrative
Agent to (i) accept delivery thereof on its behalf from any Borrower, (ii)
take such action on its behalf and to exercise all rights, powers and remedies
and perform the duties as are expressly delegated to the Administrative Agent
under such Loan Documents and (iii) exercise such powers as are reasonably
incidental thereto.
(b) Duties
as Collateral and Disbursing Agent.
Without
limiting the generality of clause
(a)
above,
the Administrative Agent shall have the sole and exclusive right and authority
(to the exclusion of the Lenders), and is hereby authorized on behalf of
the
Lenders, to (i) act as the disbursing and collecting agent for the Lenders
with respect to all payments and collections arising in connection with the
Loan
Documents (including in any proceeding described in Section 9.1(e)(ii)
or any
other bankruptcy, insolvency or similar proceeding), and each Person making
any
payment in connection with any Loan Document to any Secured Party is hereby
authorized to make such payment to the Administrative Agent, (ii) file and
prove
claims and file other documents necessary or desirable to allow the claims
of
the Secured Parties with respect to any Obligation in any proceeding described
in Section 9.1(e)(ii)
or any
other bankruptcy, insolvency or similar proceeding (but not to vote, consent
or
otherwise act on behalf of such Secured Party), (iii) act as collateral agent
for each Secured Party for purposes of the perfection of all Liens created
by
such agreements and all other purposes stated therein, (iv) manage,
supervise and otherwise deal with the Collateral, (v) take such other action
as
is necessary or desirable to maintain the perfection and priority of the
Liens
created or purported to be created by the Loan Documents, (vi) except as
may be
otherwise specified in any Loan Document, exercise all remedies given to
the
Administrative Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of
Law or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided,
however,
that
the Administrative Agent hereby appoints, authorizes and directs each Lender
to
act as collateral sub-agent for the Administrative Agent and the Lenders
for
purposes of the perfection of all Liens with respect to the Collateral,
including any deposit account maintained by a Borrower with, and cash and
Cash
Equivalents held by, such Lender, and may further authorize and direct the
Lenders to take further actions as collateral sub-agents for purposes of
enforcing such Liens or otherwise to transfer the Collateral subject thereto
to
the Administrative Agent, and each Lender hereby agrees to take such further
actions to the extent, and only to the extent, so authorized and
directed.
(c) Limited
Duties.
Under
the Loan Documents, the Administrative Agent (i) is acting solely on behalf
of
the Lenders (except to the limited extent provided in Section 2.8(b)
with
respect to the Register and in Section 10.11),
with
duties that are entirely administrative in nature, notwithstanding the use
of
the defined term “Administrative Agent”, the terms “agent”, “administrative
agent” and “collateral agent” and similar terms in any Loan Document to refer to
the Administrative Agent, which terms are used for title purposes only,
(ii) is not assuming any obligation under any Loan Document other than as
expressly set forth therein or any role as agent, fiduciary or trustee of
or for
any Lender or any other Secured Party and (iii) shall have no implied functions,
responsibilities, duties, obligations or other liabilities under any Loan
Document, and each
Lender hereby waives and agrees not to assert any claim against the
Administrative Agent based on the roles, duties and legal relationships
expressly disclaimed in clauses
(i)
through
(iii)
above.
Section
10.2 Binding
Effect.
Each
Lender agrees that (i) any action taken by the Administrative Agent or the
Required Lenders (or, if expressly required hereby, a greater
72
proportion
of the Lenders) in accordance with the provisions of the Loan Documents,
(ii)
any action taken by the Administrative Agent in reliance upon the instructions
of Required Lenders (or, where so required, such greater proportion) and
(iii)
the exercise by the Administrative Agent or the Required Lenders (or, where
so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall
be
authorized and binding upon all of the Secured Parties.
Section
10.3 Use
of
Discretion.
(a) No
Action without Instructions. The Administrative Agent shall not be required
to
exercise any discretion or take, or to omit to take, any action, including
with
respect to enforcement or collection, except any action it is required to
take
or omit to take (i) under any Loan Document or (ii) pursuant to
instructions from the Required Lenders (or, where expressly required by the
terms of this Agreement, a greater proportion of the Lenders).
(b) Right
Not to Follow Certain Instructions.
Notwithstanding clause
(a)
above,
the Administrative Agent shall not be required to take, or to omit to take,
any
action (i) unless, upon demand, the Administrative Agent receives an
indemnification satisfactory to it from the Lenders (or, to the extent
applicable and acceptable to the Administrative Agent, any other Secured
Party)
against all Liabilities that, by reason of such action or omission, may be
imposed on, incurred by or asserted against the Administrative Agent or any
Related Person thereof or (ii) that is, in the opinion of the Administrative
Agent or its counsel, contrary to any Loan Document or applicable Requirement
of
Law.
Section
10.4 Delegation
of Rights and Duties.
The
Administrative Agent may, upon any term or condition it specifies, delegate
or
exercise any of its rights, powers and remedies under, and delegate or perform
any of its duties or any other action with respect to, any Loan Document
by or
through any trustee, co-agent, employee, attorney-in-fact and any other Person
(including any Secured Party).
Any
such Person shall benefit from this
Article X to the extent provided by the Administrative
Agent.
Section
10.5 Reliance
and Liability.
(a)
The Administrative Agent may, without incurring any liability hereunder to
Lenders, (i) treat the payee of any Note as its holder until such Note has
been
assigned in accordance with Section 11.2(e), (ii) rely on the Register to
the extent set forth in Section 2.8, (iii) consult with any of its Related
Persons and, whether or not selected by it, any other advisors, accountants
and
other experts (including advisors to, and accountants and experts engaged
by,
any Borrower) and (iv) rely and act upon any document and information (including
those transmitted by Electronic Transmission) and any telephone message or
conversation, in each case believed by it to be genuine and transmitted,
signed
or otherwise authenticated by the appropriate parties.
(b) None
of
the Administrative Agent and its Related Persons shall be liable to Lenders
for
any action taken or omitted to be taken by any of them under or in connection
with any Loan Document, and each Lender and each Borrower, hereby waives
and
shall not assert any right, claim or cause of action based thereon, except
to
the extent of liabilities resulting primarily from the gross negligence or
willful misconduct of the Administrative Agent or, as the case may be, such
Related Person (each as determined in a final, non-appealable judgment by
a
court of competent jurisdiction) in connection with the duties expressly
set
forth herein. Without limiting the foregoing, the Administrative
Agent:
73
(i) shall
not
be responsible or otherwise incur liability to Lenders for any action or
omission taken in reliance upon the instructions of the Required Lenders
or for
the actions or omissions of any of its Related Persons selected with reasonable
care (other than employees, officers and directors of the Administrative
Agent,
when acting on behalf of the Administrative Agent);
(ii) shall
not
be responsible to any Secured Party for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency or value of, or the
attachment or priority of any Lien created or purported to be created under
or
in connection with, any Loan Document;
(iii) makes
no
warranty or representation, and shall not be responsible, to any Secured
Party
for any statement, document, information, representation or warranty made
or
furnished by or on behalf of any Related Person or any Borrower in connection
with any Loan Document or any transaction contemplated therein or any other
document or information with respect to any Borrower, whether or not transmitted
or (except for documents expressly required under any Loan Document to be
transmitted to the Lenders) omitted to be transmitted by the Administrative
Agent, including as to completeness, accuracy, scope or adequacy thereof,
or for
the scope, nature or results of any due diligence performed by the
Administrative Agent in connection with the Loan Documents; and
(iv) shall
not
have any duty to ascertain or to inquire as to the performance or observance
of
any provision of any Loan Document, whether any condition set forth in any
Loan
Document is satisfied or waived, as to the financial condition of any Borrower
or as to the existence or continuation or possible occurrence or continuation
of
any Default or Event of Default and shall not be deemed to have notice or
knowledge of such occurrence or continuation unless it has received a notice
from any Borrower, any Lender describing such Default or Event of Default
clearly labeled “notice of default” (in which case the Administrative Agent
shall promptly give notice of such receipt to all Lenders);
and,
for
each of the items set forth in clauses
(i)
through
(iv)
above,
each Lender and each Borrower hereby waives and agrees not to assert (and
each
Borrower shall cause each other Borrower to waive and agree not to assert)
any
right, claim or cause of action it might have against the Administrative
Agent
based thereon, except with respect to the gross negligence or willful misconduct
of the Administrative Agent or any Lender.
Section
10.6 Administrative
Agent Individually.
The
Administrative Agent and its Affiliates may make loans and other extensions
of
credit to, acquire Equity Interests and Equity Equivalents of, engage in
any
kind of business with, any Borrower or Affiliate thereof as though it were
not
acting as the Administrative Agent and may receive separate fees and other
payments therefor. To the extent the Administrative Agent or any of its
Affiliates makes any Loan or otherwise becomes a Lender hereunder, it shall
have
and may exercise the same rights and powers hereunder and shall be subject
to
the same obligations and liabilities as any other Lender and the terms “Lender”,
“Required Lender” and any similar terms shall, except where otherwise expressly
provided in any Loan Document, include, without limitation, the Administrative
Agent
74
or
such
Affiliate, as the case may be, in its individual capacity as Lender or as
one of
the Required Lenders.
Section
10.7 Lender
Credit Decision.
Each
Lender acknowledges that it shall, independently and without reliance upon
the
Administrative Agent, any Lender or any of their Related Persons or upon
any
document (including the Disclosure Documents) solely or in part because such
document was transmitted by the Administrative Agent or any of its Related
Persons, conduct its own independent investigation of the financial condition
and affairs of each Borrower and make and continue to make its own credit
decisions in connection with entering into, and taking or not taking any
action
under, any Loan Document or with respect to any transaction contemplated
in any
Loan Document, in each case based on such documents and information as it
shall
deem appropriate.
Except
for documents expressly required by any Loan Document to be transmitted by
the
Administrative Agent to the Lenders, the Administrative Agent shall not have
any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Borrower or any Affiliate
of any
Borrower that may come in to the possession of the Administrative Agent or
any
of its Related Persons.
Section
10.8 Expenses;
Indemnities.
(a)
Each Lender agrees to reimburse the Administrative Agent and each of its
Related
Persons (to the extent not reimbursed by any Borrower) promptly upon demand
for
such Lender’s Pro Rata Share with respect to the Facilities of any costs and
expenses (including fees, charges and disbursements of financial, legal and
other advisors and Other Taxes paid in the name of, or on behalf of, any
Borrower) that may be incurred by the Administrative Agent or any of its
Related
Persons in connection with the preparation, execution, delivery, administration,
modification, consent, waiver or enforcement (whether through negotiations,
through any work-out, bankruptcy, restructuring or other legal or other
proceeding or otherwise) of, or legal advice in respect of its rights or
responsibilities under, any Loan Document.
(b) Each
Lender further agrees to indemnify the Administrative Agent and each of its
Related Persons (to the extent not reimbursed by any Borrower), from and
against
such Lender’s aggregate Pro Rata Share with respect to the Facilities of the
Liabilities (including taxes, interests and penalties imposed for not properly
withholding or backup withholding on payments made to on or for the account
of
any Lender) that may be imposed on, incurred by or asserted against the
Administrative Agent or any of its Related Persons in any matter relating
to or
arising out of, in connection with or as a result of any Loan Document, any
Related Document or any other act, event or transaction related, contemplated
in
or attendant to any such document, or, in each case, any action taken or
omitted
to be taken by the Administrative Agent or any of its Related Persons under
or
with respect to any of the foregoing; provided,
however,
that no
Lender shall be liable to the Administrative Agent or any of its Related
Persons
to the extent such liability has resulted primarily from the gross negligence
or
willful misconduct of the Administrative Agent or, as the case may be, such
Related Person, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order.
Section
10.9 Resignation
of Administrative Agent.
(a)
The Administrative Agent may resign at any time by delivering notice of such
resignation to the Lenders and the Parent, effective on the date set forth
in
such notice or, if not such date is set forth therein, upon the date such
notice
shall be effective. If the Administrative Agent delivers any such notice,
the
Required Lenders shall have the right to appoint a successor Administrative
Agent. If, within 30 days after
75
the
retiring Administrative Agent having given notice of resignation, no successor
Administrative Agent has been appointed by the Required Lenders that has
accepted such appointment, then the retiring Administrative Agent shall,
on
behalf of the Lenders, appoint a successor Administrative Agent from among
the
Lenders. Each appointment under this clause (a) shall be subject to the prior
consent of the Borrowers, which may not be unreasonably withheld but shall
not
be required during the continuance of a Default.
(b) Effective
immediately upon its resignation, (i) the retiring Administrative Agent shall
be
discharged from its duties and obligations under the Loan Documents, (ii)
the
Lenders shall assume and perform all of the duties of the Administrative
Agent
until a successor Administrative Agent shall have accepted a valid appointment
hereunder, (iii) the retiring Administrative Agent and its Related Persons
shall
no longer have the benefit of any provision of any Loan Document other than
with
respect to any actions taken or omitted to be taken while such retiring the
Administrative Agent was, or because such Administrative Agent had been,
validly
acting as the Administrative Agent under the Loan Documents and (iv) subject
to
its rights under Section 10.3,
the
retiring Administrative Agent shall take such action as may be reasonably
necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents. Effective immediately upon
its
acceptance of a valid appointment as Administrative Agent, a successor
Administrative Agent shall succeed to, and become vested with, all the rights,
powers, privileges and duties of the retiring Administrative Agent under
the
Loan Documents.
Section
10.10 Release
of Collateral.
Each
Lender hereby consents to the release and hereby directs the Administrative
Agent to release (or, in the case of clause (b)(ii) below, release or
subordinate) the following:
(a) any
Borrower from its Obligations hereunder if all of the Equity Interests of
such
Borrower are disposed of in a Transfer permitted under the Loan Documents
(including pursuant to a waiver or consent), provided, after giving effect
to
such Transfer, Borrowers have complied with the requirements of Section 7.10;
and
(b) any
Lien
held by the Administrative Agent for the benefit of the Secured Parties against
(i) any Collateral that is disposed of by a Borrower in a Transfer permitted
by
the Loan Documents (including pursuant to a valid waiver or consent),
to the
extent all Liens required to be granted in such Collateral pursuant to
Section 7.10
after
giving effect to such Transfer have been granted, (ii) any property subject
to a
Lien permitted hereunder in reliance upon Section 8.2(c)
or (d),
(iii)
all of the Collateral and all the Borrowers, upon (A) termination of the
Commitments, (B) payment and satisfaction in full of all Loans and all other
Obligations that the Administrative Agent has been notified in writing are
then
due and payable, (C) deposit of cash collateral with respect to all contingent
Obligations, in amounts and on terms and conditions and with parties
satisfactory to the Administrative Agent and each Indemnitee that is owed
such
Obligations and (D) to the extent requested by the Administrative Agent,
receipt
by the Secured Parties of liability releases from the Borrowers each in form
and
substance acceptable to the Administrative Agent,
and
(iv) any Lien on the Collateral related to Westlake, Boynton and the Whittier
Residence upon the sale of same as permitted hereunder.
Each
Lender hereby directs the Administrative Agent, and the Administrative Agent
hereby agrees, upon receipt of reasonable advance notice from any Borrower,
to
execute and deliver or
76
file
such
documents and to perform other actions reasonably necessary to release the
guaranties and Liens when and as directed in this Section 10.10.
Section
10.11 Additional
Secured Parties.
The
benefit of the provisions of the Loan Documents directly relating to the
Collateral or any Lien granted thereunder shall extend to and be available
to
any Secured Party that is not a Lender as long as, by accepting such benefits,
such Secured Party agrees, as among the Administrative Agent and all other
Secured Parties, that such Secured Party is bound by (and, if requested by
the
Administrative Agent, shall confirm such agreement in a writing in form and
substance acceptable to the Administrative Agent) this Article X,
Section 11.8 (Right of Setoff), Section 11.9 (Sharing of Payments) and
Section 11.20 (Confidentiality) and the decisions and actions of the
Administrative Agent and the Required Lenders (or, where expressly required
by
the terms of this Agreement, a greater proportion of the Lenders) to the
same
extent a Lender is bound; provided, however, that, notwithstanding the
foregoing, (a) such Secured Party shall be bound by Section 10.8 only to
the extent of Liabilities, costs and expenses with respect to or otherwise
relating to the Collateral held for the benefit of such Secured Party, in
which
case the obligations of such Secured Party thereunder shall not be limited
by
any concept of Pro Rata Share or similar concept, (b) each of the Administrative
Agent and the Lenders shall be entitled to act at its sole discretion, without
regard to the interest of such Secured Party, regardless of whether any
Obligation to such Secured Party thereafter remains outstanding, is deprived
of
the benefit of the Collateral, becomes unsecured or is otherwise affected
or put
in jeopardy thereby, and without any duty or liability to such Secured Party
or
any such Obligation and (c) such Secured Party shall not have any right to
be
notified of, consent to, direct, require or be heard with respect to, any
action
taken or omitted in respect of the Collateral or under any Loan
Document.
ARTICLE
XI
MISCELLANEOUS
Section
11.1 Amendments,
Waivers, Etc.
(a)
No amendment or waiver of any provision of any Loan Document (other than
the Fee
Letter, the Control Agreements and the Secured Hedging Agreements) and no
consent to any departure by any Borrower therefrom shall be effective unless
the
same shall be in writing and signed (1) in the case of an amendment, consent
or
waiver to cure any ambiguity, omission, defect or inconsistency, by the
Administrative Agent and the Parent, (2) in the case of an amendment granting
a
new Lien for the benefit of the Secured Parties or extending an existing
Lien
over additional property, by the Administrative Agent and each Borrower directly
affected thereby, (3) in the case of any other waiver or consent, by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders), and (4) in the case of any other amendment, by the Required
Lenders (or by the Administrative Agent with the consent of the Required
Lenders) and the Borrowers; provided, however, that no amendment, consent
or
waiver described in clause (3) or (4) above shall, unless in writing and
signed by each Lender directly affected thereby (or by the Administrative
Agent
with the consent of such Lender), in addition to any other Person the signature
of which is otherwise required pursuant to any Loan Document, do any of the
following:
(i) waive
any
condition specified in Section 3.1,
except
any condition referring to any other provision of any Loan
Document;
77
(ii) increase
the Commitment of such Lender or subject such Lender to any additional
obligation;
(iii) reduce
(including through release, forgiveness, assignment or otherwise) (A) the
principal amount of, the interest rate on, or any obligation of any Borrower
to
repay (whether or not on a fixed date), any outstanding Loan owing to such
Lender, or (B) any fee or accrued interest payable to such Lender; provided,
however,
that
this clause
(iii)
does not
apply to (x) any change to any provision increasing any interest rate or
fee during the continuance of an Event of Default or to any payment of any
such
increase or (y) any modification to any financial covenant set forth in
Article V
or in
any definition set forth therein or principally used therein;
(iv) waive
or
postpone any scheduled maturity date or other scheduled date fixed for the
payment, in whole or in part, of principal of or interest on any Loan or
fee
owing to such Lender or for the reduction of such Lender’s Commitment;
provided,
however,
that
this clause
(iv)
does not
apply to any change to mandatory prepayments, including those required under
Section 2.4,
or to
the application of any payment, including as set forth in Section 2.6;
(v) except
as
provided in Section 10.10,
release
any material portion of the Collateral (it being acknowledged and understood
that any Facility shall be deemed a material portion of the
Collateral);
(vi) reduce
or
increase the proportion of Lenders required for the Lenders (or any subset
thereof) to take any action hereunder or change the definition of the terms
“Required Lenders”, “Pro Rata Share” or “Pro Rata Outstandings”; or
(vii) amend
Section 10.10
(Release
of Collateral),
Section 11.9
(Sharing
of Payments)
or this
Section 11.1;
and
provided,
further,
that
(x)(A) any waiver of any payment applied pursuant to Section 2.6(b)
(Application
of Mandatory Prepayments)
to, and
any modification of the application of any such payment to, the Term Loans
shall
require the consent of the Required Lenders, (B) any change to the
definition of the term “Required Lender” shall require the consent of the
Required Lenders and (y) no amendment, waiver or consent shall affect the
rights
or duties under any Loan Document of, or any payment to, the Administrative
Agent (or otherwise modify any provision of Article X
or the
application thereof), any SPV that has been granted an option pursuant to
Section 11.2(f)
unless
in writing and signed by the Administrative Agent, such SPV in addition to
any
signature otherwise required and (z) the consent of the Borrowers shall not
be
required to change any order of priority set forth in Section 2.6.
(b) Each
waiver or consent under any Loan Document shall be effective only in the
specific instance and for the specific purpose for which it was given. No
notice
to or demand on any Borrower shall entitle any Borrower to any notice or
demand
in the same, similar or other circumstances. No failure on the part of any
Secured Party to exercise, and no delay in exercising, any right hereunder
shall
operate as a waiver thereof, nor shall any single or partial
78
exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right.
Section
11.2 Assignments
and Participations;
Binding Effect.
(a)
Binding Effect. This Agreement shall become effective when it shall have
been
executed by Parent, the other Borrowers and the Administrative Agent and
when
the Administrative Agent shall have been notified by each Lender that such
Lender has executed it. Thereafter, it shall be binding upon and inure to
the
benefit of, but only to the benefit of, Parent, the other Borrowers (in each
case except for Article X), the Administrative Agent, each Lender and, to
the extent provided in Section 10.11, each other Indemnitee and Secured
Party and, in each case, their respective successors and permitted assigns.
Except as expressly provided in any Loan Document (including in
Section 10.9), none of Parent, the other Borrowers or the Administrative
Agent shall have the right to assign any rights or obligations hereunder
or any
interest herein.
(b) Right
to Assign.
Each
Lender may sell, transfer, negotiate or assign all or a portion of its rights
and obligations hereunder (including all or a portion of its Commitments
and its
rights and obligations with respect to Loans) to (i) any existing Lender,
(ii)
any Affiliate or Approved Fund of any existing
Lender or (iii) any other Person acceptable (which acceptance shall not be
unreasonably withheld or delayed) to the Administrative Agent and, as long
as no
Event of Default is continuing, the Borrowers; provided,
however,
that (x)
such
Transfers do not have to be ratable between the Facilities but must be ratable
among the obligations owing to and owed by such Lender and (y) the aggregate
outstanding principal amount (determined as of the effective date of the
applicable Assignment) of the Loans, Commitments subject to any such Transfer
shall be an integral multiple of $1,000,000, unless such Transfer is made
to an
existing Lender or an Affiliate or Approved Fund of any existing Lender,
is of
the assignor’s (together with its Affiliates and Approved Funds) entire interest
or is made with the prior consent of the Parent and the Administrative
Agent.
(c) Procedure.
The
parties to each Transfer made in reliance on clause
(b)
above
(other than those described in clause
(e)
or
(f)
below)
shall execute and deliver to the Administrative Agent (which shall keep a
copy
thereof) an Assignment, together with any existing Note subject to such Transfer
(or any affidavit of loss therefor acceptable to the Administrative Agent),
any
tax forms required to be delivered pursuant to Section 2.11(f)
and
payment by the assignee to the Administrative Agent of an assignment fee
in the
amount of $3,500. Upon receipt of all the foregoing, and conditioned upon
such
receipt and upon the Administrative Agent consenting to such Assignment,
from
and after the effective date specified in such Assignment, the Administrative
Agent shall record or cause to be recorded in the Register the information
contained in such Assignment.
(d) Effectiveness.
Effective upon the entry of such record in the Register, (i) such assignee
shall become a party hereto and, to the extent that rights and obligations
under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment, shall have the rights and obligations of a Lender, (ii) any
applicable Note shall be transferred to such assignee through such entry
and
(iii) the assignor thereunder shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment,
relinquish its rights (except for those surviving the termination of the
Commitments and the payment in full of the Obligations) and be released from
its
obligations under the Loan Documents, other than those relating to events
or
circumstances occurring prior to such assignment (and, in the case of an
Assignment covering all or the remaining portion of an
79
assigning
Lender’s rights and obligations under the Loan Documents, such Lender shall
cease to be a party hereto except that each Lender agrees to remain bound
by
Article X,
Section 11.8
(Right
of Setoff)
and
Section 11.9
(Sharing
of Payments)
to the
extent provided in Section 10.11
(Additional
Secured Parties)).
(e) Grant
of Security Interests.
In
addition to the other rights provided in this Section 11.2,
each
Lender may grant
a
security interest in, or otherwise assign as collateral, any of its rights
under
this Agreement, whether now owned or hereafter acquired (including rights
to
payments of principal or interest on the Loans), to (A) any federal reserve
bank
(pursuant to Regulation A of the Federal Reserve Board), without notice to
the
Administrative Agent or (B) any holder of, or trustee for the benefit of
the holders of, such Lender’s securities by notice to the Administrative Agent;
provided,
however,
that no
such holder or trustee, whether because of such grant or assignment or any
foreclosure thereon (unless such foreclosure is made through an assignment
in
accordance with clause
(b)
above),
shall be entitled to any rights of such Lender hereunder and no such Lender
shall be relieved of any of its obligations hereunder.
(f) Participants
and SPVs.
In
addition to the other rights provided in this Section 11.2,
each
Lender may, at no cost to the Borrowers (unless such assignment or participation
is undertaken at the request of Borrowers, which costs and expense in the
case
of syndication to MLC shall be less than or equal to $15,000), (x) with notice
to the Administrative Agent, grant to an SPV the option to make all or any
part
of any Loan that such Lender would otherwise be required to make hereunder
(and
the exercise of such option by such SPV and the making of Loans pursuant
thereto
shall satisfy the obligation of such Lender to make such Loans hereunder)
and
such SPV may assign to such Lender the right to receive payment with respect
to
any Obligation and (y) without notice to or consent from the Administrative
Agent or the Parent, sell participations to one or more Persons in or to
all or
a portion of its rights and obligations under the Loan Documents (including
all
its rights and obligations with respect to the Term Loans); provided,
however,
that,
whether as a result of any term of any Loan Document or of such grant or
participation, (i) no such SPV or participant shall have a commitment, or
be
deemed to have made an offer to commit, to make Loans hereunder, and, except
as
provided in the applicable option agreement, none shall be liable for any
obligation of such Lender hereunder, (ii) such Lender’s rights and
obligations, and the rights and obligations of the Borrowers and the Secured
Parties towards such Lender, under any Loan Document shall remain unchanged
and
each other party hereto shall continue to deal solely with such Lender, which
shall remain the holder of the Obligations in the Register, except that (A)
each
such participant and SPV shall be entitled to the benefit of Sections 2.10
(Breakage
Costs; Increased Costs; Capital Requirements)
and
2.11
(Taxes),
but
only to the extent such participant or SPV delivers the tax forms such Lender
is
required to collect pursuant to Section 2.11(f)
and then
only to the extent of any amount to which such Lender would be entitled in
the
absence of any such grant or participation and (B) each such SPV may
receive other payments that would otherwise be made to such Lender with respect
to Loans funded by such SPV to the extent provided in the applicable option
agreement and set forth in a notice provided to the Administrative Agent
by such
SPV and such Lender, provided,
however,
that in
no case (including pursuant to clause
(A)
or
(B)
above)
shall an SPV or participant have the right to enforce any of the terms of
any
Loan Document, and (iii) the consent of such SPV or participant shall not
be
required (either directly, as a restraint on such Lender’s ability to consent
hereunder or otherwise) for any amendments, waivers or consents with respect
to
any Loan Document or to exercise or refrain from exercising any powers or
rights
such Lender may have under or in respect of the Loan Documents (including
the
right to enforce or direct enforcement of the Obligations), except for those
described in clauses (iii)
and
(iv)
of
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Section 11.1(a)